Property Management (Level 2 and Level 3) Flashcards
How can you apportion a service charge? (4)
Floor area
Fixed percentages
Rateable value - difficult if RV’s change or are appealed
Weighted floor area - such as a department store in a shopping centre
Service Charge handover arrangements? RICS legislation
RICS Information paper on Commercial Property Handover Procedures, 2015
How do you benchmark service charges?
To ensure that operational standards are checked against an industry used index
Use OSCAR (Office Service Charge Analysis Reports) (JLL)
What is the difference between a sinking fund and a reserve fund?
Sinking fund - setting aside money for replacement of a wasting asset (plant, m&e or equipment)
Reserve fund - formed to meet the anticipated future costs of maintenance and upkeep
Professionals involved in the management of service charge accounts must act in accordance with the following 9 principles (RICS Professional Standard, Service Charges in Commercial Property 2018)
1 All expenditure that an owner/manager intends to recover must be in accordance with the terms of the lease
2 Owners and managers must seek to recover no more than 100% of the proper and actual costs
3 Must ensure that service charge budgets, including commentary are issued annually to tenants
4 Must ensure that an approved set of service charge accounts showing an accurate record of actual expenditure are provided annually to all tenants
5 Service charge apportionment matrix for their property is provided annually to all tenants
6 Service charge (including reserve or sinking funds) monies must be held in one or more discrete bank accounts
7 Interest earned on service charge accounts must be credited to the service charge account after appropriate deductions have been made
8 Where a dispute exists, any service charge payment withheld by the tenant must reflect only the actual sums in dispute
9 Any service charge that has been raised incorrectly must be adjusted to reflect the error without undue delay
When would an LTA be required?
If Landlord consent is required to undertake works
Why would you want a Licence to Alter
A Licence to Alter (LTA) ensures landlord control over tenant alterations, protecting the property’s value and compliance with lease terms. It clarifies permitted works, reinstatement obligations, and financial liabilities, preventing disputes.
An LTA also helps with dilapidations, ensuring the landlord can require the tenant to remove alterations at lease end. It safeguards against insurance risks, planning breaches, and structural damage, while maintaining clear records for future lettings or sales.
What is included in the contents of a rent review memorandum?
Name of landlord and tenant
Address of the property
Date of the lease and rent review
confirmation of the new rent agreed
Signed and dated by both parties
It can also be recorded by an independant experts determination or an arbitrators award or written acceptance of a Calderbank offer or an open letter (not marked “subject to contract”)
What is the process for CRAR? Commercial rent arrears recovery
Minimum 7 days unpaid rent
Minimum 7 days clear warning notice sent by enforcement agent (£75)
Enforement agents visit
2 days to follow before re entry to seize goods
Allow 7 days for sale of goods
Fees must be specified in entry notice
What are the contents of RICS Professional Standard : Property Agency and Management Principles, January 2025?
Introduction
Rules of Conduct
Working with clients
Managing business and staff
What are the contents of RICS Professional Standard : Property Agency and Management Principles, January 2025?
Introduction
Rules of Conduct
Working with clients
Managing business and staff
Which legislation refers to Landlord approval of a Licence for Alterations?
Section 19 of the Landlord and Tenant Act 1927 - Landlord cannot unreasonably withhold or delay.
What does the Landlord and Tenant Act 1927 say about tenant alterations?
If the alterations are considered an improvement, the landlord may be required to pay compensation
When might it be reasonable for a landlord to refuse consent for a licence for alterations?
If works cause a diminution in value
If tenant has previously failed repair covenant
If lease prohibits it
What are the rules regarding statutory demands?
Tenant has 21 days to pay arrears
After this period, the landlord can present bankruptcy/winding up petition to the court if arrears are over £750
What is PPM?
Planned preventative maintenance
To prevent unexpected breakdowns
Routine inspections and servicing
Identifying issues early
What is the difference between a sinking fund and a reserve fund?
