L&L subs Flashcards
(124 cards)
1
Q
What does your company’s disclaimer say?
A
- Date the particulars were prepared.
- Statements are true to the best of your knowledge and provided in good faith and adhered to the Misrepresentation Act
- Statements are guidance only and are not offers to be accepted
2
Q
What is the difference between the 2007 Code and the 2020 Code for Leasing Premises?
A
2007 Code - Was not compulsory
2020 - Now has mandatory requirements as it is a Professional Statement
3
Q
What are typical ceiling and floor voids
A
Ceiling - 350 mm
Floor - 150 mm
4
Q
Why did you make an offer on the basis of an assignment? Rather than a sublease?
Acquisition in Holborn
A
3 reasons:
- That is what the original tenant was offering.
- got an upfront capital payment (sublease usually rent free)
- As an incoming tenant you take over all the rights in that lease including security of tenure.
- Cheaper rent as passing rent!
5
Q
Did the Landlord approve the tenant initially?
Acquisition in Holborn
A
The Tenant satisfied the profits test so therefore we advised them to get financial advice.
After confirming they were financially sound the landlord agreed to assign the property to my client.
6
Q
What is the process of an assignment?
A
Once a client has agreed they would like to go for an assignment I start negotiating on:
- whether the L will accept the new tenant
- What the reverse premium would be
Outgoing T drafted Heads of Terms and they were signed by both parties and sent to solicitors.
Landlord then signs the deed of assignment during legals and its attached to the original lease.
7
Q
What was your reverse premium and how was it calculated for your acquisition in Holborn?
A
It included a Rent Free Period and Dilapidation costs.
Worked out to be the equivalent of 12 months rent (including £15 for dilapidations).
£500,000
Looked at rent free periods in the market - 5 years left on the lease.
8
Q
What is the difference between a sub-lease and an assignment?
A
Sub lease: The outgoing T becomes the landlord to the incoming T
Assignment: - Outgoing T loses all liability on the lease
- A direct relationship is formed with L
9
Q
What was was your marketing recommendations for your disposal in Mayfair?
A
- Wanted to keep costs low
- Launch requirements on Agents Society.
- Install a letting board
- Space too small for a launch and L wanted to keep costs low
10
Q
How big was the office?
Disposal Mayfair
A
500 sq ft
11
Q
What was your opinion for terms and rent frees in the area for your disposal in Mayfair
A
Client - wanted a 5 year term.
Achievable but would need a break due to the size and type of potential occupiers.
12
Q
What is a CAT-A?
A
It’s Landlord refurbished office space that generally consists of:
Raised floors, suspended ceilings, modern aircon, double glazed windows.
13
Q
What are the ceiling and floor voids?
A
350 mm
150 mm
14
Q
What were your clients requirements in Primrose Hill?
A
- Remain in Primrose Hill
- Lease of 5 years
- 4 employees but wanted lots of space
- 1,000 sq ft
- Budget £50 psf
15
Q
You said for your acquisition in Holborn you produced a financial comparison spreadsheet, how did you calculate that?
What were the occupancy costs?
A
I took into consideration the typical lease costs a tenant would pay.
Including:
- Rent
- Market Rent Free
- Service Charge
- Business Rates
- Fit out works £70 psf (not for the assignment)
- Dilaps £20 psf
16
Q
Did the outgoing T have to do anything to stay liable for your assignment in Holborn?
A
As my client satisfied the profit test the outgoing T did not need to enter an AGA.
Authorised Guarantee Agreement
Landlord and Tenant (Covs Act) 1995
17
Q
What is the Profits Test?
A
Need 3 years audited accounts
Net Profit must be 3 x the annual Rent for 3 consecutive years
Net Assets must be worth 5 x the annual rent for 5 consec years
18
Q
How did you consider your Tenants Dilapidation costs for your assignment in Holborn?
A
We agreed a reverse premium which accounted for dilapidation costs.
Spoke to my in-house building surveyors who stated £20 psf was reasonable.
19
Q
How much was your service office option for your acquisition in Mayfair?
A
£1,200 per year per desk
Which broke down to £200 psf (includes Rates, Service Charge, Rent, Maintenance, Cleaning, Management Costs).
