Property Management Flashcards
What RICS guidance is there for surveyors operating a service charge?
RICS service charges in commercial property professional statement effective April 2019
Is there any other guidance on service charges is there during COVID-19?
RICS released a guide: RICS advice on service charges during COVID-19
What are the aims and objectives of the RICS service charges ins commercial property professional statement?
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
What is mandatory under the service charges in commercial property professional statement?
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
Can you tell me some of the core principles under the service charges in commercial property professional statement?
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
Can an owner of a service charge budget profit from this?
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.
What guidance is there on dilapidation in Scotland?
RICS guidance note: Dilapidations in Scotland
What is a dilapidation?
A breach of non monetary obligation of lease such as an obligation to repair, reinstate, redecorate or comply with statute
What documents would you take with you on a dilapidations inspection?
Lease, any licence for alterations, schedule of condition, plan, any back letters, assignations etc.
What RICS guidance is there for property managers?
RICS professional statement - Real Estate Management 2016
What is the purpose of RICS Real estate management?
Outline the principles that share the culture of fairness and transparency that underpin the activities of real estate managers
What are the 12 principles under the RICS professional statement Real Estate Management?
- Act in an honest, fair transparent and professional manner
- Carry out work with due skill, 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 which are fair and clear, with details of the firms complaints handling procedure
- Do the utmost to avoid conflicts of interest and where they do arise, deal with them openly and fairly
- Not to discriminate unfairly in any dealings
- All communications with clients are fair, decent, clear and timely and transparent
- All advertising and marketing material in honest and truthful
- Any client money is held separately and covered by insurance
- Hold appropriate PII/errors or omissions insurance to ensure a customer does not suffer a 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 assesssments of rent/ selling prices/ financial costs having regard to market evidence and using best professional judgement
- Ensure all meetings, inspections and viewings are carried out in accordance with the clients wishes having due regard to security and personal safety
What specific advice does the real estate management professional statement provide?
Ethics Securing instructions Managing real estate Ending an instruction Safety and security Business management
What is alienation?
Clause contained within a lease that has the provision for transferring part or whole of the lease to another party.
What are the differences between Assignation and Subletting?
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
Why sub-let rather than assign?
- 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
What is the usual provision for an alienation clause?
Either absolute, open or restrictive clause.
Absolute means no provision
Open means openly allowing
Restrictive - subject to some conditions
What actions would you consider when dealing with an application for consent for assignation or sub-letting?
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
When did the recent business rate changes come into effect in Scotland?
April 2020
What are the 3 different tax rates in Scotland?
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
What other changes came in place with regard to business rates from April 2020?
It is now a civil penalty if you fail to give information and penalties for non-compliance are set out in % per time period
What is the current ‘tone date’ to establish rateable value?
April 2015.
When was the last re-valuation?
April 2017
When is the next re-valuation?
April 2023