Sinking fund - Periodically putting aside money for the replacement of a wasting asset (heating/cooling/air conditioning)
Reserve Fund - A fund formed to anticipate future costs of maintenance and upkeep in order to avoid fluctuations (redecoration)
Why would you include schedules in a budget?
To promote accuracy and fairness
Tenants only pay for services that benefit them
How do you benchmark a budget?
OSCAR - Office service charge analysis reports
Historic budgets and actuals
Comparable properties
Contractor quotes
Inflation and market trends
What are the time restrictions on issuing budgets and reconciliations?
1 month for budgets
4 months for recs (we practice 3 months)
What is a service charge reconciliation and how would you prepare one?
It compares the estimated costs incurred against the actual expenditure of the budget (paid by the tenants)
I would gather the actual costs
Compare these with the estimates
Check invoices
Calculate any shortfall
Issue statements to tenants
What are the quarter days?
25th March, 24th June, 29th September, and 25th December
Where would you seek further guidance on insurance?
The lease
Insurance Act 2016
How is insurance paid on commercial property?
Usually the responsibility of the landlord to recharge the tenant
What are the different types of insolvency?
Administration
Administrator appointed by creditors to RESCUE an insolvent company
Receivership
When the company owes money to a lender. Receiver is appointed by creditors (under Law of Property Act 1925) to release assets and repay debt
Company Voluntary Arrangement (CVA)
Voluntary arrangement with creditors as to how the debts will be settled. Voluntary liquidation/winding up a company.
How would you go about managing an empty building
Notify insurers
Notify my client
Draw down water
Remove combustible materials
Explore options for marketing
Look at Rates responsibility
EPC
Seal up letter box
Arrange security
Undertake Health and Safety and Fire Risk Assessment for the building
Planned maintenance programme
Asbestos register
Squatting
External landscaping
When can the landlord forfeit the lease?
How long does the tenant have before the Landlord can peacefully re enter the property?
If there is a forfeiture clause
For non payment of rent (section 146 notice for any other breach)
This is an aggressive tactic
6 months
What is the timeline for CRAR?
Minimum 7 days unpaid rent
Minimum 7 day clear warning notice served by enforcement agent (£75_
Enforcement agents visit
2 day clear warning notice
Re entry by enforcement agent to seize goods
Allow 7 clear days for the sale of goods
Fees must be specified on the warning note
What are the options for non payment of rent? (8)
Court proceedings
Use rent deposit
Pursue former tenants/guarantors
Serve a statutory demand (21 days)
Commercial Rent Arrears Recovery Scheme
Forfeit the lease
Negotiate a payment plan
Agree another mutually acceptable arrangement
What is the contents of RICS PS Property Agency and Management Principles, January 2025?
Introduction
Rules of Conduct
Working with Clients
Managing business and staff
This is a condensed version of Real Estate Management 2016 and Commercial Property Management in England and Wales 2011
What is included in the RICS Guidance Note Commercial Property Management in England and Wales 2011
Guide to best practice for property managers
Have a process in place to pursue occupiers for defaults in payments
Have arrangements in place to forward sums collected, less deductions on to the landlord
DUTY OF CARE TO THE LANDLORD
What is included in the RICS Guidance Note Commercial Property Management in England and Wales 2011
Guide to best practice for property managers
Have a process in place to pursue occupiers for defaults in payments
Have arrangements in place to forward sums collected, less deductions on to the landlord
DUTY OF CARE TO THE LANDLORD
What are the main principles of the RICS PS Real Estate Management 2016
Act in an honest, fair, transparent and professional manner
Carry out work with due care, skill and diligence
Ensure TOE are fair with details of CHP
Avoid COI
Not to discriminate
Hold appropriate PII
Client money to be held separately
All communication is fair decent and clear
What are the main principles of the RICS PS Real Estate Management 2016
Act in an honest, fair, transparent and professional manner
Carry out work with due care, skill and diligence
Ensure TOE are fair with details of CHP
Avoid COI
Not to discriminate
Hold appropriate PII
Client money to be held separately
All communication is fair decent and clear
Tell me about a contract you have set up with an external service provider?
