Case study number 2

Question 1

Talk me through the building?

Answer 1

• 35kn psm floor loading capacity
• 3 phase power
• Car parking
• Roller shutter access
• single cavity wall (checked on EPC as this was one of the improvements)
• screed concrete floor
• 8M eaves height
• brick elevation
• steel portal framing
• pitched roof
• 10% office space
• 10% LED lighting

Question 2

what did the tenant do?

Answer 2

Large National item delivery service company

Question 3

When you are obtaining costs for a tender (in reference to the roof), what must you ensure you are providing?

Answer 3

• best service for client/tenant

Question 4

does your client have an objective of what they can let a property to?

Answer 4

the profit must exceed the annual rent by 3 times

Question 5

how was the break noticed served?

Answer 5

• in writing before 6 months
• to the LL address
• vacant possession required

Question 6

What were the void costs that your client anticipated for your unit?

Answer 6

• Insurance (£880)
• SC (£6,000, Unit 1 was £750pa £0.29)
• Utilities (very small cost, would get a cost from our energy consultants)
• weekly inspections (security) (£2,600)
• Business rates (£16,000)

Total = £20,230

Question 7

Why did you decide to go with option number 3 over your other options?

Answer 7

1. I went ahead with option number 3 as the tenant confirmed they would cover all costs associated with marketing the unit to find a potential assignee.
2. This kept cash flow to my client until a potential occupier became available.
3. Behind the scenes I made the recommendation to refurbish some of the units including unit 1 to attract occupiers as the disrepair was causing a lack of interest.
4. Therefore win win
   - tenant finds another occupier = great
   - tenant cannot find occupier = we will refurbish the unit to make it more attractive to let.

Question 8

You were thinking about serving a s146 notice, can the T can relief under this?

Answer 8

Leasehold Property Repairs Act 1938 - if LL serves 146 notice, T can get relief from forfeiture under this act

Question 9

what was the EPC?

Answer 9

E

Question 10

Rent apportionment clause?

Question 11

Dunn and Bradstreet rating?

Answer 11

2A2

Question 11

What is the site coverage?

Answer 11

35%

Question 12

How do you measure the eaves height?

Answer 12

From ground level at the base of the outside wall to the point where that wall would meet the upper surface of the roof slope

Question 13

What do you look at when determining a covenant strength?

Answer 13

• Profits and loss statement
• Gross profit

Question 14

What is included and excluded on a GIA measuring?

Answer 14

included
- areas under 1.5m
- plant room
- internal walls and columns

excluded
- perimeter wall thickness
- areas occupied by a reveal of a window to the IDF

Question 15

How would you CRAR inclusive rent?

Answer 15

portion out the SC amount and only CRAR the rent. Would be an approx figure.

Question 16

Was the lease FRI?

Answer 16

Yes

Question 17

Why did you do the works yourself if lease was FRI?

Answer 17

The T was not complying with their rental obligations

Question 18

Was there a Jarvis V Harris Clause in the lease?

Answer 18

Yes, hence why we did the works.

Question 19

What does the Jervis v Harris clause mitigate when it comes to pursuing a tenant for damages?

Answer 19

mitigates S18 of LL and T act 1927 - damages are limited to diminution in value of the property out of repair.

Question 20

Ways you could enforce a tenant repairing obligations?

Answer 20

• interim schedule of dilaps
• S146
• Apply to court to make T undertake works

Question 21

So with your recommendations, you rejected their original offer and pushed for a higher premium despite the tenant showing obvious signs of financial pressure. Was this realistic to suggest?

Answer 21

They were a large UK national company with a large portfolio of business up and down the UK and this unit was surplus to their requirements.

They experienced losses post covid however they still turning over well in other locations so we knew they could pay.

Question 22

How did you know that the tenant had not absconded when you went to visit the site before recommending CRAR?

Answer 22

• no build up of post
• spoke to other tenants who confirmed they had been seen recently

Question 23

How did you factor in your client’s short term and long term business goals when undertaking this case study?

Answer 23

Short term
- continue to bring in cash flow
- keep void costs down

long term
- look to refurbish the unit to attract better tenants in future

Question 24

Talk me through what your company’s accounts stated?

Answer 24

From the 2019 to 2022 it was clear financial losses had taken place.

decrease in sales but salaries staying the same.

dividends are being taking out everything they were making

Question 25

How can the tenant gain relief if S146 notice is served?

Answer 25

Leasehold properties repair act 1938 the tenant can get relief from forfeiture (must serve counter notice with 28 days)