Case Study Flashcards

Question

When was the previous rent review and had the market changed much in that time?

Answer 1

The rent reviews were 5-yearly so there hadn’t been a rent review since the lease started. I am not an expert in leasing and letting with the relevant market knowledge however I had seen rents increase over the 5-year period based on new leases signed or rent reviews in the area for the properties I managed. Therefore, I advised involving my companies leasing team, who subsequently produced a leasing strategy which confirmed the property could achieve a higher rent.

Answer 2

The tenant initiated the Surrender once my client declined their proposal by confirming in an email to me that they intended to surrender the lease shortly following up with draft Heads of Terms for a Surrender.

Answer 3

Ahead of the inspection, I conducted a desktop review, referring to my companies h&s policy, conducting a risk assessment and arranged access with the tenant in accordance with their lease terms, which required a minimum of 24 hours’ notice. I then reviewed the existing lease plans and LTA plans and printed them off to bring with me on the inspection. I attended with my facilities manager and inspected the external areas of the property before signing in at reception where I met the tenant’s representative who walked me around the tenant demised areas of the building. During the inspection I took photographs and made notes where required, for instance when I discovered the disrepair. Upon my exit I signed out at reception.

Answer 4

RICS Surveying Safely (2nd Edition, 2018), which was made into a Professional Standard in February 2024.

Answer 5

In accordance with the RICS Surveying Safely, 2nd edition, 2018, I ensured I carried out a pre-assessment of the potential hazards or risks and determined that PPE was not required for the visit as there were no ongoing works or unsafe structures at the premises and I was not required to access the roof for the inspection. I attended alongside my facilities manager who knew the property very well including the fire strategy for the building and estate. I ensured my phone was fully charged, I also informed my contract director that I was attending the property and messaged her when I got there and when I left. I inspected the external property first to look out for any structural issues that may impact the internal areas. I signed in at reception and signed out upon exit.

Answer 6

Yes, I had a rough estimate based on costs from other void budgets and the expected rates liability costs. I ensured my client was fully aware of the void costs to ensure they could make an informed decision, and they were confident that they were making the right decision. My client was very concerned about the risk associated with the tenant and was keen to remove them as soon as possible.

Answer 7

- Asbestos report, asbestos register and management plan (Why: Landlord's ongoing duty under Control of Asbestos Regulations 2012) - Lift life safety maintenance report (landlord’s responsibility to maintain from surrender) - Fire risk assessment and fire strategy (Why: Regulatory Reform (Fire Safety) Order 2005 compliance) - EPC (Why: MEES regulations - minimum EPC rating requirements) - Gas Safety Certificates (Why: Gas Safety (Installation and Use) Regulations) - Electrical installation Certificates (PAT testing records if required by lease - Why: Electrical safety compliance) - Insurance documentation (Why: Lease compliance and risk management) - Statutory Inspections and Certifications o Thorough Examination Certificates (LOLER) - 6-monthly inspections under Lifting Operations and Lifting Equipment Regulations 2012 o Insurance inspection reports - typically annual o Quarterly maintenance records from competent persons o Why: Legal requirement and liability protection - Legal Liability - Non-compliance can result in prosecution under HSWA 1974 - Insurance Validity - Insurers require evidence of proper maintenance - Duty Holder Responsibilities - Landlord assumes legal duties upon surrender - Re-letting Impact - Poor lift maintenance history affects marketability - Cost Implications - Deferred maintenance becomes landlord's problem I requested compliance documentation ahead of the surrender to support with budget setting. We already had copies of some compliance documentation such as their FRA, water risk assessment for the domestic water systems, fire doors inspection, etc which we keep a record of on Riskwise. We required a full list of compliance documentation as from the surrender date, the responsibility for compliance within that demise shifted to my client. The lease only provides provision for the landlord to enforce tenants to provide proof of insurance compliance, planning applications or permissions, EPC and Fire Certificate, during the term.

Answer 8

All communication to the tenant and their agent were done via email to ensure an audit trail was kept, which was important to ensure all stakeholders had a record of what was agreed. I communicated to my client via email and teams but ensured I followed up any calls with a written confirmation of what was discussed and what next steps would be.

