Leasing & Letting

Question 1

What is the difference between a lease and a licence?

Answer 1

A licence grants permission to use land in a certain way or a right over the land whereas a lease grants exclusive possession of the land for a term and there is usually a rent demanded.

Question 2

When does a lease need to be drafted by a solicitor?

Answer 2

Anything over 3 years must be executed as a deed and drafted by a solicitor. Any lease over 7 years must be registered at the Land Registry. Any lease over 20 years may be eligible for SDLT.

Question 3

Does the valuation basis differ for a rent review and a lease renewal?

Answer 3

Yes, a lease renewal is prescribed in statue in LTA 1954 whereas a rent review is prescribed in the lease itself.

Question 4

What legislation introduced Right to Rent checks?

Answer 4

Immigration Act 2014

Question 5

Can landlords accept a ‘pet rent’?

Answer 5

Yes, up to £10 per pet per month.

Question 6

What are the mandatory documents to serve alongside an Assured Shorthold Tenancy agreement?

Answer 6

How to Rent guide, gas safety certificate, EPC, tenancy deposit certificate, EICR and prescribed information.

Best practice to serve TDS guide, boiler certificate.

Question 7

What types of EPC exemption are there and where do you register an exemption?

Answer 7

EPC exemptions must be registered on the Private Rented Sector (PRS) Exemptions Register and are valid for 5 years. Exemptions include: High Cost Exemption, All Improvements Made, Wall Insulation, New Landlord, Devaluation, Consent.

Question 8

What is the difference between a herbage agreement and a grazing licence?

Answer 8

Herbage agreement – the licensor is providing the licensee with the crop of grass for a fee and the landowner will remain the occupier, for purposes of claiming BPS (they will also need to be in occupation themselves for 28 days of each year). So the third party’s animals are able to graze the land, in return for a fee.

Grazing licence – short term basis licence, where control can be regained quickly and easily. When the licence ends, the grazier must leave (usually 1 year, always under 2 years). The licensor is granting the licensee rights to access their land.

Question 9

How do you prevent a storage licence from becoming a 1954 Act tenancy?

Answer 9

Ensure that it has the three characteristics of a licence: not granted exclusive possession, not for a fixed term (therefore no reference to security of tenure as can be terminated at any point) and not for a rent, but for a fee.

Question 10

What are the implications of a 20 year lease? (i.e. SDLT, Land Registry)

Answer 10

Anything over 7 years in length must be registered with the Land Registry and may be eligible for Stamp Duty Land Tax. Anything over 3 years must be executed as a deed.

Question 11

What are the impacts of the Tenant Fees Act 2019?

Answer 11

The Tenant Fees Act 2019, from 1st June 2019, prevented agents from collecting fees from tenants, unless for situations where the tenant wishes to terminate the tenancy early, default fees for late rent, changes to the tenancy and refundable holding deposits. The agent can also now collect no more than 5 weeks’ rent to hold as a deposit for the term, unless the rent is over £50,000 per annum, where they can collect 6 weeks’ rent maximum.

Question 12

What are the risks to clients from the introduction of the Tenant Fees Act 2019 and what have you advised your clients on it?

Answer 12

Clients are now in the position that they will have to cover agents fees, referencing fees and costs for carrying out the schedule of condition/inventory, which they might choose to reflect in the rent. Furthermore, the limits to deposits mean that in the event of damage/unpaid rent at the end of the tenancy, there are less funds held to recover from and the landlord may need to request further funds from the tenants.

Question 13

What do you mean by referencing a tenant?

Answer 13

We reference our tenants with a third party called HomePpl. We ask the tenants to fill out an online form and then they are credit checked, checked for any criminal convictions or county court judgements, their employer confirms their salary for affordability purposes and if possible, a reference is obtained from the current/previous landlord.

Question 14

What do you mean by suitability of a proposed tenant? Can this be seen as discrimination?

Answer 14

For example, if the tenant has more pets that we allow for the property, they would be unsuitable. We would be obliged to show everyone (suitable) who enquires around the property and do operate on a first come first served basis, however we do ensure that the client’s position is protected when accepting tenants.

Question 15

What are the provisions for costs when a tenant wishes to leave a fixed term tenancy early (Tenant Fees Act 2019)?

Answer 15

The tenant cannot be charged more than the rental amount from the date they leave to the date that a new tenant moves in.

Question 16

What are the dates for registering a deposit before a tenancy and for returning a deposit after the tenancy?

Answer 16

The deposit should be registered and all information provided to the tenant relating to the deposit no more than 30 days after receipt. The deposit should be returned to the tenants no more than 10 days after agreeing how much is to be retained and returned.

Question 17

What were the repair works and mandatory checks for the commercial site, to prepare for its letting?