20
Q
For your acquisition in Mayfair, what was their preference? Were they bothered about whether it was going to be Cat A, Fitted?
A
My clients main objective was FLEXIBILITY and staying in MAYFAIR.
They were not too concerned whether it was fitted out or not but due to the flexibility my client requested fitted out options were the most suitable.
21
Q
What is a plug and play office?
A
Space that’s ready for immediate occupation.
Fully cabled
Desk and Chairs
Wifi
Move in tomorrow no hassle of setting up internet.
22
Q
How much was the plug and play office?
A
It was less than the serviced office as it does not have all the costs are included in a serviced office such as rates, service charge, management costs etc.
It was £90 psf.
23
Q
Which one did they go for?
Acquisition in Mayfair
A
Plug and Play due COVID-19 - May 2020
My client did not want the shared communal areas.
24
Q
How big was the office in Mayfair
Acquisition
A
1,000 sq ft
10 employees
25
How did you abide by the Estate Agents Act 1979 during your disposal in Mayfair?
1. Specified all costs and fees in advance and included these in my TofE
2. Disclosed that I had no personal interests to the property or to the client.
3. Told my client any offers that they received.
26
What is a RFP: Request for a Proposal?
When would you use them?
Request for a Proposal?
Instead of making an offer on each, you would submit a document asking the Landlord to fill in the Rent, Term etc.
Lets the L know you have asked for RFPs on other offices.
27
What is a RFP: Request for a Proposal?
When would you use them?
Request for a Proposal?
Instead of making an offer on each, you would submit a document asking the Landlord to fill in the Rent, Term etc.
Lets the L know you have asked for RFPs on other offices.
Usually for larger tenants.
Duty to tell the tenants of all of those offers.
28
What was the fee for your acquisition in Mayfair?
10% of the Rent
29
Would you not want to agree a higher rent then if you were doing it on a 10% of rent?
No as you would not want to deter potential clients from hiring you if you agree a higher rent.
If you agree a lower rent it may get you more work which overrides that.
30
Talk me through your disposal in Mayfair
1. Instructed by client
2. Competent, Interests, TofE
3. Obtained clients objectives
4. Inspected and Measured the property - 500 sq ft
5. Researched Market for MR and lease terms and RFPs. £40 psf (loft conversion, period office building, no lift, limited natural light.
6. Produced a report outlining my recommendations.
7. Drafted particulars and launched it on Agents Society and my company's website
8. Erected a letting board as high footfall and could attract unrepresented tenants
9. Received an offer in my opinion of MR and commenced negotiations
10. Heads of Terms were drafted.
31
What were your clients main objectives for disposal in Mayfair?
- Achieve a competitive MR
- Limit Refurbishment Costs
- Limit Disposal / Marketing Costs
- Secure a term of 5 years
- Minimise marketing void
32
Tell me about the description of the office?
| Disposal Mayfair
- Loft conversion of a period office building with retail on the ground floor
- 4 upper floors with a separate entrance (no lift)
- Carpeted floors
- Wall mounted aircon
- Perimeter trunking
- Not much natural light
- Low floor to ceiling height
33
How did you measure the office in Mayfair?
NIA and IPMS 3
But the client wanted me to use NIA as it was what they were familiar with and was common to the market (comparable evidence)
34
What was included in your in-house particulars?
- Description of property
- Location / map
- Amenities
- EPC
- Rates (£18.50 psf) and Service Charge (£9.10 psf)
- Contact details
- Disclaimer
- Photos
- Floorplan / Area
35
What is included in service charge?
- Management Fee
- Electricity
- Gas
- Security
- Cleaning for common parts
- Water
- Repair and Maintenance
36
What are the restrictions on letting boards?
Letting boards have restrictions under the Town & Country Planning Regulations 2007.
However, Westminster had their own restrictions including:
- boards could not be aluminated
- had to be black / white / grey
- no V shaped boards.
Height
Ground - 3m 0.5 m2
3m - 4.6m 1.1 m2
>4.6 m None
37
How much did it cost to erect a letting board?
And how long do you have to take it down?
£125
Must be removed within 14 days of completion.
38
What are the usual requirements for letting boards under Town and Country Planning Regs 07?
Planning consent if over:
>2.5 m2 for flat
> 2.3 m2 for V shaped boards
Cannot project more than 1m away from building
None above height of 4.6m
39
What was your Market Rent for your disposal in Mayfair?
