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APC commercial pathway > Property Management (level 3) > Flashcards

Property Management (level 3) Flashcards

1
Q

You have approached some of this topic differently than how we would expect

A

Yes well working for a public body I am client side so I am dealing with the same property management issue but acting on the side of my client. I was told by my mentor that this is allowed.

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2
Q

what are the key document I would consider in relation to property management

A
  1. RICS professional Statement on Real Estate Management 2016
  2. Occupiers Liability
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3
Q

what does the RICS professional statement on Real Estate Management 2016 cover

A
  1. it covers 12 principles that promote fairness and transparency for all activities that underpin property management
  2. covers both commercial and residential property management
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4
Q

can you tell me some of the 12 principles you should demonstrate when acting as a property manager

A
  1. being honest, fair, transparent and professional
  2. ensuring the terms are agreed, including CPH
  3. ensuring there are no conflicts of interest
  4. ensure all communications with clients are fair, clear and communicated on timely
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5
Q

what area of advice does the RICS professional statement on Real Estate Management cover

A

1.Ethics- duty of care, CoI
Securing instructions- ToE and CHP
2.New lettings and lease renewals- general principles for negotiating HoT
3.Management of Real Estate-collecting rent, repairs, insurance and service charge
4.Portfolio of Estate management- performance measurement
5.Ending Instructions- written confirmation and handover of info
6.Safety and Security - confidentiality and GDPR and H&S
7.Business Management- advertising services, PII, holding client money

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6
Q

What does an alienation cover

A

Alienation is the general term for the tenant’s ability to deal with the lease. Most commonly, this will refer to the tenant’s ability to either;

  1. assign the lease
  2. sublet whole or part of the property
  3. share occupation of the premises
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7
Q

What does an alienation cover

A

Alienation is the general term for the tenant’s ability to deal with the lease. Most commonly, this will refer to the tenant’s ability to either;

  1. assign the lease
  2. sublet whole or part of the property
  3. share occupation of the premises
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8
Q

Why might a tenant choose to sublet instead of assign

A
  1. the lease only allows for this
  2. there is a profit to be made if the market rent is higher than the passing rent
  3. they intend on reoccupying the building
  4. might only wish to sublet part of the building
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9
Q

what types of alienation clauses might you see

A
  1. Open- allowing alienation
  2. qualified- subject to some conditions
  3. absolute- not allowing subletting or assignment
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10
Q

what conditions might you expect to see in an alienation clause

A
  1. a common restriction is to prohibit the tenant assigning part of the lease but allow the the tenant to assign the whole lease subject to their permission
  2. a tenant could be asked to provide a guarantee for any assignee under the alienation clause. This will last the duration of the lease.

(there is usually a clause to say that the landlord will not unreasonably uphold or delay and requests)

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11
Q

what might I consider when undertaking an application for Alienation

A
  1. RTL
  2. will the tenant take responsibility for the legal and surveying costs
  3. review if the passing rent is the same, more or less than the market rent
  4. review how it might effect the investment value of the property
  5. Consider the terms of the lease. Are there any reasonable grounds for withholding consent
  6. Consider the strength of the new lease. Are there accounts and references to consider
  7. has a deposit been agreed. Is an AGA a requirement of the alienation clause
  8. provide report setting out recommendation
  9. obtian clients approval
  10. If granted I would then need to a license for assignment or sub letting
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12
Q

What does a dilapidations clause relate to

A

This relates to the repairing liability. Thee negotiations tend to take place at lease expiry to bring the property back to it original condition. The tenant may choose to do the work or the landlord may do it and claim the money.

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13
Q

what are the three different types of schedules for a dilapidations clause

A
  1. intermin- served during lease with more than 3 years remaining
  2. terminal - served before the lease expiry with up to 3 years remaining
  3. final- served at lease expiry
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14
Q

what should a dilapidation schedule contain

A
  1. outline repairing obligation
  2. state remedy and cost of breach
  3. loss of rent if appropriate
  4. fees and vat position for surveyors and solicitors
  5. if no agreement is reached an ADR method.
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15
Q

What should I consider when served with a repairing schedule

A
  1. RLT
  2. check if licenses/leases were altered at all
  3. read the schedule
  4. consider the dilapidations protocol 2012
  5. was schedule served within 56 days of expiry and tenant must respond within 56 days of receiving it.
  6. RICS guidance note on dilapidations
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16
Q

In what scenario might a dilapidations claim not be agreed?

A
  1. lease isnt on full repairing terms
  2. Schedule of conditions limits repairing liability
  3. if the landlord intends to demolish or fully refurb
  4. Tenant has gone into administration
  5. If the lease is extended and the landlord and tenant agree to roll over repairing obligations to such time.
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17
Q

What are the responsibilities of a property manager dealing with an empty building

A
  1. ensure appropriate insurance- eg tell insurers its empty
  2. Maintain building/ get EPC
  3. Maintain asbestos register
  4. carry out regular inspections
  5. ensure building is well secured to prevent trespassing/arson etc
  6. inform local rating authority
  7. arrange for power and services to be isolated
  8. agreement of disposal and marketing strategy
18
Q

