Leasing & Letting

Question 1

How would you deal with a new letting?

Answer 1

• conflict of interest/money laundering checks on client
• agree ToE
• agree strategy
• site visit, measure, arrange works/stat comp/EPC (dilaps if outgoing tenant?)
• valuation, approval
• marketing particulars
• viewings
• tenant selection (due diligence)
• HoTs (Code for Leasing Business Premises PS 2020)
• agree, approval, instruct solicitors
• liaise with solicitors to completion (SoC?)
• handover (meter reads, stat comp, SoC)
• update records, diarise milestone
• check rent paid!

Question 2

What are different methods of letting?

Answer 2

• by private treaty
• by tender (informal/formal)
• recommended method, alternatives, risks, pros and cons
• costs for both buyer and seller and implications for stamp duty

Question 3

What market trends affect the value of leasehold interests?

Answer 3

• supply and demand
• location
• sector
• type of property
• economic uncertainty
• social changes inc technology
• interest rates and inflation
• performance of alternative asset classes (if investment)
• government policy

Question 4

What lease terms affect the value of leasehold interests?

Answer 4

• length of term
• flexibility i.e. breaks
• contracted out
• repairing obligations
• user clause
• frequency of RR
• ability to assign

Question 5

What does customer due diligence entail under Money Laundering Regs 2017?

Answer 5

• identify client and verify identity
• assess and where appropriate obtain info on the purpose and intended nature of the business rel or transaction
• identify and verify a person who purports to act on behalf of a client
• where client is a corporate body, must verify:
  name;
  company no.;
  reg office and place of business;
  its constitution/other governance docs;
  names of boards of directors
• keep data for 5 years

Question 6

How would you select a tenant?

Answer 6

• due diligence
• research (Companies House)
• tenant application form
• accounts
• references
• credit check
• guarantor / deposit

Question 7

What is relevant legislation relating to leasing and letting property?

Answer 7

• Bribery Act 2010
• Equality Act 2010
• Consumer Protection from Unfair Trading Regs (CPR) 2008
• Business Protection from Misleading Marketing Regs (BPR) 2008
• Estate Agents Act 1979
• Money Laundering Regs 2017
• Data Protection Act 2018
• Misrepresentation Act 1967
• L&T Acts
• Late Payment of Commercial Debts Act 1998
• Supply of Goods and Services Act 1982
• Unfair Contract Terms Act 1977
• Cancellation of Contracts Regs 2013

Question 8

Code for Leasing Business Premises PS 2020

NEED TO ADD DATE AND EFFECTIVE DATE

Answer 8

• outlines the kinds of terms RICS expects
• states that negotiations must be approached in a collaborative and constructive manner
• must advise of code and to obtain professional advice
• agreement must be recorded in HoTs, minimum terms
• negotiation should aim to produce terms that achieve a fair balance between parties having regard to their respective commercial interests

Question 9

Who is an estate agent according to the Estate Agent Act 1979?

NEED TO ADD DATE AND EFFECTIVE DATE

Answer 9

• you deal with people who want to buy or sell FH or LH property
• you do this as part of a business
• and you act on instructions from a client

Question 10

What are the requirements on handling clients’ money under the Estate Agents Act 1979?

Answer 10

• 2 types of deposit:
  pre-contract (before exchange), contract (on exchange)
• must put in a client account separate from rents etc.
• pay interest of over £10 for deposit over £500 to client
• keep detailed records of all transactions related to a client account including receipts
• accounts must be audited
• must keep records for 6 years

Question 11

What do the Money Laundering Regs 2017 aim to do?

NEED TO ADD DATE AND EFFECTIVE DATE

Answer 11

• set out additional obligations of private sector firms working in areas of higher money laundering risk
• aim to stop criminals using pro services to launder money by requiring pros to take a risk-based approach
• firms must put measures in place to identify their clients and monitor how they use their services

Question 12

Real Estate and Agency Brokerage PS 2016

NEED TO ADD DATE AND EFFECTIVE DATE

Answer 12

• gives guidance on ethics, securing instructions, acting for the seller, acting for the buyer, ending the instruction, safety, security, agency management
• duty of care and conflicts of interest
• ToE, sub-agents
• advising on price, market advice, records, marketing, reporting, communicating offers with client and buyer
• property search, reporting, purchases, holding money
• written confirmation, invoice
• confidentiality, data protection, H&S
• advertising services, complaints, debts, insurance, training

Question 13

Real Estate Agency and Brokerage PS 2016 communicating with clients

Answer 13

• clients must be provided with ToE which are fair and clear (services, duration, fees, sub-agents)
• comms should be fair, clear, timely and transparent
• all marketing material should be clear, fair and transparent
• reporting on property price/rent and confirm offers in writing with sufficient detail
• must seek to avoid and disclose conflicts of interest

Question 14

UK Commercial Real Estate Agency PS 2016

NEED TO ADD DATE AND EFFECTIVE DATE

Answer 14

• gives guidance on standards and ethics, securing instructions, marketing and implementing disposals, acquisitions, ending instructions, UK regulatory requirements
• duty of care and conflicts of interest
• ToE, sub-agents
• inspection, measurement, appraisal, viewings, reporting
• methods of sale/letting, offers
• property search, reporting, purchases inc LH
• written confirmation, invoice
• reference to Real Estate and Agency Brokerage PS 2016