£40 due to poor specification:
- natural light
- loft conversion
- no lift
40
Did you assess the covenant strength of the disposal in Mayfair?
Yes.
Did not satisfy profits test so told landlord to get financial advice.
Decided on a deposit: 6 months rent + VAT
41
From your experience, how much are deposits usually?
6-12 months but its up to client and we recommend FINANCIAL ADVICE
42
What were your recommendations in your report for your Mayfair Disposal?
- MR was £40 for this space (included comps)
- Refurbishment - should repaint walls, replace carpet, keep kitchenette and retain lights.
- Typical lease lengths in market 5 years with RFP of 12 months
- Size this small should expect the T wanting a break at year 3
43
What did you include in the Heads of Terms for Disposal Mayfair?
- Date of Lease March 2019
- Name of L
- Name of T
- Term 5 year lease
- Break options 18 years
- Rent £40
- Rent Free Period 12 months
- Outside 1954 Act OUTSIDE
- Deposit details 6 months rent + VAT
- Alienation Can assign whole
- Reinstatement Yield up to how it was before
- Timing 4 weeks
- L's solicitors & agent
- T solicitors & agent
44
What was included in your Terms of Engagement for your Primrose Hill acquisition?
- Address of client
- Name of client
- Date of instruction - March 2019
- Agency services provided
- Fee
- AML checks
- Commencement date - When letter is signed
- Signature
Terms of Business will include:
- Complaints Handling Procedure
- PII
45
What were the agency services stated in Terms of Engagement?
- Provide knowledge on current market conditions
- Arrange inspections
- Measuring / checking floor areas are correct
- Negotiate on your behalf
- Provide solicitors with the details they need
46
What was the Fee?
10% of 1st years rent (Min of £10,000)
Exclusive of VAT
47
Describe the office in Primrose Hill they moved into?
- CAT A specification
- Gated development
- Raised floors
- Suspended ceilings
- good natural light
- modern - newly refurbished
- Fan Coil air conditioning
- Double glazing
- Good ceiling height
48
What was the clients budget in Primrose Hill?
£50 psf
49
What did you agree in Primrose Hill in your Heads of Terms?
- Address
- Name of L&T
- Rent £47
- Term 5 years
- Break year 3
- Rent Free - 5 months (not as much as CL)
- OUTSIDE ACT
- Alienation
- L solicitors and agents
- T solicitors and agents
- Timing
- Access
50
For your acquisition in Holborn, what were your clients objectives?
- 8,000 sq ft
- over 1 floor
- Holborn / West End (not east)
- Rent £65 psf
- Upgrade spec
- SAVE COSTS
- Wanted to move offices as they had been in occupation for over 15 years
51
What was included in Terms of Engagement for your acquisition in Holborn?
- Date of instruction
- Name and Address of Client
- Fee and expenses
- Agency services provided
- AML checks
- Signature
- Surveyors contact details
52
What are the selection of fit out options available?
- serviced offices
- assignments
- sublease
- plug and play offices
53
Why did you not recommend a serviced office?
| Holborn
Had lots of client meetings and they did not want to be sharing facilities.
54
What options did you narrow down for your acquisition in Holborn?
1. Assignment in Holborn
- tenants fit out provided
- good specification of fit out
- modern office
2. New lease in Hammersmith (Cat A spec)
- v modern
- roof terrace
- Grade A spec
55
What did you include in your financial comparison spreadsheet? (Holborn)
I took into consideration the typical lease costs a tenant would pay.
Including:
- Rent
- Market Rent Free
- Service Charge
- Business Rates
- Fit out works £50 psf (not for the assignment)
- Dilaps £20 psf
56
What is a reverse premium?
| holborn
A contribution from the outgoing T to the incoming T which act as the equivalent of a rent free incentive.
(The equivalent of 12 months rent free including dilaps at £20)
£550,000
57
How do you assign a property?
| Holborn
Heads of Terms are drafted:
- L
- Assignor
- Assignee
- Demise
- User - B1
- Basis of Transactions - ASSIGNMENT of existing lease
- Assignee liability commence
from completion.
