Property Management (Level 2 and Level 3) Flashcards

1
Q

How can you apportion a service charge? (4)

A

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

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2
Q

Service Charge handover arrangements? RICS legislation

A

RICS Information paper on Commercial Property Handover Procedures, 2015

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3
Q

How do you benchmark service charges?

A

To ensure that operational standards are checked against an industry used index

Use OSCAR (Office Service Charge Analysis Reports) (JLL)

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4
Q

What is the difference between a sinking fund and a reserve fund?

A

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

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5
Q

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)

A

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

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6
Q

When would an LTA be required?

A

If Landlord consent is required to undertake works

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7
Q

Why would you want a Licence to Alter

A

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.

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8
Q

What is included in the contents of a rent review memorandum?

A

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”)

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9
Q

What is the process for CRAR? Commercial rent arrears recovery

A

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

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10
Q

What are the contents of RICS Professional Standard : Property Agency and Management Principles, January 2025?

A

Introduction
Rules of Conduct
Working with clients
Managing business and staff

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11
Q

What are the contents of RICS Professional Standard : Property Agency and Management Principles, January 2025?

A

Introduction
Rules of Conduct
Working with clients
Managing business and staff

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12
Q

Which legislation refers to Landlord approval of a Licence for Alterations?

A

Section 19 of the Landlord and Tenant Act 1927 - Landlord cannot unreasonably withhold or delay.

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13
Q

What does the Landlord and Tenant Act 1927 say about tenant alterations?

A

If the alterations are considered an improvement, the landlord may be required to pay compensation

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14
Q

When might it be reasonable for a landlord to refuse consent for a licence for alterations?

A

If works cause a diminution in value

If tenant has previously failed repair covenant

If lease prohibits it

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15
Q

What are the rules regarding statutory demands?

A

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

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16
Q

What is PPM?

A

Planned preventative maintenance

To prevent unexpected breakdowns

Routine inspections and servicing

Identifying issues early

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17
Q

What is the difference between a sinking fund and a reserve fund?

A

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)

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18
Q

Why would you include schedules in a budget?

A

To promote accuracy and fairness

Tenants only pay for services that benefit them

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19
Q

How do you benchmark a budget?

A

OSCAR - Office service charge analysis reports

Historic budgets and actuals

Comparable properties

Contractor quotes

Inflation and market trends

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20
Q

What are the time restrictions on issuing budgets and reconciliations?

A

1 month for budgets

4 months for recs (we practice 3 months)

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21
Q

What is a service charge reconciliation and how would you prepare one?

A

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

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22
Q

What are the quarter days?

A

25th March, 24th June, 29th September, and 25th December

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23
Q

Where would you seek further guidance on insurance?

A

The lease

Insurance Act 2016

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24
Q

How is insurance paid on commercial property?

A

Usually the responsibility of the landlord to recharge the tenant

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25
Q

What are the different types of insolvency?

A

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.

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26
Q

How would you go about managing an empty building

A

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

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27
Q

When can the landlord forfeit the lease?

How long does the tenant have before the Landlord can peacefully re enter the property?

A

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

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28
Q

What is the timeline for CRAR?

A

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

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29
Q

What are the options for non payment of rent? (8)

A

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

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30
Q

What is the contents of RICS PS Property Agency and Management Principles, January 2025?

A

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

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31
Q

What is included in the RICS Guidance Note Commercial Property Management in England and Wales 2011

A

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

32
Q

What is included in the RICS Guidance Note Commercial Property Management in England and Wales 2011

A

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

33
Q

What are the main principles of the RICS PS Real Estate Management 2016

A

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

34
Q

What are the main principles of the RICS PS Real Estate Management 2016

A

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

35
Q

Tell me about a contract you have set up with an external service provider?

A

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

36
Q

Tell me about a reactive/proactive management plan you have set up

A

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

37
Q

Service Charge Budget - High Holborn

Can different leases charge for different elements of a service charge? What is the RICS guidance on this?

A

Yes

RICS Professional Statement: Service Charges in Commercial Property (2019)

38
Q

Service Charge Budget - High Holborn

How do you charge your time in managing a service charge provision?

Talk me through the cost analysis?

A

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.

39
Q

Service Charge Budget - High Holborn

How do you ensure tenants are getting best service and value?

A

Retender contracts regularly

Negotiate contracts

Benchmark against the market to maintain competitive pricing

40
Q

Wayleave - Office, Cheapside

What is a wayleave?

