Propery Management - Summary Of Experience Flashcards
Tell me what you know about the RICS Guidance Note on Commercial Property Management in England & Wales, 2011
This guidance note is a guide to best practice for commercial property managers containing a lot of useful information.
It focuses on how a property manager can be efficient, effective and accountable to their client and comply with statue law.
It states that primary duty of care is to the landlord, the client and gives specific advice including property manager’s core duties on rent collection, service charges, managing properties and health & safety.
What is the RICS document on Management and what does it state?
The RICS produced a Professional Statement Real Estate Management, 2016.
This document outlines the principles that share the culture of fairness and transparency that underpin the activities by real estate managers.
It is a mandatory statement and is aimed at both commercial and residential property managers.
What are the 12 principles of the RICS Professional Statement - Real Estate Management, 2016
1) Act in an honest, fair, transparent and professional manner.
2) Carry out work with due skill, care and diligence.
3) Ensure Clients are provided with terms of business that are fair and clear.
4) Do your utmost to avoid conflicts of interests.
5) Not to discriminate
6) Communications with clients are fair,decent, clear and transparent.
7) All advertising and marketing material is honest and truthful.
8) Any client money is held separately and covered by appropriate insurance
9) Hold appropriate PII insurance.
10) Make it clear that identity of your client.
11) Give realistic assessments of prices/rents/financial costs.
12) Ensure all meetings and inspections are carried out in accordance with clients wishes, with regard for personal safety.
Are the RICS doing anything to amend this Professional Statement / Guidance Note?
Yes, the RICS is currently working on a new practical professional standard in both property management and property agency for members and firms in the UK.
What are some of the key factors that drive good landlord and tenant relationships?
Honesty and professionalism
Good and clear communication from the outset.
Good payment of monies due under the terms of the lease.
Quiet enjoyment from landlord.
What are some of the legal requirements for a multi-occupied property?
Both landlord and tenants have statutory obligations which need following and may vary depending on the terms of the lease.
Some of the legal obligations / requirements could include:
- Fire Risk Assessment
- Workplace Risk Assessment
- Fire Evacuation Plan
- Fire Drills
- Electrical Installation Certificate Reports
- Energy Performance Certificates.
- Gas Safety Certificates if applicable
Tell me what you know about Alienation?
In the first instance, it is always appropriate to read the lease before tackling any queries regarding Alienation.
Leases can have an absolute, open or restrictive (qualified) alienation clause:
- Either allowing alienation (open)
- Subject to some conditions (qualified)
- Not allowing a sub-letting or assignment (absolute)
Usual clauses state that the landlords consent is not to be reasonably withheld or delayed.
What are some of the reasons to sub-let, rather than assign the lease?
- Depends on the requirements of the lease.
- Sub-let may relate to part of the demise and not the whole.
- If the market rent is higher than the passing rent (face rent) then there is a profit rent.
- If the tenant wants to re-occupy in the future
- The new party is of a lesser covenant.
What actions are needed to be undertaken when dealing with an application for consent to assign or sub-let?
It again is prudent to read the lease beforehand.
As a surveyor, I would ask myself some of the following questions:
- Will the T give an undertaking for the surveyor’s fees & legal costs.
- Is the proposed rent the market rent and same as the passing rent?
- What is the strength of covenant of the proposed new tenant?
- Has a rent deposit been agreed?
- Is there an AGA clause?
How did you ensure temporary safety of the building (East Ham Example)?
I actually attended site myself as soon as I heard about the break in and was in attendance until the contractors turned up which was approximately 1.5 hours. I ensured the CCTV was working (which is was,) occupiers were aware.
How often do Flue Cleaning Certificates (TR19) need to be produced?
Flue Cleaning Certificates are mandatory and can be a very severe risk if not treated properly.
The advice is that if you are a busy kitchen then cleaning should be undertaken every 3 months, less busy establishments need to be cleaned every 6 months.
Tell me what you know about the Landlord & Tenant (Covenants) Act 1995?
- This act relates to the assignment of leases.
- Came into force on 1st January 1996
- The Act abolished privity of contract for new leases.
- It gave landlords more scope for setting conditions regarding the approval of an assignee.
- It introduced Authorised Guarantee Agreements (AGA’s) for the most recent former tenant to guarantee the lease obligations of the immediate assignee as a voluntary arrangement to be agreed.
What do you know about Licence for Alterations?
- A Licence To Alter needs to be completed before the works commence.
- Has two useful functions: to protect the parties at rent review and dilaps at the end of the lease.
- The Licence must clearly document the works agreed.
Why did you advise for the tenants to send you their flue certificates?
I advised this so we had document records and evidence that tenants had their certificates. This led us to be able to manage this more effectively by creating a schedule of when specific tenants certificates were due to expire. This led us to be able to stay on top of the situation.
Tell me what you know about dilapidations?
In the first instance, a surveyor should always read the lease.
The negotiations take place at the lease expiry to bring the property back to its condition at the start of the lease assuming there is a repairing liability.
There are THREE forms of Dilaps Schedules.
What are the THREE forms of dilaps schedules?
1) Interim Schedule - served by the landlord or tenant during the lease, with at least 3 years remaining.
2) Terminal Schedule - served normally in last 3 years of the lease.
3) Final Schedule - served at or after the lease expiry / break clause date when the tenant is out of occupation and the landlord wants to agree a claim for damages.
What is typical format of a schedule of dilaps?
- Outline repairing obligations
- State the remedy and cost of the breach
- Loss of rent, if appropriate over period to do the works.
- Fees + VAT for the claim for surveyors and lawyers.
- Negotiations conducted on a without prejudice basis until agreement reached.
- If agreement not reached, landlords surveyors may be required to prepare a Scott Schedule for the Court, setting out a summary of the landlords and tenant’s position.
What does the RICS Guidance Note on Dilapidations, 2016 aim to do?
This document aims to reduce claims between landlord and tenants. Some key points include:
- Substantial guidance on diminution valuations.
- Relates to interim and final claims in commercial property.
- Emphasises the importance of a careful and considered estimate of loss.
- Both parties are kept to the agreed timescales.
What are the reasons why a Dilaps Settlement is not agreed?
- When the lease is not on full repairing terms.
- Reinstatement is not required by the landlord.
- If a Schedule Of Condition limits the repairing liability.
- If the building is to be demolished.
- Tenant may have gone into administration.
- Agreement between L & T to roll over the claim.
Tell me what you know about Insurance in relation to Property Management?
- Insurance is usually the responsibility of the landlord to arrange and then re-charge the tenant based on a percentage in accordance with the lease.
- Covers fire, storm, flood, subsidence, loss of rent and service charge, theft, terrorism, public liability etc)
- Insurance Act 2016 is the key law.
- The RICS became a Designated Professional Body for insurance matters in February 2005.
What actions may you need to take in respect to an Empty Property?
- Notify Insurers.
- Obtain an EPC
- Clear the building of any combustible material.
- Undertake and record regular inspections.
- Seal up letterbox.
- Arrange security and decommission services.
What are the TWO fundamental principles of rent collection ?
1) Accuracy of information
2) Timing
What are the appropriate options to consider in the event you are unable to secure payment?
1) Court proceedings
2) Use of rent deposit
3) Pursue former tenants and guarantors.
4) Serve a statutory demand.
5) Commercial rent arrears recovery scheme
6) Forfeit the lease
7) Negotiate a payment plan
8) Agree another acceptable arrangement.