- Rent £65 psf
- Outside 1954 Act
- Rates (£20) and SC (£12 psf)
- Reinstatement - handed over in existing
condition
- Responsible for reinstatement
in original lease.
- Premium - equivalent of 12 months rent
- £550,000 plus VAT
- Insurance - assignee
- Alienation - as per existing lease
- Alterations - as per existing lease
- Fixtures and Fittings - assignee to inherit fit out
- Costs - each party bear own legal
costs
- Timing - 6 weeks
- Assignor and Assignee solicitors
- SUBJECT TO CONTRACT
Deed of assignment
58
Describe the office of the acquisition in Holborn
- 8,000 sq ft
- over 1 floor
- manned reception
- Space fitted out by previous tenant
- Good condition
- 8 meeting rooms
- Good natural light
- 5 year lease
- Double glazing
- Raised Floors, suspended ceilings.
59
What happens after heads of terms are sent to solicitors?
FIND OUT
60
For your acquisition in Mayfair, what were your clients objectives?
- Flexibility (COVID-19)
- Costs down
- 10 employees
- 1,000 sq ft
- STAY IN MAYFAIR
- Budget £100
61
You stated you informed them of the process of finding an office. Could you tell me the process?
1. OBJECTIVES
2. RESEARCH MARKET
3. SCHEDULE OF OPTIONS
4. VIEWINGS
5. NEGOTIATIONS
6. LEGALS
7. FIT OUT
8. MOVE IN
62
What are the different acquisition types?
- Traditional Leases
- Sub lease
- Assignment
- Serviced office
63
What is a serviced office?
Space that's ready for immediate occupation.
It is fully-furnished and is managed by a third party.
Rent includes service charge, business rates, management, cleaning etc.
64
What is a plug and play office?
Space that's ready for immediate occupation.
It is fully furnished with wifi, furniture etc BUT MANAGED BY THE TENANT
Move in tomorrow no hassle of setting up internet.
RENT DOES NOT INCLUDE service charge, business rates, management costs etc.
65
Describe the plug and play office?
| Mayfair
- Fully furnished to a good specification
- good natural light
- 1,000 sq ft
- Fan coil aircon
- Bike racks
- showers
66
You said you produced a cost comparison spread sheet, how did you account for the comparison between a serviced office and your plug and play office?
Serviced office incorporated Service Charge, Management Fees, Business Rates etc so I just inserted the Rent.
For the plug and play office I obtained details of business rates, service charge and obtained estimates of management costs from my property management team and added them to the Rent to create a comparison.
However, COVID became even more prominent and my client was worried about the shared facilities.
I therefore advised my client that I should negotiate on the plug and play office
67
What were the advantages and disadvantages of the serviced office?
Advantages Disadvantages
- Flexibility (shrink and grow) - No Front Door
- Management costs incorporated - Rent higher
- Saving on Fit out - SHARED
FACILITIES
(Covid)
- additional amenities
68
What were the advantages and disadvantages of the PLUG AND PLAY office?
Advantages Disadvantages
- Flexibility - move straight away - Management
costs
- OWN FRONT DOOR - lower spec / less
amenities than
serviced office
- NO SHARED FACILITIES
- Lower rent (but management costs)
69
What was included in your Heads of Terms?
- Date of HofT
- Date of New Lease
- Address and Name of L&T
- Rent: £90 psf
- Term: 3 years
- Break option 12 months, 24
months
- Rent Free 3 months
- Inside or Outside Act OUTSIDE ACT
- Alienation Clause Can assign
- Repair clause
- L&T's agents and Solicitors
- Rates
- Service Charge
70
What specifically did your break clause say?
1. At least 6 months notice to be given (T only)
2. All rents & service charge to have been paid
3. Must leave premises FREE FROM OCCUPATION
71
If you client had wanted to go with the serviced office what would have been the main difference?
- For serviced offices you sign a licence rather than a lease.
- do not have security of tenure
- rent more expensive
- Not as secure.
72
How do you work out the business rates of a property?
VOA Website to obtain RV
(RV x UBR) / sq ft
73
What is the current UBR?
RV < £51,000 = 0.49
RV > £51,000 = 0.54
74
What is the threshold for Small Business Rates Relief?