I set up a cleaning contract for a multi-let office building
I reviewed the scope of works and the termination clauses
I acquired competitive tenders and recommended the best value provider
I signed the contract with clear service level agreements
Tell me about a reactive/proactive management plan you have set up
I noted that a lift kept on breaking at one of the buildings that I manage
I discussed this at length with the FM and recommended scheduling monthly PPM checks.
I also recommended retendering the lift contract
Service Charge Budget - High Holborn
Can different leases charge for different elements of a service charge? What is the RICS guidance on this?
Yes
RICS Professional Statement: Service Charges in Commercial Property (2019)
Service Charge Budget - High Holborn
How do you charge your time in managing a service charge provision?
Talk me through the cost analysis?
I note down the hours per month that I spend on each of my clients portfolios
We have a fixed management fee with each client in each Property Management Agreement and this can be renegotiated if more time is spent on a portfolio than anticipated.
Service Charge Budget - High Holborn
How do you ensure tenants are getting best service and value?
Retender contracts regularly
Negotiate contracts
Benchmark against the market to maintain competitive pricing
Wayleave - Office, Cheapside
What is a wayleave?
It is a legal agreement that allows a telecommunications company the right to install and operate their apparatus at a property.
Between telecoms company and landlord
Wayleave - Office, Cheapside
What surveying was undertaken in this transaction to apportion a fee?
Inspection
Reviewing the lease terms
Provide recommendations to my client in the form of a recommendation proforma
To approach the solicitor and building surveyor
Wayleave - Office, Cheapside
How did the matter conclude and would you advise the installation is better for your client’s asset?
Removal of wayleave at the end of the term.
It had little effect on my client’s asset as the connection was to be removed at the expiry of the lease.
How have you advised on the preparation and presentation of reports relating to property management?
Make sure quarterly reports are clear and understandable
That they include key issues and issues that are important to the client
Tailored to each client
Use of graphs and figures to highlight rent and service charge collection
How have you dealt with disputes?
How have you provided recommendations on the ADR options available?
I have dealt with disputes by carefully listening to both parties, identifying the core issues, and seeking to resolve them through clear communication and negotiation.
If negotiations break down, I advise clients on alternative dispute resolution options such as mediation, arbitration, or expert determination.
What necessary actions have you taken to protect your clients position? i.e when a dispute arises.
Reviewing lease terms
Monitoring key dates for rent reviews and lease renewals
I also ensure that there is appropriate legal documentation in place for alterations (licences etc)
Licence to Alter, Portobello Dock
How did you establish that the works were structural?
I checked the lease and reviewed the scope of works
The Building Surveyor reported that the works would penetrate into the buildings fabric.
The charger was mounted to the wall of the building
Licence to Alter, Portobello Dock
You advised that the costs should be recovered via the tenant. Why was this?
Would you advise that the installations could be an improvement?
As they only benefitted the tenant.
Yes, they could also be an improvement but also there was also a provision in the LTA for these to be removed at lease expiry
Outstanding Arrears, Portobello Dock
What are the requirements under RICS Real Estate Management for rent arrears?
You should ensure that you have an efficient system to monitor rents collected and those that go into arrears, with standard letters chasing payments not received.
You should monitor closely whether rents are received when due and, if not, communicate promptly with the tenant.
Keep your client informed in writing of any significant arrears situation as soon as practicable; advise legal protection insurers of the situation, if cover has been arranged.
Outstanding arrears, Portobello Dock
What did you advise in terms of recovery?
What are the options available to the landlord?
Charging interest on late payment
Options available:
friendly reminder
rent deposit
charge interest
CRAR
pursue guarantor
Serve statutory demand
negotiate payment plan
forfeit the lease
How does a tenant in arrears impact a clients portfolio?
