Property Management Flashcards
What is the RICS standard on property management
RICS professional statement: property management, agency and management principles 2024
When did the RICS professional standard on property management come in to effect
1st Jan 2025
What does the RICS professional standard on PM cover
Working with clients
Managing businesses and staff
What is the RICS guidance on PM
RICS guidance note on commercial property management in England & Wales 2011
What does the RICS guidance note cover?
Best practice for commercial property managers
Primary duty of care is to the landlord, the client
How would a tenant know if they can sub-let
Read the lease
Why would a tenant sub-let rather than assign a lease
Requirement of the lease
For part of the demise and not the whole
If the market rent is higher than the passing rent
If the tenant wants to re-occupy in the future
The new party is of a lesser covenant strength
What actions should be undertaken when dealing with an application for consent to assign/sublet
Read the lease
Will the tenant give an undetaking for the surveyor’s and legal costs
Is the proposed rent the MR and/or the same as passing rent
What will be the effect on the investment value of the property
Are there any reasonable grounds for withholding consent to sublet?
What does the Landlord and Tenant Act 1995 relate to
Assignment of leases
When did the Landlord and Tenant Act 1995 come into force
1st Jan 1996
What is the Landlord and Tenant Act about
Abolished privity of contract for new leases
It gives landlords more scope for setting conditions regarding the approval of an assignee
What is an Authroised Guarantee Agreement
The most recent former tenant only to guarantee the lease obligations of the immediate assignee as a voluntary arrangement between the landlord and tenant
There can only be one AGA in place at any time
What is a Section 17 notice
Must be served upon a guarantor within 6 months of the tenant defaulting to require the former tenant who has entered an AGA to pay the arrears
In what situation would a tenant choose not to enter an AGA
If they have a strong covenant, pay an appropriate rent deposit and/or provides a suitable guarantor
What is included in a schedule of condition
Outline repairing obligations
State the remedy and cost of the breach
Loss of rent
Fees + VAT for the claim for surveyors and lawyers
Negotiations conducted on a without prejudice basis until agreement reached
What does the LL and Tenant Act 1927 state about alterations
If a lease prohibits improvements being made to a property without Landlords consent, Section 19 of the act imposes a proviso that such consent cannot be unreasonably withheld
What happens if Section 19 in the Landlord and Tenant Act 1927 have been followed
The landlord may be obliged to pay compensation for alterations that may constitute improvement
What are reasons why a dilapidations settlement wouldn’t be agreed
When the lease isn’t on FRI terms
Reinstatement not required by the landlord
If a schedule of condition limits the repairing liability
If the building is to be demolished
Tenant has gone into administration
What are the four methods of apportionment?
Floor area
Fixed percentages
Rateable value
Weighted floor area
What does not for profit, not for loss mean?
Descriptions of the service charge costs, which are not inflated for profit but also, there is no residual loss left for the owner to pay
What does ICAEW stand for?
The institute of Chartered Accountants in England and Wales
What is a depreciation charge
The ‘cost’ to the owner representing the measure of the wearing out, consumption or other reduction inlife of an asset.
What is an arrears statement?
A transaction list of all unpaid charges demanded
by the landlord from the tenants, collated on a
tenant by tenant basis.
What is on-account service charge
An estimated charge raised in advance and anticipation of the final service charge liability,
calculated from the service charge budget.
What is planned preventative maintenance
PPM is maintenance that is performed purposely
and regularly to keep the fabric, facilities, plant and
equipment of a building in satisfactory operating
condition by providing for systematic inspection,
detection and correction of failures, either before
they occur or before they develop into major
defects
What is a reserve fund
A fund formed to meet anticipated future costs
of maintenance and upkeep in order to avoid
fluctuations in the amount of service charge
payable each year
What is a Retail Price Index
A measure of inflation in the UK published monthly,
or such other comparable national statistics
published from time to time.