Answer 9

Key terms I requested were original suggested and amended were: * No requirement for tenant to make do any disrepair and hand over in its current form * No requirement to a pay a surrender fee * No rent due past the quarter day of 24th March (which was sums already paid) * Vacant possession (agreed) Advised amendments: * 12 months surrender fee * Tenant to make good any disrepair * Tenant to transfer ownership of remaining fixtures and fittings to landlord for price of £1 & tenant to confirm they own in full with no Hire Purchase agreements in place. * Tenant to pay all rents up to surrender date Final accepted amendments: * Tenant to make good any disrepair (payment from tenant rather than requirement to complete works) * Tenant to transfer ownership of remaining fixtures and fittings to landlord for price of £1 & tenant to confirm they own in full with no Hire Purchase agreements in place. * Tenant to pay all arrears up surrender date, agreed at 12th April even though completion was 19th April. All revisions were sent via the landlord’s solicitor to ensure the wording protecting my clients interests in terms of interpretation and legal implications.

Answer 10

The tenant was required to keep the property in good and substantial repair and condition and the definition of property in the lease extended to Service Conduits exclusively serving their unit, which means ‘pipes wires cables sewers drains gutters flues other conducting media and any items similar to any of them and all valves chambers covers fixings and similar items ancillary to any of them.’

Answer 11

Full access raised floors with floor boxes Approximate ceiling height of 2.6 to 2.8m Maximised day light with double glazed windows across the front of the building Air conditioning Passenger lifts Approximate floor loading of 2.5 to 3 KN/sq m with an allowance of 1.2 KN/sq m for partitioning Planning grid of 1.5m x 1.5m This office is classified as Grade B, so the leasing team had proposed some renovation works that could push the property into Grade A to achieve higher rents as part of their leasing strategy. The current EPC was a B so they proposed updates to the BMS and HVAC which they suggested could push the property into the Grade A category. Heating, Ventilation, and Air Conditioning

Answer 12

The tenant wanted to backdate the rent back to November 2023, which was when the property was sold to my client. From communications with the tenant, I understand that the previous landlord had informally agreed a rent concession at a lower rate with the tenant, However, this was never formally agreed, and my client was not willing to accept lower than their contracted rent. Therefore, as they had paid their rent in full since November, not only were they requesting a reduced rent moving forward, but they wanted to be reimbursed for the part of the rent they had already paid.

Answer 13

The landlord would have had the choice to accept surrender or decline but ultimately force the tenant into default as they stated they would exit the premises in 2 weeks. In this scenario my client would have the right to forfeit the lease however would not have put my client in a favourable position as they could end up with unpaid arrears and the property could be handed over in poor condition as there would be no surrender agreement protecting my client’s interest in terms of other lease obligations. If the tenant abandoned the unit and stopped paying rent without landlord consent, the lease would remain in place until the landlord forfeits it. They could take legal action against the tenant for damages of legal enforcement, but this would require legal advice. Some leases have clauses specifying a procedure and fees but this lease was silent on the abandonment.

Answer 14

Depends on the type of insolvency proceeding: * Administration (strictest) – moratorium preventing landlord for collecting rent or taking action against tenant. If Pillar Denton applies, then post-administration arrears are recoverable * CVA – landlords are bound by the terms if agreed and usually reduces rent, which can’t be backdated after the CVA ends. * Liquidation – Court action to recover arrears under standard proof of debt process under Rule 14 of the Insolvency Rules 2016.

Answer 15

The 1988 Act refers to the landlords duty to respond to an Alienation request, this must be done in writing and consent cannot be unreasonably withheld or delayed (assignment, subletting or intention the part with the property), whereas the 1995 Act abolished the privity of contract and introduced AGAs for assignment of leases.

Answer 16

By agreeing the surrender quickly as this was the best way to end the lease while negotiating terms that protected some of my clients’ interests. The other option to forfeit the lease would have removed the tenant, but would not have protected certain interests such as payment of rents or repair obligations

Answer 17

I advised that the landlord benefit from 3 months empty rates exemption, I also advised that only essential costs would be included in the budget and that savings could be made where the building was not required to be in full operation. To lower contractual costs, I requested my facilities manager to agree additional scopes to our existing contracts on the estate where applicable as this was more affordable that setting up an entire new contract. For instance, we had cleaning on the estate and extended the hours to include cleaning in the property ahead of viewings. Plant that was not required was decommissioned and security ensured lights and air conditioning etc was not left running when not required to reduce utility costs.