Reducing cash flow
potentially lowering the property’s value
increasing the risk of further financial instability or vacancy.
may also lead to additional administrative and legal costs in recovering the arrears.
What are dilapidations?
Breaches of a tenant’s lease obligations relating to the condition of the property, typically involving disrepair, lack of maintenance, or failure to reinstate alterations.
What is forfeiture?
The Landlords right to regain possession of the premises and to bring the lease to an end
What are the 3 stages of a planned maintenance programme?
Cyclical
Preventative
Responsive
What is a notice to repair?
Served by a Section 146 Notice under the Law of Property Act 1925
Notice served in writing during the lease
Tenant must repair as per lease obligations
What must be included in a notice to repair
Details of the repairing breach
Timescale for remedy
Course of action if Tenant fails to remedy
What are the 4 main options open to a landlord to consider to deal with a tenant who is not fulfilling their repairing obligations?
Serve a repair notice
Forfeit the lease
Serve interim schedule of dilapidations
Do the work themselves and charge the tenant - Jarvis vs Harris
How would you terminate the lease by forfeiture?
Landlord would peacefully re enter the property
Initiate court proceedings to recover possession
Terminate the lease immediately
When can a Landlord peacefully re enter a property?
When any rent is unpaid for 21 days after becoming payable
Act of insolvency
Any material breach of the lease
What are CPSE’s. What do CPSE1 and CPSE 3 relate to?
CPSE’s are a set of standard questions used to gather essential information when leasing or managing commercial properties. They’re typically completed by the seller or landlord when selling or leasing a property and are part of the due diligence process.
CPSE 1 - General Information about the Property:
Boundaries, rights, and any restrictions that might affect the use or transfer of the property. It’s a general overview of the property’s condition and legal standing.
CPSE 3 - Tenancy Details:
Provides information on the current tenancy situation, such as rent details, tenant obligations, lease terms, and whether there are any ongoing disputes or claims regarding the tenants or property. This helps in assessing the financial viability of the property.
When should service charge accounts be reconciled?
Annually
What are some of the core duties of a property manager?
Collection of rent, service charge and other sums owed by the tenant to the Landlord
The management of the property
Health and Safety
Procurement of suppliers
What are the updates of the new service charge code?
Old version was a guidance note - this is mandatory
The inclusion of 9 mandatory obligations for RICS Members and firms including:
Transparency of costs
Service charges issued annually
Procuring quality service standards to ensure value for money
What are the 11 subsections of Service Charges in Commercial Property 2018?
- Service Costs
- Allocation and apportionment
- Communication and consultation
- Duty of care
- Financial Competence
- Occupier responsibilities
- Right to challenge
- Alternative dispute resolution
- Timelines
- Transparency
- Value for money
What is PPM (planned preventative maintenance)?
What are the main types?
Scheduled maintenance routine prepared by building surveyor to forecast future repairs needed
Cyclical, preventative, responsive
What is a reserve fund?
A fund formed to meet anticipated future costs of maintenance and upkeep.
Useful for major works and unexpected expenditure
What 3 things need to be taken into account when involved in 3rd party procurement?
Tender works to at least 3 different contractors
Contractors must be safe and accredited
Contractors should be from an approved suppliers list
What would you do if a tenant becomes insolvent?
Would you accept keys?
Notify Landlord
Check the lease to see if there is a guarantor or rent deposit
Make an early contact with the administrator/ receiver and register claim for arrears
Inform insurers
Ensure property is secure
Prepare schedule of dilapidations
Forfeit lease or seek court order to terminate
Consent to assignment if option
- Would not accept keys as this would constitute as surrender
How would you handover upon sale or change in managing agent?
Is there any RICS guidance on this?
Complete interim service charge reconciliation
Send a copy of the budget over
Arrange a meeting with the new owner/managing agent
There is an RICS information paper on Commercial Property Handover Procedure 2015
What is a warranty?
