Case Study

Question 1

Please describe the layout of your industrial property?

Answer 1

Question 2

What is the user class of your case study?

Answer 2

User class was B1C - light industrial use within a residential area

Now superseded by Class E as of 1st sept 2020

Question 3

I note your tenant was contracted out of the Landlord and tenant act 1954. How was this done?

Answer 3

• give up security of tenure
• LL must serve notice on the tenant under the regulatory reform order 2003.
• if notice served 14 days or more before lease start then T simply signs declaration.
• If within 14 days of lease start date then T sign statutory declaration before solicitor or independent expert.

Question 4

Difference between GIA and IMPS2

Answer 4

Internal balconies - GIA included/IMPS2 stated separately

External balconies - GIA excluded/IMPS2 stated separately

Accessible rooftop terraces - GIA excluded/IMPS2 stated separately

Question 5

You did a credit check to determine tenants covenant strength, how?

Answer 5

Dunn and Bradstreet

1. Financial strength (A-E)
2. risk indicator (1-5)

Question 6

How to inspect in accordance with surveying safely ?

Answer 6

-Carry out a risk assessment before visiting
-Check in with RFM
-Let the tenant aware if you are needing demise access
-Take charged phone, put in outlook diary
-Let colleagues know what time to come back
-sign in and out of site

Question 7

You looked on companies house to review tenants financial accounts. What governs the format the company accounts?

Answer 7

The Companies Act 2006

Question 8

What is included in company accounts, as laid out in the Companies Act 2006?

Answer 8

• cover page
• information and contents
• Directors report
• Accountants report
• profit and loss account (income statement)
• balance sheet

Question 9

Why did you measure on GIA and not IPMS?

Answer 9

As a chartered surveyor I’d advise and encourage to use IPMS however client wanted GIA.

Wasn’t enough comparable data in GIA

Question 10

If you have been doing a lease renewal for some time, and gone beyond contractual lease expiry date. What would you do?

Answer 10

Call for interim rent - S24A

Calculated based on market rent

Question 11

Aim of LL and Tenant Act 1988?

Answer 11

S1 states consent must be provided reasonable timeframe (no delays)

Question 12

Aim of LL and T Act 1927?

Answer 12

S18 - Limits the amount of damages a LL is able to recover for breach of T repairing covenants

S19 - States consent must not be unreasonably withheld

Question 13

9 Mandatory requirements in SC Professional Statement?

Answer 13

Question 14

Walk me through how you would do a rent review?

Answer 14

1. Receive client instructions
2. Check competent
3. Check if any Conflicts of interest
4. Agree a few
5. Check RR clause and see if there is a LTA in place.
6. Inspect and measure.
7. Collect comparable and make recommendation to the client

Question 15

assumptions?

Answer 15

• property is fit for use
  -property is vacant
• tenant has not been in breach of lease (obligations)
• the lease term

Question 16

Disregards?

Answer 16

• any goodwill
• tenants occupation
• some improvements

Question 17

Difference between balance sheet and income statement?

Answer 17

Question 18

Landlord and tenant covenant act 1995?

Answer 18

Authorised guarantee agreement (AGA)

Question 19

What is the data protection act 2018 and the 7 principles of it?

Answer 19

Question 20

What does GDPR stand for and what are the 8 rights under it?

Answer 20

General Data Protection Regulation

• right to information
• right to access
• right to rectification
• right to erasure
• right for restrict processing
• right to data portability
• right to object
• right to automated decision making

Question 21

What and when would you use the investment method?

Answer 21

Market rent (net of outgoings) x years purchased

= market value

When you have an income stream to value

Question 22

How would you value a reversionary investment?

Answer 22

Term and reversion (under rented)

Term
Get your net income (annual rent) and capitalise this until the end of the lease with a lower yield (risk is lower as it’s below market rent)

Reversion
Get your market rent and capitalise this at a higher yield (reflect the risk) into perpetuity. You then discount it back to PV£1 as there is time left on term. Market rent is not coming in until then.

Question 23

What are exceptions to the red book?

Answer 23

Internal purposes - for client to know market value of property

Agency - advertise price if getting interest up it, if not lower it

Statutory functions - where the law tells us what to do (lease renewals, rating, compulsory purchases)

Acting as a expert witness - arbitrator or expert would tell you what to do

Question 24

Workman’s management agreement?

Question 25

What determines how much you inspect your properties?

Answer 25

-client requirements -workman requirements -insurer requirements (if vacant)

Question 26

What are the purposes of inspection?

Answer 26

Valuation Purchase or sale (agency) Property management (breach of lease)

Question 27

Rent is inclusive how do you CRAR/apportion it?

Answer 27

Deduct the rates and service charge It will be an approx figure

Question 28

Net effective rent?

Answer 28

Rent that incorporates rental concessions Rent including rent free period

Question 29

Break notice?

Answer 29

- 6 months before the break date - must be in writing to LL address - have to give vacant possession