Answer 18

Rent and service charge was calculated on a daily rate up to the surrender date, insurance was also calculated on a daily rate but for the portion of the entire year as this is raised yearly. Quotes were obtained for the outstanding works and agreed with the tenant before adding to the completion statement.

Answer 19

Rule 1: Members and firms must be honest, act with integrity and comply with their professional obligations, including obligations to RICS. Example: I ensured there were no conflicts of interest and that I had no personal interest before proceeding with advising my client on the surrender negotiation. How? Rule 2: Members and firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise. Example: I ensured I involved the relevant competent people where matters fell outside my scope of expertise, for instance I involved the leasing team to provide market advice and relet the property. I also ensured that the landlords solicitor reviewed the Heads of Terms from a legal standpoint before I sent anything to the tenant. Rule 3: Members and firms must provide good-quality and diligent service. Example: I made sure I understood my client’s objectives before providing advice or acting on their behalf. Rule 4: Members and firms must treat others with respect and encourage diversity and inclusion. Example: I ensured I acted cooperatively with all parties and did not discriminate against protected characteristics. Rule 5: Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession. Example: I ensured I remained alert to anything that did not seem right or may have been unlawful and I would have reported this if I discovered anything I also considered health and safety compliance when reviewing budget and assuming responsibility for the property, protecting visitors including for viewings

Answer 20

The opening offer was 12 months, and this was based on the expectation that there would be up to 12 months void period based on advice from the leasing team and also to prevent my client from being at a disadvantage when it came to marketing fees and other void costs. The reason I did not provide a counteroffer was based on the request for my client to remove the tenant as soon as possible. The tenant already had ongoing court cases with other UK landlords that had been left if less than favourable positions, so this was the priority given my client’s concerns. I deemed that it wasn’t worth the risk of prolonging negotiations as this risked the deal collapsing all together. Looking back 6 months would have been a better opening offer as the tenant had requested to reduce the rent to 50%, indicating that this would have been a more affordable yearly rent for the tenant. This also would have largely reduced the void costs for my client

Answer 21

1 DEFINITIONS AND INTERPRETATION 2 2 SURRENDER OF PREMISES 3 3 TENANT’S OBLIGATIONS 3 4 LANDLORD’S OBLIGATIONS 4 5 RELEASE OF TENANT AND GUARANTOR 4 6 RELEASE OF LANDLORD 5 7 STATUTORY COMPENSATION 5 8 REGISTRATION 5 9 THE CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 5 APPENDIX 1 – FIXTURES AND FITTINGS LIST 6 APPENDIX 2 – IT LIST 7

Answer 22

Final IT equipment, fixtures, and fittings lists are requested in surrender deeds to clarify which items will be removed and which will remain, thereby avoiding contractual disputes and ensuring the property is returned to the landlord in the agreed-upon state. This documentation helps establish clear expectations about vacant possession, prevents disputes over whether items were intended to be part of the property, and avoids potential legal claims for items that were improperly taken.

Answer 23

It was clear as water coming through as there had been heavy rainfall so i engaged a BS to determine remedial works and recommend contractors to quote for the works.

Answer 24

Deeds become effective from the moment they are exchanged or signed; therefore, solicitors give undertakings to hold deeds until funds clear. This protects both parties - seller gets guaranteed payment, buyer gets guaranteed title. The solicitor acts as neutral stakeholder ensuring neither party is disadvantaged.

Answer 25

This could amount to an implied surrender due to actions of the landlord. It’s important to check funds are received and check with solicitor before accepting the keys.

Answer 26

They were transferred into the client rent account and allocated against the intended invoices; the rent and insurance were then transferred to my client.