A written agreement promising to repair/replace an item within a set time period
What is TUPE?
Transfer of undertakings (protection of employment)
Applies to people who provide a service at a property
protects employees and allows them to transfer over to new employer
What insurance does a Landlord typically have?
Property owner liability insurance
Loss of rent insurance
Loss of service charge insurance
Other insurance that is recharged to tenant includes - engineering insurance, building insurance, public liability insurance
Are you aware of any updates to RICS Service Charges in Commercial Property?
Currently in the consultation phase - updates on ESG and sustainability
How would you charge interest on late payment? (Portobello Dock)
What is the current base rate?
Charge interest when the debt crystalises.
4.5%
What RICS Property Management Documents are you aware of?
RICS Professional Standard Real Estate Management 2016
RICS Guidance Note Commercial Property Management in England and Wales 2011
RICS Professional Standard Property Agency and Management Principles 2025
RICS Professional Standard Service Charges in Commercial Property 2018
How could you chase for service charge arrears?
Send a letter before action (LBA)
Forfeit the lease
Issue court proceedings
What is PPM?
What are the types?
How can it be helpful?
Planned preventative maintenance
Cyclical, preventative and responsive
Can avoid spikes in service charge expenditure over a number of years
What are the three types of insolvency?
Administration - Administrator is is appointed by creditors to rescue an insolvent company - administrator devises a strategy of rescue route
Receivership - Receiver is appointed when a company defaults on payment - their job is to release assets to repay debts
Company Voluntary arrangement - voluntary agreement with creditors as to how the debts will be settled, winding up of a company, bankruptcy
When did CRAR come into force?
2014
What is a balancing charge?
The difference between what a tenant has paid on account for service charges and the actual costs incurred by the landlord at year-end.
What is an insured risk?
An event or peril, like fire or flood, that is covered under a building’s insurance policy.
What would you include in Terms of Engagement for a Property Management Instruction?
Parties involved – who is providing and receiving the service
Scope of services – what property management tasks will be done (e.g. rent collection, repairs, service charges)
Fees and payment terms – how much and when the manager will be paid
Professional Indemnity Insurance and Complaints Handling Procedure
Duration and termination – how long the agreement lasts and how to end it
Client responsibilities – what the client must provide or do
Regulatory compliance – RICS standards, data protection, anti-money laundering, etc.
Dispute resolution – how any disagreements will be handled
Name some legislation that Property Managers have to be aware of?
Landlord & Tenant Legislation
Landlord and Tenant Act 1954 – Lease renewals & terminations (commercial).
Landlord and Tenant Act 1985 – Service charges & maintenance standards.
Commonhold and Leasehold Reform Act 2002 – Right to manage & consultation.
Housing Act 1988 – ASTs & tenant rights.
Housing Act 2004 – Licensing of HMOs, housing health & safety rating system.
Leasehold Reform, Housing and Urban Development Act 1993 – Lease extensions.
Health & Safety Legislation
Health and Safety at Work etc. Act 1974 – General duty of care.
Regulatory Reform (Fire Safety) Order 2005 – Fire risk assessments & safety.
Control of Asbestos Regulations 2012 – Duty to manage asbestos.
The Building Safety Act 2022 – Higher-risk building responsibilities.
Environmental & Building Regulations
Environmental Protection Act 1990 – Waste, nuisance, and pollution.
Energy Performance of Buildings Regs 2012 – EPCs & MEES compliance.
Building Regulations (especially Part L) – Energy efficiency & construction standards.
Financial & Conduct Regulations
Money Laundering Regulations 2017 – ID checks & suspicious activity reports.
Bribery Act 2010 – Prohibition of corrupt practices.
Companies Act 2006 – Governance if managing company structures.
Service Charges (RICS Professional Statement) – Fair and transparent management.
Data Protection & Privacy
UK GDPR / Data Protection Act 2018 – Data storage, access & privacy obligations.
