Property Management

Question 1

Tell me what is the most recent professional statement on Service Charge

Answer 1

Service Charge in commercial property management 2018

Question 2

What does the RICS SC professional statement do?

Answer 2

Provides guidance on how to manage SC

Question 3

Can you give me some examples of recommendations that the SC professional statement comes out with?

Answer 3

Management fees are fixed – calculated based on reasonable amount of time.
Budgets minimum 1 month before accounting date
Recs within 4 months of accounting date
Expenditure in accordance within lease

Question 4

If there is a surplus in the SC account, what would you recommend to the Client?

Answer 4

Refund as balancing service charge

Question 5

How might you protect your Client against unforeseen large expenditure on an old building

Answer 5

PPM
Reserve fund

Question 6

What is a PPM?

Answer 6

Planned Preventative maintenance

Question 7

How long does a PPM last?

Answer 7

5 or 10 year period

Question 8

How might you prepare for the cost of replacement of plant and machinery

Answer 8

Sinking fund

Question 9

What is a sinking fund and what does it do?

Answer 9

Collecting money for a specified purpose over several years

Question 10

In a multi-let property, how is SC generally apportioned?

Answer 10

By floor area

Question 11

Tenant hasn’t paid rent – what is the process you would go through?

Answer 11

Contact tenant and understand why they haven’t paid

Question 12

Tenant hasn’t responded to your chasers on rent, what do you do then?

Answer 12

Go to site
CRAR
Statutory demand
Draw down on RD
Claim on AGA

Question 13

Why would you go to site if a tenant hasn’t paid rent?

Answer 13

To see if they’re in occupation and trading

Question 14

Where would you find a rent deposit?

Answer 14

Rent deposit deed

Question 15

What does a rent deposit deed say?

Answer 15

Notice needs to be given before drawing down and RD must be topped up once drawn down

Question 16

What is a statutory demand the first step toward?

Answer 16

Winding up petition – aggressive tactic

Question 17

What is CRAR

Answer 17

Commercial Rent Arrears Recovery

Question 18

What is the process of CRAR?

Answer 18

7 day letter issued
Enforcement agents attend to take stock and enter a controlled goods agreement
48 hours no payment – bailiffs return to recover goods
Hold for 7 days

Question 19

What is a controlled goods agreement

Answer 19

Contract between bailiff and debtor enabling them to retain the right of use of the goods in return for a promise to pay the debt within specified period

Question 20

If you believe the tenant will ‘do a runner’ after receiving a 7 day notice letter of enforcement, what can you do?

Answer 20

Reduce the 7 day notice period by applying to court for a court order

Question 21

What can you actually seize in CRAR?

Answer 21

Goods owned by the tenant
Can’t recover things on finance
Can’t recover things that would cause a breach of peace – tools of the trade up to an aggregate value of £1,350

Question 22

What happens if you have a shop with a flat upstairs, can you CRAR the shop?

Answer 22

You can CRAR the shop but not the flat – unless let on an overriding lease, where 1 tenant holds the lease of the whole building, you cannot crar

Question 23

What is it that CRAR allows you to recover?

Answer 23

Rent only

Question 24

How do you recover SC in CRAR?

Answer 24

You can include SC in the notice, however bailiffs can only recover goods in the amount of the rent outstanding

Question 25

If you have an inclusive rent, what do you CRAR/how do you CRAR?

Answer 25

Calculate how much rent is apportioned – i.e calculate the RV, insurance, SC and subtract from the total.

Question 26

What is the final resort for tenant non-payment of rent?

Answer 26

Forfeiture

Question 27

What is the process for forfeiting the lease?

Answer 27

Check the lease to see if you’re able to forfeit – look in the forfeiture clause

Question 28

When would you recommend that a landlord forfeits a lease?

Answer 28

If there is a commercial advantage to forfeiture Confident you can re-let / if there is demand / if under-rented / opportunity to improve tenant covenant

Question 29

If you forfeit for a breach in repairing obligation, what is the process?

Answer 29

S.146 notice, providing a reasonable amount of time to remedy the repairs

Question 30

What is a reasonable amount of time to give for remedying a S.146 notice breach

Answer 30

6 months – cannot do anything in that time

Question 31

How do you forfeit for non-payment of rent?

Answer 31

Peaceable re-entry after 21 days of no payment, whether formally demanded or not

Question 32

Tell me about dealing with an application to assign the lease – what do you do if a tenant wants to assign the lease

Answer 32

Review the alienation provision

Question 33

Typically, what would an alienation clause say?

Answer 33

Tenant cannot assign part of the premises Tenant can assign the whole of the premises, with landlord consent, such consent not to be unreasonable withheld or delayed

Question 34

What is a reason to not grant consent for an assignment

Answer 34

Covenant strength – AGA rejected Tenant in breach of lease clause Negative use clause

Question 35

What is the difference between an assignment and a subletting

Answer 35

Assignment transfers interest in property to new tenant creating a new relationship. Landlord has no relationship with subtenant

Question 36

When would you recommend to a tenant Client that they sublet rather than assign?

Answer 36

If it is under-rented, they may be able to profit if subletting at market rent

Question 37

If you were to take on the management of a multi-let building not previously managed, what sort of H&S checks would you carry out as part of your due diligence?

Answer 37

Fire Risk Assessment General Risk Assessment Asbestos Management Survey EPC Gas safety certificate Engineering inspection Legionella assessment