Leasing & Letting L1 - Oct 2023

Question 1

Tell me about your understanding of legislation relevant to your leasing and letting practice?

Answer 1

The Estate Agents Act 1979
Consumer Protection from Unfair Trading Regulations 2008
Misleading Marketing Regulations 2008
Money Laundering and Terrorist Financing

Question 2

Tell me about your understanding of the Estate Agents Act 1979.

Answer 2

Make sure that estate agents act in the best interests of their clients, and buyers and sellers are treated honestly, fairly, and promptly.
Estate agents who do not comply with the law, could be banned from working as an estate agent

Question 3

What are the 6 key principles of the Estate Agents Act 1979?

Answer 3

Honesty
Transparency
Professionalism
Fairness
Respect
Diligence

Question 4

How does Section 18 relate to your letting practice?

Answer 4

Estate Agents must give a full breakdown of all costs to the client.

Question 5

What are the various agency bases?

Answer 5

• Sole agency.
• Joint sole agency.
• Multiple agency.
• Sole selling rights agency.

Question 6

What are the differences between the four agency bases?

Answer 6

Sole Agency - One agent instructed.
Joint Agency - Two agents instructed.
Multi Agency - A number of agents instructed.
Sole Selling Rights - Only one agent can sell.

Question 7

What is a ready, willing and able purchaser?

Answer 7

Ready, willing and able purchaser. A ready, willing and able clause in an estate agent contract means that the agent is entitled to their fee if they just introduce a buyer who is ready, willing and able to buy. Such a clause can lead to having to pay an estate agent’s fee even if your house sale does not actually go through and possible disputes about what does ready, willing and able purchaser actually mean.

Question 8

How does Section 21 relate to your letting practice?

Answer 8

Section 21 of the Estate Agents Act 1979 relates to Conflicts of Interest and informing your client as such.

Question 9

Tell me about key points of the Consumer Protection / Business Protection Regulations.

Answer 9

Consumers treated fairly and to avoid engaging in unfair commercial practices, e.g. giving false information in marketing material or not acting in good faith.

Question 10

What are considered to be unfair practices under this legislation?

Answer 10

giving false information in marketing material or not acting in good faith.

Question 11

How does the Misrepresentation Act 1967 relate to your agency practice?

Answer 11

The Act protects consumers from false or fraudulent claims that induce them into buying or entering into contract. Therefore all particulars and details should not be misleading.

Question 12

What does the Unfair Contract Terms Act 1977 say?

Answer 12

The Unfair Contract Terms Act 1977 protects parties from unfair exclusion clauses within contracts. It is now for business only.

Question 13

Do you need to inform your client if you offer a service to a prospective tenant?

Answer 13

Yes as this would be a conflict of interest.

Question 14

Tell me about your understanding of the Code for Leasing Business Premises in England & Wales.

Answer 14

The objective is to improve the quality and fairness of negotiations on lease terms and to promote the issue of comprehensive heads of terms that should make the legal drafting process more efficient.

Question 15

When and how was it last updated?

Answer 15

It was updated with the new rules of conduct in Jan 2022 and also updated in September 2023 as a RICS Professional Standard

Question 16

Explain what alienation is.

Answer 16

A clause which either gives the right or prohibits a tenant in transering or subletting an interest in property.

Question 17

What happens if there is no alienation clause in a lease?

Answer 17

If the lease is silent in regards to Alienation then the tenant is free to dispose of the interest or grant a sublease.

Question 18

What is subletting?

Answer 18

Subletting is the tenants ability to lease the premises or sometimes part of the premises out to anothr party.

Question 19

What is assignment?

Answer 19

Assignment is the transfer of the interest in the property to another.

Question 20

Explain your understanding of the Landlord & Tenant (Covenants) Act 1995 and how it affects your leasing work.

Answer 20

The Landlord & Tenant (Covenants) Act 1995 deals with lease covenants one of which was the privity of contract issue and now when a lease is assigned the original tenant is not liable and an Authorised Guarantee Agreement could be used if necessery.

Question 21

What does S19 1a of the Act say?