What is a sinking fund
A fund formed by periodically setting aside money
for the replacement of a wasting asset
What are void liabilities
The share of the agreed service charge expenditure
for any service charge accounting period that is
attributable to vacant lettable accommodation
What are the key principles outlined in the RICS Professional Statement Real Estate Management 2016
- Act in an honest, fair, transparent and professional manner
- Carry out wok with due skills, care and diligence and ensure all staff employed have the necessary skills to carry out their tasks
- Ensure that clients are provided with terms of business that are fair and clear, with details of the firms complaints handling procedure
- Do the utmost to avoid conflicts of interests and where they do arise, deal with them openly and fairly
- Do not discriminate unfairly in any dealings
- All communications with clients are fair, decent, clear and timely and transparent
- All advertising and marketing material is honest and truthful
- Any client money is held seperately and is covered by adequate insurance
- Hold appropriate PII/errors or omissions insurance to ensure a customer does not duffer loss because of a negligent act
- Make it clear the identity of your client and ensure all parties are clear of your obligations to each party
- Give realistic assessments of selling prices/rents/financial costs having regard to market evidence and using best professional judgment
- Ensure all meetings, inspections and viewings are carried out in accordance with the clients’ wishes having due regard to security and personal safety
How are LL and T relationships directed by the terms of a lease?
What is the RICS guidance on service charge
RICS Professional Standard on Services Charges in Commercial Property (2019)
What does the RICS guidance on service charge lay out?
Improve general standards and promote best practice, uniformity, fairness and transparency in the management and administration of services charges
Ensure timely issue of budgets and year-end certificates
What is a licence to alter
How did you determine a licence to alter was required
Reviewed the lease and looked for a clause containing guidance on alterations
What is RAMS and why should it have been provided?
Tenant has to provide RAMS
PM do not review this - goes to a building surveyor
Did you inform your client that the tenant had completed works outside of the Licence to Alter? Before or after remediation?
It would be down to the building management team to inform the client
iHow did you ascertain who’s responsibility it was to cover the cost of repairing the window?
Read the lease
Why was it important to obtain further quotes other than the one first received?
What is best value?
What is the WELL standard and how does it differ to other sustainability accreditations?
What policies did you advise your client on?
How did you inform incoming tenants of their obligations to comply?
Talk me through your Service Charge Budget example on Great Castle Street.
When should reconciliation of service charge be issued?
Within 4 months of the end of the service charge year
What are the headings in a service charge budget?
- Management
- Utilities
- Hard services
- Soft services
- Income
- Interest
- Exceptional expenditure
What are some of the principles included in the service charge professional standard?
- All expenditure that the owner and manager seek to recover must be in accordance with the lease
- O+Ms must seek to recover no more than 100% of the proper costs of the supply of services
- O+Ms must ensure that SC budgets are issued annually to all tenants
- O+Ms must ensure an approved set of SC accounts showing a true and accurate record the actual expenditure constituting the SC are provided annually to all tenants.
What’s included in a SC clause in a lease?
Timing for payment of SC, timing of SC budget issue, apportionment and any clauses for SC caps.
What are the types of apportionment?
- Floor area
- Fixed percentages
- Rateable Value - difficult if RVs are reassessed and changed
- Weighted floor area
How often should SC contracts be put out to tender?
Every 3 years
When did you issue the service charge budget pack?
One month ahead of the beginning of the service charge year.
Why did my client adopt WELL
Part of a suite of standards they were going for - wired score
The client was advised by the letting agents to aim for WELL
WELL vs BREEAM - What’s the difference
BREEAM is more physical in the products and materials
WELL is more holistic
What initiatives did i implement to achieve the standard
Is WELL a benefit to the tenant
Do the tenants want WELL
What are green leases
What is RAMS
PM need to ask for this from the tenant if they want to do a LTA - Minimum of 72 hours before works begin
How they are going to do it and is it going to be done safely