What should you consider when it comes to building insurance

A
  1. usually the responsibility of the landlord to arrange and re-charge the tenant
  2. covers for reinstatement of the building for variety of things like fires, floods, robbery, public liability etc)
  3. the basis of measurement for building reinstatement is done on GIA for commercial properties
  4. regular revaluations should be taken
  5. Insurance act 2016-key law aimed to help reduce claims
  6. only registered members of RICS can now deal with insurance
19
Q

what documents would I consider when it comes to insurance

A
  1. Insurance Act 2016

2. RICS guidance note on insurance for commercial property management

20
Q

what are the two fundamentals of rent payment

A
  1. timing

2. accuracy of data

21
Q

What are the two fundamentals of rent collection/payments

A
  1. accuracy

2. timing

22
Q

What is the standard interest rate for rental arrears

A

usually about 2-4% above the bank base rate

23
Q

what things should you consider when dealing with rental arrears

A
  1. RTL- what process is in place? is there guarantors
  2. check if rent deposit is in place
  3. interest
  4. advise client promptly before debts accumulate
  5. consider if you wish to gain possession of property again-is passing rent less than market rent?
  6. get legal advice
  7. act promptly
24
Q

what are some remedies for rent default

A
  1. court
  2. use rent deposit
  3. payment plan
  4. garentors
  5. forfeit lease- must be a clause in lease for this
  6. commercial rent recovery scheme
25
Q

What is an FRI lease

A

full repairing and insuring lease- this is when the tenant is responsible for the cost of any repairs and maintenance

26
Q

What would you consider when a tenant is not repairing their property

A
  1. serve repair notice
  2. forfiet of lease (only is there is forfeit clause)
  3. serve an interim schedule of dilapidations
  4. do the work and then charge the tenant
27
Q

what would you expect the contents of a repairing clause to contain?

A
28
Q

what should you consider for a notice to repair

A

1.serve notice under section 146 of law and property act 1925

provide the following:

  1. details of repairing issue
  2. timescales for action
  3. action if tenant fails to rectify the breach
29
Q

when does the leasehold properties repairing act 1938 applied

A

to leases of more than 7 years with more 3 years till expiry.

The court can enforce repairing if one of the four can be proved:

  1. immediate remedy is necessary to prevent property value being effected
  2. immediate remedy is needed to comply with leg
  3. the tenant does not occupy all of the building and action is required in the interest of others (health and safety reasons)
  4. the breach could be remedied at low cost compared with potential costs if postponed
30
Q

what are the 3 types of planned maintenance

A
  1. Cyclical- regular activities carried out regardless of condition e.g painting, plant maintenance
  2. preventative- depending on condition survey which forecasts works needed e.g window replacement
  3. responsive- remedial work done in response to an issue e.g leak or broken fence etc
31
Q

what is the different before a schedule of conditions and a schedule of dilapidation

A

The Schedule of Condition is a complete record of the condition of the property on a particular date that can be used as a benchmark against which its condition can be assessed in the future and any changes identified.

A Dilapidation Report is used at the end of a tenancy to assess any repairs required to reinstate the premises to the condition it was in at the beginning of the tenancy. This is prepared based on the repairing conditions clause contained in the lease.

32
Q

when and why is a schedule of condition prepared

A

prepared prior to commencement of the lease. Allows for a benchmark for assessing repairs needed throughout the duration of a lease. Limits repairs to only whats in the schedule. often documented with photos.

33
Q

what is a service charge

A

charges to a tenant of a multi-tenanted property or estate of costs incurred by a landlord to maintain or manage property

34
Q

what would you expect for service charges

A

1.quaterly billing- 28 February, 28 May, 28 August and 28 November.
2.a service charge budget to be agreed with tenant prior and quarterly billing based on this
3.service charge caps perhaps
4.

35
Q

what is the key guidance on service charges

A

RICS service charges for commercial properties 2018- professional statement so must follow. This sets out the core principles for handling service charges

36
Q

what are some of the core principles you should adhere to when dealing with service charges

A
  1. cost of service charge- should be transparent, non profitting etc
  2. communciation and negation- respond timely
  3. tenant obligation- pay timely
  4. duty of care- on both sides to manage property and to take care of property
37
Q

what do you consider when dealing with service charges?

A

i would always have regard for the rules set out in the RICS professional statement on service charges for commercial property 2018. This sets out a number of core principles which i would refer to.

38
Q

how are service charges apportioned

A
  1. floor area- using code of measuring practice 2007
  2. fixed percentages
  3. rateable value- gets complicated when rent changes
  4. weight floor area-such as department store in shopping centre
39
Q

what is a sinking fund, reserve fund and depreciation charge

A

sinking fund- money set aside periodically for assets that deprecate over time such as large plant machinery
reserve fund- fund formed to meet any anticipated future costs (decorating, cleaning service)
Depreciation fund- a measure of the wearing out, consumption and other reductions in assets life. This would be included in the service charge to reflect the amount it cost the landlord at installation and not replacement.

40
Q

what do you do if a tenant becomes insolvent

A
  1. tell client
  2. RTL-is there a deposit or previous tenant who is liable
  3. consider legal action before moratorium is in place
  4. check amount of money owed
  5. submit the claim
  6. make contact with administrator
  7. consider schedule of dilap
  8. thinking about empty rates
  9. consider reletting
41
Q

what are the different forms of insolvency

A
  1. adminastration - administrators appointed by creditors to rescue company
  2. recievership - an administrative receiver appointed by creditors to realise assets to pay debt
  3. company voluntary arrangement
  4. voluntary liquidation
  5. bankrupcy

APC commercial pathway (25 decks)

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