Answer 27

No notice is required for non-payment of rent unless explicitly stated in the lease, the forfeiture clause in appendix F states that the landlord may re-enter the property if rent is unpaid for 21 days, and no formal demand is required. Right to forfeit: The landlord can proceed with forfeiture through either peaceable re-entry or court proceedings. Consider the lease: Always check the specific terms of the lease, as some leases may require prior notice for rent arrears. However, I would always advise seeking legal advice before forfeiting a lease to ensure the process is correctly followed and the landlord does not open themselves up to any liability risks.

Answer 28

There is no fixed definition for a 'reasonable timeframe' to remedy a commercial lease breach; it is determined case-by-case and depends entirely on the nature and severity of the breach. A landlord must give the tenant a reasonable period to fix the problem, and the timeframe should be clearly stated in a Section 146 notice to be enforceable. Factors like the complexity of the required remedy, the scale of the breach, and potential delays will influence the specific time allowed

Answer 29

As the landlord did not want the tenant to have possession on the property, if they chose to forfeit the lease following non-payment of rent, they could not demand or accept rent as this could waive their right to forfeiture and reinstate the lease.

Answer 30

With my client’s permission I discussed the property with my leasing team to understand the level of interest in the market and what the expected market rent would be. The long-term effects of a much lower rent would have been much more detrimental than an anticipated year of void costs as the lease did not expire until 2034 and the leasing agents confirmed rents had increased slightly in comparison to the passing rent. Negative impacts to the client include: o Low-income stream, which could impact their other investments o Red flag to lenders, particularly if the property was mortgaged, accepting a lower rent may look like a financial risk o Could also have a negative impact on insurance as rents are a consideration for coverage.

Answer 31

Either an administrator or CVA could be put in place that would restrict the landlord’s ability to collect contracted rent.

Answer 32

o Unpredicted income stream o Service charge contributions at risk

Answer 33

A landlord can apply for a possession order under CPR Part 55 after insolvency is declared, but the approach depends on the type of insolvency proceedings: Corporate Insolvency: Administration (Schedule B1 IA 1986) o Moratorium applies: Generally prevents possession proceedings without consent o Need administrator's consent or court permission CVA (Company Voluntary Arrangement) o Check CVA terms: May contain moratorium provisions (28 days) o Usually can proceed unless specifically restricted Liquidation o Compulsory liquidation: May need court permission o Voluntary liquidation: Generally can proceed, but check specific circumstances

Answer 34

When a tenant goes insolvent and no Deed of Surrender is agreed beforehand, the landlord's ability to enforce reinstatement becomes much more limited. Administrator appointed: Moratorium can prevent forfeiture for breach of repair obligation while its in place. Court or administrator permission required to forfeit but this doesn’t solve reinstatement issue. Liquidator could disclaim lease, releasing tenant from all obligations including repair. Under s.315 Insolvency Act 1984, landlords can make claims to recover costs for disrepair. Legal advice should be sought to ensure process is properly followed. Rent deposit/guarantee - Though these may be insufficient for major reinstatement works and not available here Parent company guarantees - If the guarantor remains solvent – not option here are guarantor was bankrupt already

Answer 35

Insurance requirements: High security area as in Covent Garden, where there a frequent break-ins. We had to either board up the building with remote monitoring or provide 24-hour manned security. As my client wanted to progress with viewings as soon as possible and didn’t want unsightly hoarding up they preferred to proceed with 24-hour manned security despite the much higher costs. Asbestos management: Duty transferred under Reg 4 of Control of Asbestos Regulations 2012– had to instruct an intrusive survey before any refurbishment works could proceed as one hadn’t been carried out by the previous tenant, only a management survey. Fire Risk Assessment General Risk Assessment Lift safety & Certificates

Answer 36

The leasing team provided different options including another full FRI lease but ultimately advised that due to the size of the building and based on demand in the area, they would achieve higher rents and reduced void periods if the property was let as a multi-let. Due to the layout of the building, very minor refurbishment would have been required to enable this. Although I should note that I have not been involved in the reletting of the property, I only initiated the relationship before handing the matter over.