Answer 17

We ensured that the electrics were in a good condition and had these checked by an electrician. You would also install a water meter to measure the water usage and be able to calculate recharges. The property also required an EPC to be carried out. We also ensured that the site was safe from hazards and there were signposted access points for fire exits and fire extinguisher had been supplied. Smoke and Co2 alarms were also installed in the property.

Question 18

What is the maximum deposit you can now take for residential property?

Answer 18

5 weeks’ rent. 6 weeks’ rent if the annual rent exceeds £50,000 per annum.

Question 19

What are the different rents per sq ft for grain stores/commercial units/offices/residential property?

Answer 19

Industrial barns - £6-9 psf
Grainstores - £3-5 psf
Offices - £9-15 psf depending on location/quality
Residential - £15 psf
However this varies depending on location and the specification of the building.

Question 20

How would you go about letting a property?

Answer 20

After ensuring that you have signed terms of engagement by your client, make sure the property is compliant with MEES, smoke alarms/carbon monoxide alarms/gas safety/electrical checks/boiler services and you are aware of the location of any asbestos or legionnaires. Take photos of the property and upload the details (including measurements of rooms) to the market. Undertake viewings, receive tenant applications and proceed to referencing and right to rent check the tenants. Prepare their tenancy agreement, collect the rent and deposit, serve the required documentation and get an inventory carried out then check them in to the property.

Question 21

How would you measure a field: on the ground and on the computer?

Answer 21

I would use a measuring wheel to measure on the ground and on the computer, I would use LandApp mapping software.

Question 22

What is the importance of tenants signing a form to confirm they have received all statutory documentation at the start of a tenancy?

Answer 22

By ensuring that tenants have received the statutory information, you are therefore protecting yourself in the event that you would want to regain possession through a Section 21 notice.

Question 23

What are the different types of letting process?

Answer 23

Open market, formal tender, informal tender

Question 24

What is included in a tender pack?

Answer 24

Background information – farm, requirements, particulars etc
Details of the applicant
Training and qualifications
References (professional and character)
Current farm – viewing days, ability, gross margins
Financial details
Diversification (current or proposed)
Budget – detailed costings
Rent offer
Tenancy HoTs

Question 25

What is the purpose of serving a Form 9 notice? And the dates?

Answer 25

You would serve a Form 9 under the Housing Act 1988 on an agricultural worker to notify them that they were entering into an Assured Shorthold Tenancy who might otherwise comply with the provisions to create an Assured Agricultural Occupancy, whereby they may have security of tenure. These were compulsory to serve between 15th January 1989 and 28th February 1997 but nowadays it is seen as best practice, as after 1997 all tenancies were assumed to be ASTs. You would serve this notice prior to the tenancy commencing.

Question 26

Why would you not want the tenancy to become an Assured Agricultural Occupancy?

Answer 26

These tenancies are governed under the Rent (Agricultural) Act 1976 and grant security of tenure to the tenant and one right of succession. However the tenant must meet a 3-stage test to be applicable (Qualifying worker, qualifying ownership, relevant licence or tenancy). The landlord can only gain possession of the property under certain grounds.

Question 27

How would you carry out a commercial rent review?

Answer 27

I would initially check there were no conflicts of interest and then agree terms of engagement. I would read the lease and check the terms of the rent review. If I was acting for the landlord I would give the tenants notice of the rent review, usually 3 months before the review date and in line with what the lease says. Depending on the method of review I would present the rental increase figure to my client for approval before suggesting this to the tenant. If the tenant agrees I will document the review using a rent review memorandum to confirm both parties are happy. I will update the rent demands on our internal system and ensure the new rent is paid on the rent review date.

Question 28

Please could you advise what information you would provide to a tenant on lease commencement?

Answer 28

Residential: how to rent guide, what is the TDS leaflet, gas safety, EICR, EPC, inventory, AST, oil boiler certificate (if applicable)
Commercial: EPC, Tenancy agreement, gas safety, health warning notice (if applicable)

Question 29

Please could you talk me through the process and key considerations when registering a tenants deposit?

Answer 29

• Confirm deposit amount (5 weeks’ rent max.)
• Receive deposit into protected account
• Register deposit with TDS within 30 days
• Provided tenant with certificate within 30 days or with tenancy agreement

Question 30

What are the key differences between formal and informal tender and in what instances would you use formal?

Answer 30

Informal: do not have to accept the highest offer or any offer, offer not legally binding
Formal: legally binding offers, must complete sale by specified date, highest bid accepted.
Formal used when there is strong demand for a property or public accountability is required. Both can be used for selling or letting farmland however informal is more common.

Question 31

What is the current RPI?

Answer 31

381

Question 32

In what instances must you serve a Form 9 notice and when must it be served?

Answer 32

If a tenant due to rent a cottage meets the requirements of an AAO – qualifying ownership, qualifying occupancy, employed in agricultural for last 91/104 weeks.
Must be served before the start of the tenancy to confirm the agreement remains an AST and not an AAO.