Property Management Flashcards

1
Q

What RICS guidance is there for surveyors operating a service charge?

A

RICS service charges in commercial property professional statement effective April 2019

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2
Q

Is there any other guidance on service charges is there during COVID-19?

A

RICS released a guide: RICS advice on service charges during COVID-19

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3
Q

What are the aims and objectives of the RICS service charges ins commercial property professional statement?

A

To improve general standards and promote best practice, uniformity, fairness and transparency in the management of service charges

Ensure timely issuing of year end budgets

To reduce the cause of disputes and to provide guidance where these do arise

Provide advice to clients, managers and solicitors on management of service charges

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4
Q

What is mandatory under the service charges in commercial property professional statement?

A

All expenditure that the owner or manager seeks to recover MUST be under the terms of the lease

Owners and Managers must seek to recover not more than 100% of the proper and actual costs of the provision or supply of the services

Owners and managers must ensure budgets are sent annually to each tenant

Owners and managers must ensure that an approved set of service charges accounts showing a true and accurate record constituting the expenditure is provided to all tenants

Owners and managers must ensure that a service charge apportionment matrix for their property is provided annually to all tenants

Service charge monies must be held in one or more discrete bank accounts

Interest must be credited into the account

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5
Q

Can you tell me some of the core principles under the service charges in commercial property professional statement?

A

The service costs - should be transparent so that everyone involved can clearly understand costs

Costs and apportionment - costs should be allocated to the relevant expenditure category.

Communication and consultation - to provide best service and ensure clarity around the work being done and the benefit.

Duty of care - those certifying accounts have a duty of care to act with professionalism and set clear policies on how this should be managed.

Right to challenge/ADR - should be available.

Timeliness - in communication and preparation of budgets/ end of year reconciliation

Value for money - owners/ managers should seek to achieve best value

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6
Q

Can an owner of a service charge budget profit from this?

A

No, but they can charge reasonable costs for management. Again this must be the actual cost incurred for management. Management fees should be on a fixed price basis.

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7
Q

What guidance is there on dilapidation in Scotland?

A

RICS guidance note: Dilapidations in Scotland

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8
Q

What is a dilapidation?

A

A breach of non monetary obligation of lease such as an obligation to repair, reinstate, redecorate or comply with statute

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9
Q

What documents would you take with you on a dilapidations inspection?

A

Lease, any licence for alterations, schedule of condition, plan, any back letters, assignations etc.

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10
Q

What RICS guidance is there for property managers?

A

RICS professional statement - Real Estate Management 2016

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11
Q

What is the purpose of RICS Real estate management?

A

Outline the principles that share the culture of fairness and transparency that underpin the activities of real estate managers

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12
Q

What are the 12 principles under the RICS professional statement Real Estate Management?

A
  1. Act in an honest, fair transparent and professional manner
  2. Carry out work with due skill, care and diligence and ensure all staff employed have the necessary skills to carry out their tasks
  3. Ensure that clients are provided with terms of business which are fair and clear, with details of the firms complaints handling procedure
  4. Do the utmost to avoid conflicts of interest and where they do arise, deal with them openly and fairly
  5. Not to discriminate unfairly in any dealings
  6. All communications with clients are fair, decent, clear and timely and transparent
  7. All advertising and marketing material in honest and truthful
  8. Any client money is held separately and covered by insurance
  9. Hold appropriate PII/errors or omissions insurance to ensure a customer does not suffer a loss because of a negligent act
  10. Make it clear the identity of your client and ensure all parties are clear of your obligations to each party
  11. Give realistic assesssments of rent/ selling prices/ financial costs having regard to market evidence and using best professional judgement
  12. Ensure all meetings, inspections and viewings are carried out in accordance with the clients wishes having due regard to security and personal safety
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13
Q

What specific advice does the real estate management professional statement provide?

A
Ethics 
Securing instructions
Managing real estate 
Ending an instruction
Safety and security
Business management
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14
Q

What is alienation?

A

Clause contained within a lease that has the provision for transferring part or whole of the lease to another party.

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15
Q

What are the differences between Assignation and Subletting?

A

Assignation - transfer of lease in full is passed on to incoming party who has direct relationship with Landlord

Sub-let - relationship stays with the tenant, who hold the relationship with the Landlord

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16
Q

Why sub-let rather than assign?

A
  • Requirement under lease
  • for part of the demise, not whole
  • profit rent
  • tenant wants to re-occupy in future
  • new party is of a lessor covenant strength
17
Q

What is the usual provision for an alienation clause?

A

Either absolute, open or restrictive clause.

Absolute means no provision
Open means openly allowing
Restrictive - subject to some conditions

18
Q

What actions would you consider when dealing with an application for consent for assignation or sub-letting?

A

Legal costs?
Proposed rent?
What will the investment value impact be?
Terms of lease? And reasonable grounds for withholding consent
What is the strength of the covenant?
Has a rent deposit been agreed?
Client will need to be provided with recommendation report
Obtain client approval to proceed
Licence for assignment/ subletting will be required

19
Q

When did the recent business rate changes come into effect in Scotland?

A

April 2020

20
Q

What are the 3 different tax rates in Scotland?

A

Basic = 49.8p to the £1

Intermediate = 51.1p to the £1 for businesses with a rateable value between £51,001 and £95,000

Higher = 52.4p to the £1 for businesses with an rv more than £95,000

21
Q

What other changes came in place with regard to business rates from April 2020?

A

It is now a civil penalty if you fail to give information and penalties for non-compliance are set out in % per time period

22
Q

What is the current ‘tone date’ to establish rateable value?

A

April 2015.

23
Q

When was the last re-valuation?

A

April 2017

24
Q

When is the next re-valuation?

A

April 2023

25
Q

What are the relief provisions for empty properties?

A

50% for first 3 months they’re empty and 10% thereafter

Industrial get 100% relief for first 6 months then 10% thereafter

100% relief for empty properties which are listed and have a rateable value under £1,700

26
Q

What are the best practice recommendations for issuing and reconciliation of service charge budgets?

A

Issuing: atleast one month in advance

Reconciliation: within four months of year end

27
Q

What do you do when a property gets handed back vacant?

A

Make sure it’s secure
Take regular meter readings
Advice insurers and comply with their requirements for inspections
Regular inspections
Make sure local authority are updated with regards to rating liability
Agree strategy with client for either re-letting or disposal

28
Q

What is a service charge?

A

It is a cost incurred by the landlord for the running of the property, charges back to a tenant