Simple questions Flashcards
Why was the unit(s) measured under a GIA basis, should you not use NIA or IPMS?
- I measured the unit on this basis in line with other units on the site
- I also knew that I had potential comparables
Are the business rates payable by your client straight after the property becomes vacant?
For industrial buildings such as this one, there is a 6 months rates relief period. This is noted
What was your conclusion of market rent for property? What lease terms would this market rental lease include?
I concluded the market rent to be in the region of £16.80-£17.30 based on my comparables.
Lease terms
- 5 year lease
- 6 month rent free
- IRI lease
What were your key achievements?
- Ensuring all arrears were paid
- Reduced void liability for my client
- Ensured a good landlord and tenant relationship, especially as there were no prior issues with the tenant
What is a TORT notice? What are the timescales?
Legal document alerting the owner of the items that have been left on private land or property
- Time limit for seizing goods from service notice is 12 months
- Goods can only be seized between 6am and 9pm
- Goods seized must be valued and not sold for 7 days
What is an FRI?
Full Repairing and Insurance
What is an IRI?
Internal Repairing and Insurance
What are the main lease terms for the tenant?
- 5 year lease
- 6 months rent free
- No SC cap
What is a B1 user class?
Relates to offices, research and development and light industry. This has consolidated into
Have the user classes not changed since these lettings have happened?
B1 user class is now incorporated into class E as of the Business and Planning Act 2020
What would is the effect of a tenant being on an FRI lease compared to an IRI?
It would likely increase the rent as the tenant
What is a B8 user class?
Warehousing and open air storage or as a distribution centre
When did user classes change?
Amendments to the user classes were made under the Town and Country Planning Act Regulations 2020
What are the results of the user classes change?
Those previously labelled as A1, A2, A3, B1, B2, D1 and D2 brought together under new use class E
What other uses fall under class B?
B class - Businesses that serve people either as factories or storage
B2 - Use for carrying on of an industrial process under class E
B8 - Use as storage or distribution centre
Can you explain to me the service charge of the site and the current budget?
- Service charge of the site split into 20 schedules
- Budget is £5,500,000 (includes office)
What are the other vacant industrial units you mention?
These units are of a much larger size, and are also permitted for use under the same user class(es)
What is the situation with the vacant office units at the site?
- Number of vacant office units on site - Ranging sizes
- Out of London office market is currently struggling, although Croxley Park is an attractive location with the services that are offered
What if the unit was vacant for 9 months?
- Void liability for rates would be 3 months = £16,789.50
What was the rateable value for the unit? and multiplier?
- RV = £134,316
- Multiplier = standard multiplier of 54.6p for the current year (2024/2025)
What is the service charge for the unit? And what kind of services do you provide to the common areas?
Service charge year ran from June 2023 to June 2024
- SC at £3.41 psf for the year
Is the lease inside or outside the act?
The lease is outside the act
Were your comparables inside or outside the act?
All of my comparable properties were outside the act
What would have been different if they were inside the act?
The tenant would have had security of tenure under sections 24-28 of the L and T act 1954
How long does the tenant have to dispute forfeiture and what do they need to do?
Have to apply for relief within 6 months of the landlord re-entering the premises
Did you consider dilapidations in the cost of forfeiture?
This wasn’t a discussion that was had as it was to be believed that
Did you consider dilapidations in the cost of moving the tenant to another unit on the site?
This wasn’t considered as there was no option to move them to a smaller unit on the site.
What is the current situation with the tenant?
They have continued paying on the usual payment dates
What would the sq foot of the property be in IPMS?
The unit wasn’t measured under this basis. All units industrial units on the site are measured under GIA
What was the rent deposit that your client held?
£37,500
Why did you advise against CRAR?
Client aim of fostering strong relationships
- Although it could have been used as an action to recover rental arrears
- Service charge sums would still remain outstanding - As you can’t recover SC through CRAR action
What is the process of serving CRAR?
Introduced in April 2014 under Tribunals, Court and Enforcement Act 2007
- Minimum unpaid 7 days rent
- 7 days notice to be served
- If no response, enforcement agent can re-attend and take control of goods
- If another 7 days passes, enforcement agent can dispose of goods
What is the process of forfeiture? Are there any deadlines?
Least must have a forfeiture clause
- 21 days of no payment whether formally demanded or not - Landlord can then change locks and gain possession
What are the different types of industrial unit on the site? Are they all the same?
Mainly B1/B2 or B8 user classes
What is the current standard RV multiplier?
54.6p as of April 2024
What was the £X increase in tenants costs made up of?
- Rents signed under new lease
- Service charge increases
- Utilities increases - Although utility costs have since reduced and the market has become less volatile
What is IPMS?
International Property Measurement Standards
What is GIA?
Gross Internal Area
- Area of the building measured to the internal face of the permitted wall at each floor area
What are the differences between GIA / NIA (Why didn’t you measure on NIA?)
GIA = Includes total internal floor area within the internal walls of a building (excludes external elements such as balconies and external walls)
NIA = Refers to usable floor area within the internal walls of a property (excludes common areas and structural elements)
GIA includes all internal areas within external walls, NIA excludes non-usable spaces, focusing on functional, usable areas
Does the tenant insure the property directly?
Landlord insures the property directly and recharges the tenants. As per IRI, tenants insure their belongings
How did you undertake the profits test?
Helps efficiently evaluate financial performance of business
1) Collected last 3 years of audited accounts
2) Assessed if net profit for business 3 times the rent for the 3 years
3) Although profit was high by YE2020, by YE2022 this had reduced significantly and they had been struggling to generate profit. This can also be seen by their dwindling cash reserves and plateauing revenues
What does a balance sheet show you?
- Assets
- Liabilities
- Shareholders equity