Leasing & Letting Flashcards
1
Q
What’s the standard size of a letting board?
A
- Flat board 4ft (0.37m) x 3ft (0.27m)
- V-shaped board, 2 flat boards together
- Anything over 2m squared needs planning for flat and 2.3m squared for V-shaped
- Must not project more than 1m from the face of the building & not be above 4.6m from the ground
- Planning required for:
- Illuminated boards
- Remove boards
- Boards erected on listed buildings and conservation areas
- A board must be removed 14 days after the completion of a transaction or dis-instruction
- Must have owners approval to erect (check lease)
- Most London Boroughs have their own planning rules regarding letting boards
2
Q
What legislation does an Agent need to adhere to?
A
- The main legislation is the Estate Agents Act 1979
- For the purposes of disposals and acquisitions of interests in land:
- S18 clarifies the terms of business of the agency including fees and costs, nature of business e.g. sole agency, joint or multiple
- S21 declaring personal interests e.g. if the agent could benefit financially from the transaction such as his employer, principal, agent employee
- Punishments include negative licensing; prohibition order; policed by the trading standards of the local authority
- The purpose of the Estates Agents Act is to allow clarity for terms of engagement from all agents and to provide details of instruction
- Other legislation includes:
- Misrepresentation Act 1967 - separate question for these
- Consumer Protection Regulations 2008 - separate question for these
3
Q
What is your understanding of the Misrepresentation Act 1967?
A
- Leading case is Hedley Byrne v Heller & Partners, 1964
- Relates to a mis-statement of fact during pre-contractual enquiries which has the effect of inducing a party to purchase
- Also relates to professional opinions and third-party advice
- Three tests:
- Foreseeability - the damage is reasonably foreseeable
- Proximity - the relationship is sufficiently proximate
- Fairness - it is seen as fair for a duty of care to arise
- Doesn’t apply to banks to a plaintiff
- Punishments - sued for financial damages and/or contract rescinded
4
Q
What is your understanding of the Consumer Protection Regulations 2008?
A
- The Property Misdescriptions Act 1991 was repealed and replaced with the Consumer Protection Regulations for Estate Agency work and business protections
- Relates to business to consumer
- Broad definitions, agents have a duty of care to clients and all parties
- Agents must declare all that is known about the property
- They must not apply pressure
- Full due diligence is required for new instructions
- Policed by the Trading Standards Office
5
Q
What is an Alienation clause?
A
- Contained in a lease, provides parameters for under-letting and/or assignment
- Key features include:
- Permission to underlet and on what basis (open or restrictive)
- Whether an assignment is subject to the inclusion of an AGA under S17 of the L&T Covenants Act 1995
- Always read the lease
- Always be mindful of alienation provision when marketing
6
Q
What was contained in the marketing report for Newmarket?
A
- Address, date, photo of the property
- Description of the location with commentary on immediate neighbouring tenants
- Description of the property including measurements
- Rateable value
- Tenure commentary with lease details
- EPC - D September 2017
- Market commentary such as vacant units, recently let properties
- Recommendation:
- Market on an FRI lease at passing rent (£12k)
- Need to discuss sub-letting with LL due to restrictive alienation (passing rent)
- Marketing:
- Preparing particulars
- Distribution to associated retailers
- Putting on EGI, Shop Property
- Installing V-shaped board
- £500 plus VAT for initial marketing
- Market on an FRI lease at passing rent (£12k)
7
Q
Can you tell me the different agency types
A
- Sole selling rights or sole agency rights
- Sole selling rights means the agent is entitled to a full fee regardless of negotiating the deal
- Sole agency is where there is a single agent but incentive fees are secured based on the deal agreed
- Sole, joint sole or multiple agency
- Joint sole is where two agents are appointed and the agent who secures the deal is entitled to the full fee
- Contained within the terms of business - S18 Estates Agents Act
8
Q
Can you tell me the difference between sole selling rights and sole agency
A
- Sole agency is where a single agent is appointed to market a property. Usually entitled to a fee based on the deal negotiated by the agent
- Sole selling rights is where a single agent is appointed to market a property but is entitled to a full fee regardless of whether the agent secures the deal or not
9
Q
What is an agreement for lease and when would you use it?
A
- Pre-contractual agreement in principle for a lease subject to conditions being met
- Commonly used when change of use planning is submitted
10
Q
Can you tell me the current SDLT thresholds
A
- Leasehold and Freehold transactions on Commercial property:
- For LH the SDLT is charged on the NPV of the lease and breaks are disregarded
- If the NPV is less than £150k, there is no stamp duty payable
- From £150k-£5m 1%
- £5m and above 2%
- If the lease is less than 7 years and/or the threshold is less than £150k
- For FH:
- Purchase price of less than £150k has zero
- The next £100k has 2% SDLT
- The remaining portion over £250k has 5%
- It’s a cumulative tax
- If the lease is assigned, you pay SDLT on the consideration (lease price)
- HMRC have a stamp duty calculator to calculate your exposure to SDLT
- Commercial property is defined as:
- Shops or offices
- Property that isn’t suitable to be lived in
- Forests
- Agricultural land that isn’t part of a working farm
- Any other land which isn’t part of a dwelling
- 6 or more residential properties bought in a single transaction
11
Q
Can you tell me any SDLT exemptions?
A
- Property transactions where no money changes hands, type of payments such as:
- Goods
- Services or works
- Release of debt
- Transfer of a debt including outstanding mortgage value
- Property left in a will
- Divorce or civil partnership
- FH transactions less than £40k
12
Q
Can you tell me your understand of the RICS Code for Leasing Business Premises?
A
- Professional statement, released in February 2020
- The code provides best practice guidance on negotiating heads of terms and lease terms
- It also provides a template for negotiating heads of terms
- It recommends that unrepresented tenants should be notified that a surveyor is recommended to represent them and that agents should point out the existence of the code if unaware
13
Q
If you had lots of interest in a property, how would you manage this with your agent?
A
- I would ask the agent to conduct best and final bids and make a recommendation based on the offers
14
Q
How do you generate interest on properties which are receiving little interest?
A
- Market the property on flexible terms and reduce the expectations of rent receivable
- Potential obtain a tenant on a TAW to cover business rates
- This was done at Tottenham with a charity to cover the rates
15
Q
Can you tell me about the Burnham-on-Crouch assignment?
A
- Assigned in March 2020
- 3 years unexpired at the point of assignment
- The Landlord rejected a surrender in favour of an assignment
- We favoured the assignment over the sub-letting due to the unexpired term on the lease, the rental level of £8,500 P.A. and the legal fees associated with the sub-letting
- An AGA was agreed until lease expiry
