Property Management Flashcards
What RICS guidance is there on service charges?
RICS PS on Service Charges in Commercial Prop 2019
can an owner profit from service charges?
No
- How would you prepare a service charge for a client?
Procure all landlord services in the lease in a best value for money fashion, not the cheapest services.
-Budget to be agreed with tenant prior to the commencement of year.
-annual accounts prepared at year end.
-balancing payment made at the end of the year upon presenting audited accounts.
What happens to interest on SC accounts?
Must be credited to account
How are management fees for SC calculated?
fixed fee
how is service charge apportioned?
usually psf
rateable value
fixed percentage
weighted floor area
what is a sinking fund?
For replacement of a wasting asset, ie a lift.
what is a reserve fund?
For meeting the anticipated costs, of maintenance.
Are there time restrictions on sending the service charge budgets to the tenants?
budgets need to be sent one month in advance
When did RICS Pro Statement on Service Charges become effective?
2019
Can you name some uninsured risks?
flood risk
why do you need a RCA?
to insure the property against full cost of rebuild in the case of damage, equal too the previous building.
where can you find the insured risks?
In the lease
how is insurance organised and paid?
landlord insures and charges to tenant normally by way of insurance rent.
Insurance rent to cover the cost of BUILDING INSURANCE proportion to tenant.
what are the english quarter days?
25 march, 24 june, 29 sept, christmas day
what is a schedule of condition? when would you use one?
attached to lease with photos and text to limit TENANTS repairing obligations upon yield up
How would you deal with the management of an empty property?
- arrange insurance telling them its empty
-cut off power, turn radiators to frost.
-inform local authority for payment of empty rates
-think about security
-maintain asbestos register
-remove flammable material
what floor area basis are RCA’s calculated
normally GIA in line with BCIS
would you collect rent on a tenant holding over?
no, could create security of tenure
what law deals with insurance?
Insurance Act 2016
What are the two main purposes of a license to alter?
protect parties at rent review, protect parties at dilaps
what is that main legislation relating to applications for alterations? and what does it say?
Landlord and Tenant Act 1927, specifies under leases landlords cannot unreasonably withhold consent for improvements
can you tell me about a time that you have advised a client in relation to a request for alterations?
is there any RICS guidance that deals with alterations?
RICS guidance note on alterations 2013
What insurance should a building have?
Insurance against damage, including loss of rent. And public liability insurance
How should a property manager manage contracts with third party suppliers?
Contract would be between landlord and tenant. PM to ensure they hold a copy, and are stated at agent to landlord.
What should a property manager do when landlord stops paying rent.
Notify landlord immediately and discuss sensible approach forward.
When was the most recent business rates valuation?
April 23 based on RV from April 21
What other things to property managers do?
Rent reviews
Disposal strategy’s
Dilaps advice
Can you talk me through your service charge example?
- Service charge for a multi-let asset of three tenants.
-I read each of the leases to find out what the services were.
-I prepared a budget using the costs from a pre-procured service provider.
-I apportioned these for each tenant and sent the budget and apportionment schedule to the tenant ahead of the service charge year. - As the draft budget exceeded the ‘maxmimum’ cost I applied the RPI multiplier.
-I advised the landlord they would need to make up the shortfall.
Why might a landlord want to restrict alterations?
-maintain investment value
-maintain rental value
-leave themselves liable to building regs
- could harm structural integrity
what dispute resolutions are recommended for service charge?
independent expert
mediation
What is a service charge shortfall?
can occur if landlord has voids, or cannot recover 100% of the cost, or it is capped.
When would rent be overdue?
Anything after the payment date.
How could you advise an occupier in relation to service charges?
Advise them to request an index linked cap.
What legal regulation is there any relation to service charges?
None
what is the difference between direct debit and standing order?
direct debit is money going out controlled by the service provider, is notified and can be cancelled
standing order is money going out controlled by you.
How should a property manager deal with rent deposits?
As per the rent deposit deed, usually in a separate interest bearing account.
when would it be reasonable to withhold consent for tenant alterations?
lowers value, prohibited in lease, failed repairing covenant.
What did CRAR replace?
Ancient law of distress
How would you CRAR someone
After 7 days unpaid rent, you give 7 days notice of CRARing. Then the enforcement officer does inventory. 2 clear days follow. Then seize goods. Then allow 7 days before sale.
Explain privity of contract?
For leases before 1996, the original tenant no matter how many assignments was always on the hook.
How would you use a rent deposit?
Landlord draws down on it and tenant tops it up.
How would you use an AGA
If arrears are less than six months old, if lease has been assigned could claim from previous tenant. Although they have a right to ask for overriding lease.
How long is empty rate relief for shops and offices?
3 months
How long is empty rate relief for industrial?
6 months
What property’s can you not CRAR?
Anything with resi in it
What goods can you not CRAR
anything essential to the landlords running of a business, or is on a finance plan.
What are dilapidations?
when a tenant doesn’t uphold their repairing covenant in the lease.
how are dilaps claims calculated?
either the diminution value of the property (difference in value of the property upon possession had it not been in good repair) OR cost of the works.
What if the landlord proposes redevelopment?
the value of reversion would be nil, no dilaps.
What are the three schedules of dilaps?
interim- with at least three years of lease remaining.
terminal- less than three years.
final- at end of lease, or at the break.
How does a Stat demand work?
Serve on tenant if the level of arrears is known, then they have 21days to pay. then the landlord can present a winding up petition if the company still hasn’t paid.
Was there any special relief for tenants during covid?
Commercial Rent (coronavirus) act 2022, which stopped landlords pursuing tenants for any debts which fell in the ring fenced period.
would you advise a client in relation to dilapidations?
No I would always advise my client that they sought the advice of a building surveyor.
What are the four remedies for breach of repair?
- Section 146 notice under the Law of Property Act 1925
- Forfeiture, also section 146 notice in the lease.
-Jervis and Harris clause- landlord can undertake the works and reclaim the cost as debt.
-Serve interim schedule of dilaps if three years left on the lease
What does the Real Estate Management Professional Statement say in essence?
Underpins the mandatory ethical behaviours of a property manager.
what does the service charge professional statement do?
Sets out mandatory best practice for the administration of service charges?
What can you tell me about Professional Statement on Real Estate Management 2016
Underpins the principles and ethics of a property manager?
Can you tell me how you abide by the principles set out in the real estate management statement?
-acting fairly
-avoiding conflicts
-providing terms of business.
-making sure meetings and inspections are carried out in accordance with client wishes.
-client money separately held.
-hold PII cover.
- give realistic assessments of costs
Can you tell me about the Property Management Guidance note?
Gives guidance on beat practice in property management in CONJUNCTION with client money statement, and service charges.