Liable if RV less than £15,000
Wont pay any business rates if less than £12,000
75
Talk me through your acquisition in Holborn
1. INSTRUCTED BY C
2. C, I, T of E
3. OBJECTIVES OF CLIENT
4. LAUNCHED REQUIREMENTS ON AGENTS SOCIETY, LOOKED ON COSTAR
5. PRODUCED A SCHEDULE OF OPTIONS
6. VIEWINGS
7. FINANCIAL COMPARISION SPREADSHEET BETWEEN 2 BEST ONES
8. DECIDED THEY ONLY LIKED ONE IN THE END (ASSIGNMENT) - Negotiated on the reverse premium.
9. DRAFTED HEADS OF TERMS
10. DEED OF ASSIGNMENT SIGNED AND ATTACHED TO LEASE
76
Talk me through your acquisition in Mayfair
1. INSTRUCTED BY C
2. C, I, T
3. OBJECTIVES (over zoom as during COVID)
4. LAUNCHED REQUIREMENTS ON AGENTS SOCIETY, LOOKED ON COSTAR
5. SCHEDULE OF OPTIONS
6. VIEWINGS (Serviced and Plug and Play)
7. COST COMPARISON SPREAD SHEET
8. During COVID-19 DECIDED AGAINST SHARED FACILITIES IN THE SERVICED OFFICE
9. NEGOTIATED ON THE PLUG AND PLAY SPACE
L wanted £95 psf and term of 3 years
T wanted £90 for a term of 3 years and annual break
10. DRAFTED HEADS OF TERMS
77
Are you aware of the stamp duty for leasing a property?
NPV up to £150,000 NIL
NPV over £150,000 1%
NPV over £5m 2%
78
What are the main reasons a tenant would prefer fitted space?
- Cost savings
- Accounts purposes
- Flexibility
79
What are the standard defects in a period-office building?
- Dry and Wet Rot
- Deathwatch beetle
- Damp
- Tile Slippage
- Water Ingress
80
How do you know if something is Dry Rot?
Is it serious?
- Fungal infection
- strong smell
- red spores
Very serious - can destroy timber and masonry.
81
How do you identify Wet Rot?
Cause by damp
- Wet and Soft timber
- Fungal growth
- musty smell
82
What Efflorescence
White marks on the brickwork.
Formed when water reacts with the natural salts.
83
What is rising damp?
Damp that stops around 1.5 m
84
What are the defects you would find in a modern office?
- Damp
- Water damage (from aircon)
- Efflorescence
85
What would you do if you identified defects on an inspection?
1. Take photos
2. Work out causation
3. Notify Landlord
4. Recommend specialist advice.
86
If you receive an offer from a potential tenant, how long do you have to tell the client (Landlord)?
24 hours
87
Have you come across service charge caps?
I personally have not.
However, I am aware they are a way to stop service charge costs spiralling out of control.
They are used for older buildings where costs may increase a lot due to the higher repair and maintenance costs.
88
What are the 3 biggest costs to a tenant?
1. Rent
2. Service Charge
3. Business Rates
89
What was the alienation clause on that lease?
T could assign with landlords consent (NTBUWH)
T could sublet whole with L's consent (NTBUWH)
T could not subject part.
90
What are typical Grade A spec rents in West End, City and Midtown?
West End - £85
Midtown: £70
City: £65
91
Were you acting as a sole agent / multiple agent / joint agent
Sole
92
How do you conduct a schedule of condition?
Take photos of the property
Write detailed notes of the condition, whats included etc.
93
What is in a deposit deed?
Who keeps it?
What was the release mechanism?
Deposit deed is attached to the lease as an annex:
- How much
- Who looks after it (Solicitors or Property Managers)
- Deposit held due to failure to meet profits test, deposit returned after occupation.
94
What is a Guarentor?
A company or an individual that agrees to accept the liability for a tenants ,lease if a tenant defaults / doesn't comply with the covenants.
95
How do you adhere to the Bribery Act 2010 during launches?
I do not accept any gifts
96
What are usual rent frees in Mayfair?
Depends on term but for a term of 5 years its usually between 9-12 months
97
You stated you looked on Costar, and Agents society to find space, are there any other ways to find office space?
Yes.
Walking around local area for letting boards
98
Did you measure the unit?
Yes NIA and IMPS 3
99
Why did you not do a launch?
