Property Management Flashcards
What RICS guidance is there on service charge and can you give me some of the key requirements?
RICS Service Charge in Commercial Property, 2018
- Budgets issued minimum of 1 month and Recs within 4 months of accounting date
- All expenditure must be inaccordance with the lease
- Ensure apportionment matrix and explanatory comments are issued with budgets
- SC monies helf in one or more individual bank accounts
How do you ensure your communication is clear with tenants?
- Send follow up emails after conversation
- Ensure i am being honest and transparent
- Maintain regular contact and hold regular meetings with tenants
You recommended CRAR at Building 1000, can you talk me through the stages of CRAR?
Compliance stage - 7 day notice of enforcement to give the tenant 7 days to pay
Enforcement stage - enforcement agent attends to take inventory and enter into a Controlled Goods Agreement.
Disposal stage - where the tenant does not make payment or default on an arrangement, enforcement agents will return to the premises and remove the goods. This period is 48 hours from the enforcement stage, giving the tenant 2 days to bring things up to date before any removal action can begin
What can you CRAR and what is the minimum for instruction?
Rent only and minimum 7 days rent outstanding
Can you dispose of goods straight away or is there a period to hold on to them?
must keep for 7 days before disposing
How would your advice at building 1000 have changed 12 months ago?
CRAR would have been unavailable, leaving a payment plan as the best option
What legislation is CRAR associated with?
Tribunals, Courts and Enforcement Act 2007
When did CRAR come into force and what did it replace?
2014 and replaced common law to levy distress
How does CRAR differ from the common law to levy distress?
CRAR only applies to leases and not licences
Only applies to rent
minimum 7 days rent outstanding
Only available for commercial
7 days notice prior to seizing
Agents only attend in business hours
What goods can be seized by CRAR and by whom?
only goods belonging to the tenant
Cannot recover tools of the trade up to an aggregate value of £1,350
Cannot recover goods being used
Enforcement agents can seize
Can the tenant appeal CRAR?
Yes, the tenant has the right to apply to the court for an order that no further steps be taken under CRAR without permission of the court
What is the ultimate question when you make an Licence to Alter recommendation
- Am i competenant enough to advise
- How is it affecting the landlords interests
At the Glasshouse Yard licence to alter, you requested plans detailing the fit-out, did you request anything else?
- Confirmation on undertaking of fees
- Confirmation works would be re-instated
- H&S information and RAMS
- Building Regulations compliance
- Year warranty
Were you qualified to inspect and sign off the fitout at Glasshouse Yard
No, but i inspected with building surveyors who were also acting on the project
Why was the tenant responsible for the fees at Glasshouse Yard
As stated in the lease the tenant is responsible for the reasonable costs associated with documenting the licence
What legislation would allow the tenant to carry out improvement works without Landlord consent?
Section 3 of the Landlord and Tenant Act 1927
What is the difference between a subletting and an assignment?
Assignment transfers interest whereas a sublet does not
- Superior tenant can re-occupy if sublet
- Sublet - the landlord has no direct relationship with the subtenant - relationship remains with their tenant, the superior tenant
How does the Landlord and Tenants covenant act 1995 affect an assignment?
Removed privity of contract for when a lease gets assigned and introduced AGA.
In the assignment at Farringdon Point, you requested tenants accounts, what were you looking for when reviewing?
overall financial performance - if they are able to adhere to the lease obligations.
profits test - net profit should equal 3 times the annual rent (not set in stone, just rough guide)
What is an AGA?
Authorised Guarantee Agreement
Outgoing tenant guarantees the performance of the incoming tenant - they are liable if the incoming tenant defaults
What is an AGA?
Authorised Guarantee Agreement
Outgoing tenant guarantees the performance of the incoming tenant - they are liable if the incoming tenant defaults
Why did you also request a 6 month rent deposit at the Farringdon Point assignment?
To provide the Landlord with additional security
Can a landlord refuse an assignment?
Yes on a lease after 1995 and the tenant is of weaker covenant strength and an AGA is stipulated but refused
- Also if the incoming tenant requires use of the premises for a differing reason than that stated in the lease
What is a PPM and why is it helpful?
Planned Preventative Maintenance
- Ensures any issues are identified and addressed before they develop further
- Ensures H&S compliance
- Less need for major unplanned repair work
- Less chance of unplanned fluctuations in service charge
- Preserves value
What works were required at Riverbridge House and what was the approximate cost?
Priority 1: roof works and fire escapes in poor condition
Priority 2/3: Stairwells in poor condition (need recarpetting/redecorating), car park patch works, and damaged cladding panels
Approximate cost was £150,000
How did you assess the tenders at Riverbridge House PPM?
on a value for money basis
How did you ensure that the works at Riverbridge PPM were carried out safely?
- Contractor insurance policy
- Contractor H&S policy
- Site specific RAMS
- General contractor information
Were the works at Riverbridge House for the PPM carried out in the same year?
No, the Client forward funded and costs were apportioned and split between 3 service charge budgets
Can you withdraw a section 25 notice?
No, only when the landlod has transferred his ownership to a new landlord who wishes the tenancy to continue on the old basis or new and different terms
Can you withdraw a Section 26 notice?
Yes can be withdrawn at any stage
Can you withdraw a section 27 notice?
No it is irrevocable and the tenant has no right to remain in the property once the termination date passes
What are the aims of the Service Charge guidance?
- Improve general standards and promote best practice.
- Encourage uniformity, fairness and transparency in the management of service charges
What would you do if the tenant enters liquidation
- Submit claim,
- liaise with liquidators on whether they are occupying the lease,
- Draw down on the RD,
- surrender the lease
Why is RV not appropriate for SC apportionment
doesn’t represent reasonable use of benefit
When does SC Rec need to be audited?
If stated within the lease – however it is best practice to have large service charge accounts audited regardless
What can be recovered from CRAR
Rent and interest
What options do you have to protect the landlords interest if they remain in the unit after expiry in a contracted out lease?
- Tenancy at Will
- Double rent under L&T Act 1730
- Court order to remove