A

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

41
Q

Wayleave - Office, Cheapside

What surveying was undertaken in this transaction to apportion a fee?

A

Inspection

Reviewing the lease terms

Provide recommendations to my client in the form of a recommendation proforma

To approach the solicitor and building surveyor

42
Q

Wayleave - Office, Cheapside

How did the matter conclude and would you advise the installation is better for your client’s asset?

A

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.

43
Q

How have you advised on the preparation and presentation of reports relating to property management?

A

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

44
Q

How have you dealt with disputes?

How have you provided recommendations on the ADR options available?

A

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.

45
Q

What necessary actions have you taken to protect your clients position? i.e when a dispute arises.

A

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)

46
Q

Licence to Alter, Portobello Dock

How did you establish that the works were structural?

A

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

47
Q

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?

A

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

48
Q

Outstanding Arrears, Portobello Dock

What are the requirements under RICS Real Estate Management for rent arrears?

A

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.

49
Q

Outstanding arrears, Portobello Dock

What did you advise in terms of recovery?

What are the options available to the landlord?

A

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

50
Q

How does a tenant in arrears impact a clients portfolio?

A

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.

51
Q

What are dilapidations?

A

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.

52
Q

What is forfeiture?

A

The Landlords right to regain possession of the premises and to bring the lease to an end

53
Q

What are the 3 stages of a planned maintenance programme?

A

Cyclical

Preventative

Responsive

54
Q

What is a notice to repair?

A

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

55
Q

What must be included in a notice to repair

A

Details of the repairing breach

Timescale for remedy

Course of action if Tenant fails to remedy

56
Q

What are the 4 main options open to a landlord to consider to deal with a tenant who is not fulfilling their repairing obligations?

A

Serve a repair notice

Forfeit the lease

Serve interim schedule of dilapidations

Do the work themselves and charge the tenant - Jarvis vs Harris

57
Q

How would you terminate the lease by forfeiture?

A

Landlord would peacefully re enter the property

Initiate court proceedings to recover possession

Terminate the lease immediately

58
Q

When can a Landlord peacefully re enter a property?

A

When any rent is unpaid for 21 days after becoming payable

Act of insolvency

Any material breach of the lease

59
Q

What are CPSE’s. What do CPSE1 and CPSE 3 relate to?

A

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.

60
Q

When should service charge accounts be reconciled?

61
Q

What are some of the core duties of a property manager?

A

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

62
Q

What are the updates of the new service charge code?

A

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

63
Q

What are the 11 subsections of Service Charges in Commercial Property 2018?

A
  1. Service Costs
  2. Allocation and apportionment
  3. Communication and consultation
  4. Duty of care
  5. Financial Competence
  6. Occupier responsibilities
  7. Right to challenge
  8. Alternative dispute resolution
  9. Timelines
  10. Transparency
  11. Value for money
64
Q

What is PPM (planned preventative maintenance)?

What are the main types?

A

Scheduled maintenance routine prepared by building surveyor to forecast future repairs needed

Cyclical, preventative, responsive

65
Q

What is a reserve fund?

A

A fund formed to meet anticipated future costs of maintenance and upkeep.

Useful for major works and unexpected expenditure

66
Q

What 3 things need to be taken into account when involved in 3rd party procurement?

A

Tender works to at least 3 different contractors

Contractors must be safe and accredited

Contractors should be from an approved suppliers list

67
Q

What would you do if a tenant becomes insolvent?

Would you accept keys?

A

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
68
Q

How would you handover upon sale or change in managing agent?

Is there any RICS guidance on this?

A

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

69
Q

What is a warranty?

A

A written agreement promising to repair/replace an item within a set time period

70
Q

What is TUPE?

A

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

71
Q

What insurance does a Landlord typically have?

A

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

72
Q

Are you aware of any updates to RICS Service Charges in Commercial Property?

A

Currently in the consultation phase - updates on ESG and sustainability

73
Q

How would you charge interest on late payment? (Portobello Dock)

What is the current base rate?

A

Charge interest when the debt crystalises.

4.5%

74
Q

What RICS Property Management Documents are you aware of?

A

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

75
Q

How could you chase for service charge arrears?

A

Send a letter before action (LBA)

Forfeit the lease

Issue court proceedings

76
Q

What is PPM?

What are the types?

How can it be helpful?

A

Planned preventative maintenance

Cyclical, preventative and responsive

Can avoid spikes in service charge expenditure over a number of years