Answer 21

That the assignment will be for a term of the remainder of the lease term.

Question 22

What is an Authorised Guarantee Agreement and when might one be given?

Answer 22

An Authroised Guarantee Agreement (AGA) gives the landlord the ability to approach the original tenant for any obligations under the lease for instance non payment of rent.

Question 23

Can a tenant assign a lease to it’s guarantor?

Answer 23

There was a High Court case decision in 2016 where the decision stated that a lease could not be transferred to the guarantor as this would make the obligation void on tenant or guarantor. The case was EMI v O&H A1 Limited in 2016

Question 24

What is a pre-letting?

Answer 24

greement between landlord/developer and tenant for occupation at a future date, e.g. Agreement for Lease plus pre-agreed form of Lease, Licence for Alterations etc.

Question 25

What is an Agreement for Lease?

Answer 25

An agreement for lease is a contract that a lease will be entered into in the near future.

Question 26

Why would one be used?

Answer 26

The Agreement for lease is entered into if the lease will not be in place until a later date and the tenant may want to carry out some fit out works to which the landlord can provide a licence.

Question 27

Tell me about the planning considerations you are aware of if you want to install a marketing board.

Answer 27

Only on or in the curtalige of the property and for commercial property can be up to 2sq m or 2.3 for V board

Question 28

Do you need planning consent to install a marketing board?

Answer 28

If it is not alluminated and not over 2sq m then it has deemed consent.

Question 29

Tell me about the requirement surrounding letting property and EPCs.

Answer 29

You cannot let a property with an EPC lower than E

Question 30

What buildings are exempt from having an EPC?

Answer 30

You don’t need an Energy Performance Certificate (EPC) if you can demonstrate that the building is any of these:
- listed or officially protected and the minimum energy performance requirements would unacceptably alter it
- a temporary building only going to be used for 2 years or less
- used as a place of worship or for other religious activities
- an industrial site, workshop or non-residential agricultural building that doesn’t use much energy
- a detached building with a total floor space under 50 square metres
- due to be demolished by the seller or landlord and they have all the relevant planning and conservation consents

Question 31

Can you charge a tenant for a copy of an EPC?

Answer 31

No

Question 32

Where does the EPC have to be shown?

Answer 32

In the building if:
- the total useful floor area is over 500 square metres
- the building is frequently visited by the public
- an EPC has already been produced for the building’s sale, rental or construction

Question 33

How long do you have to produce the EPC after a property is put on the market?

Answer 33

7 days

Question 34

Tell me about how MEES affects your leasing practice.

Answer 34

The current MEES requiremnts state that new leases cannot be granted without an EPC of E or higher.

Question 35

What are the key compliance dates?

Answer 35

EPC C - 2027
EPC B - 2030

Question 36

How can MEES risk be reduced?

Answer 36

Retail asset owners should engage early with tenants, during the life cycle of a lease and at lease trigger events. Identifying the risks and seeking timely professional advice will help mitigate the risks and reduce the costs of compliance with MEES.

Question 37

What would you do if you were asked to let an F or G rated property?

Answer 37

Decline the instruction

Question 38

How can you improve an EPC rating?

Answer 38

Insulation, lighting- LED, heating systems, air conditioning systems, double glazing.

Question 39

How could onerous lease clauses / macro / micro economic conditions impact upon tenant confidence and demand?

Answer 39

Onerous lease clauses and ecomonic conditions can influence tenant demand, effect the rental value and effect a businesses lending capacity.

Question 40

How does VAT affect lettings?

Answer 40

VAT on commercial property is charged at 20%

Question 41

What are the parts of the Code for leasing business premises?

Answer 41

The parts of the Code for leasing business premises 2020 are:
- Part 1 - Introduction
- Part 2 - Mandatory Requirements
- Part 3 - Lease Regulation Best Practice
- Part 4 - Appendices

Question 42

What are the Part 2 mandatory requirements of the Code for leasing business premises 1st Ed 2020

Answer 42

Part 2 of the code includes the negotiations, Heads of terms and that you must inform an unrepresented party of the code and to seek their own professional advice.