- Client wanted to keep costs low
| - Did not feel appropriate for this size
100
What does a launch usually include?
Inviting agents to come and look at the space and show them the property.
101
Whats the difference between Mis Rep Act and Consumer Protection from Unfair trading Regs
x
102
What are some of the principles of the Estate Act 1979?
Honesty
Accuracy
Clarity
Openness
103
What are the main practices they recommend in the Estate Act?
S.18 - Agree any fees and expenses prior to commencement of instruction in TofE
s.21 - Disclosure of Personal Interests
OBLIGATION TO TELL CLIENT OF ANY OFFERS RECEIVED.
104
What legislation do you follow whilst writing particulars?
Misrepresentation Act
105
What would you do if you suspected someone was involved in Money Laundering or Bribery?
I would report it to my Compliance Director and Money Laundering Officer.
106
If you were a sole practioner who would you report your ML or Bribery concerns to?
The relevant authorities:
- ML = National Crime Agency
- Bribery - Serious Fraud Office / NCA
107
What is the legislation covering dilapidations?
s 18 Landlord and Tenant Act 1927
Claim for dilapidations are limited to either the cost of the works, or the difference between the value of the property upon possession had the covenants to repair and decorate not been undertaken.
108
What are dilapidations?
They are the obligations of the tenant to reinstate the property to how it was at the start of the lease.
109
2 CHOICES for dilaps prior to lease expiry date:
1. Tenant can do agreed works
| 2. Tenant can pay L a sum to do works
110
What is the sum?
Breach + Loss + Evidence = Recovery.
111
If the landlord plans to demolish building can he still claim for dilaps?
Depends.
If demolish then sometimes reversion could be nil
112
Is there any guidance on Dilaps?
Yes GN on Dilapidations.
113
What is a schedule of condition?
A detailed recording of a property's condition which is usually retained to use at a future time to establish the previous condition of the premises.
The survey is typically included within a Lease to limit Tenant's repairing obligations to the condition of the property at Lease commencement.
114
What are the differences between traditional leases and serviced offices?
Serviced offices:
- ready for immediate occupation
- furnished and managed by a third party
- licences
- shared space
Traditional leases:
- usually not fitted out
- formal process requiring a lease
- managed by the tenant
- usually own front door
115
How has GDPR restricted leasing and letting?
In relation to marketing and particulars...
You can only send those to people who have opted in to receive them, rather than everyone on your emailing list.
116
What is the next big date for MEES and Leasing and Letting?
So at the moment the current situation is that New leases have to have a minimum EPC rating of E.
However, from 1 April 2023 that will apply to existing leases.
For resi the existing leases rule came into force 1 April 2020
117
What are the easy wins you can advise a client if they wish to increase their EPC?
- Replace Lightbulbs
- Double glazing
- Upgrade heating / cooling systems
118
What are the fitted options you advised your client? And why did you advise this?
Acquisition Holborn
- serviced offices
- assignments
- sublease
- Cat A + / Plug and play offices
Benefits:
- keep costs down (my clients objective)
- Flexibility
119
How is an Assignment Granted?
Licence to assign
Document that enables the current tenant (Assignor) to transfer the lease to the Assignee (incoming tenant) with the landlord’s permission (consent).
All three parties will sign this document.
120
How is an Assignment Documented?
Deed of Assignment
Contains:
- Parties (assignor and assignee)
- Date of Contract (deed)
- Lease
- Lease obligations
- Premium (exclusive of VAT)
- Property
- Signed by both parties
121
If you are acting for T and they like an office your company act for the L, what do you do?
1. If the building = joint agents negotiate through them.
2. Informed Consent
3. Unwind instruction
122
How has COVID-19 changed marketing?
- Advise clients they should have Matterport produce a virtual tour for the property.
- which is the company that produce them
- nothing for more than 2,000 sq ft
123
What was your marketing budget?
Disposal in Mayfair
There was not one for this space as it was so small and the rental value was so value it wasnt worth spending money on marketing however we did recommend a letting board.
124
What is the difference between sole, joint, multiple agency?
Sole - Only you act for the landlord and you get the whole fee.
Joint - two agents acting for the landlord and split the fee.
Multiple - Lots of agents acting for the L and whoever does the transaction gets the fee