Answer 37

This was due to the risk of corporate insolvency, if the tenant went insolvent before the Deed of Surrender was signed, insolvency proceedings restrict the landlord’s ability to recover arrears. If administrator appointed, a moratorium prevents landlord from enforcing payment of contractual rents. Pre- administration arrears become an unsecured debt, which is ranked lower in priority for recovery (typical recovery 0-20p/£1). If ‘Pillar Denton’ protection applies, which is when the administrator continues trading from the premises, full rent becomes an administration expense, but this does not cover pre-administration arrears. The landlord would need to submit proof of debt for pre-administration arrears, but full recovery is extremely unlikely. The requirements in Rule 14.2-14.4 Insolvency Rules 2016 applies but the administrator has the authority to admit or reject claims. If CVA is put in place, the landlord is bound by the terms, which usually restrict rent recovery. - CVA moratorium is only 28 days initially - Rent arrears treatment in CVA varies significantly - Landlord voting rights in CVA approval process - Modification procedures available to landlords If liquidations, then no automatic moratorium and pre-disclaimer arrears are claimed through the standard proof of debt process in liquidation. Landlords should follow Rules 14.2-14.4 cover proof of debt requirements in relation to the Insolvency (England and Wales) Rules 2016. Usually have 21 days to submit a claim and landlord has to cover costs of submitting the claim. Legal advice would need to be sought if this route is followed and there is not a 100% chance to claim will be allowed.

Answer 38

I ensured I conducted a comprehensive lease compliance audit before accepting any surrender, to ensuring any breaches were either remedied or specifically addressed in the surrender documentation. o Rents: All paid to date o Security and guarantees: no deposit, guarantor already bankrupt/insolvent o Alterations: nothing unauthorised – LTA on file from their initial fit out o Alienation: no unauthorised assignment or subletting o General H&S compliance o Insurance: own coverage and no actions to invalidate building insurance

Answer 39

I reattended to ensure the pipe had been properly repaired after discovering the disrepair on the initial inspection, during this inspection I walked around with the tenant’s representative where I noted the office was still operating as usual, there were no closure signs up and no furniture had been removed so I raised the question with the representative to confirmed no plans had been made yet.

Answer 40

If it was the end of the lease term, the tenant would be required to return the property in accordance with the Yielding up clause, which might account for dilapidations or state the condition the tenant is required to return the property to, which may prevent the option to include reinstatement costs in the completion statement. However, as the terms of a Deed of Surrender are based on negotiation and mutual agreement between parties, it was not essential to adhere to this term.

Answer 41

A completion statement is a detailed financial reconciliation document prepared at the end of a lease transaction (whether assignment, surrender, or lease expiry) that ensures all financial obligations are properly calculated and settled. It protects against unpaid obligations and prevents disputes as leaves a clear audit trail.

Answer 42

I ensured Change of Tenancy forms were correctly filled out by the tenant’s representative and requested a copy to provide to my utility consultant to contact the energy suppliers. My facilities manager also attended the property to make a note and record of all meters in their demise to ensure every meter was accounted for.

Answer 43

One of the core principles on ‘Allocation and apportionments’ in the Service Charge Code, states that: 4. Costs should be allocated to the relevant expenditure category. Where reasonable and appropriate, costs should be allocated to separate schedules and the costs apportioned to those who benefit from those services.

Answer 44

Key Terms of the Surrender o Effective Date: 12 April 2024 - tenant pays rent up to this date o Property: Lower Ground to Fifth Floors plus Roof Terrace at 22 Long Acre, Covent Garden o Early Termination: 15-year lease from 2019 surrendered early by mutual agreement Tenant's Key Responsibilities Property Handback: o Provide vacant possession with all keys, fobs, and security passes o Remove all internal signage o Deactivate all WeWork security passes IT Equipment: o Remove or decommission all IT equipment listed in Appendix 2 o This included 110 wireless access points, 103 cameras, security systems, and network equipment Fixtures & Fittings: o Transfer specified items to landlord for £1 (over 450 desks, chairs, meeting room furniture) o Remove items marked "Y" in the detailed schedule o Warrant all transferred items are owned outright and free from encumbrances – to ensure no finance agreements that my client could become liable for once transferred. Financial Obligations: o Pay rent, insurance and service charges up to surrender date o Pay for landlord to remove external WeWork signage o Key Benefit: Both tenant and guarantor (WeWork Companies LLC) are released from all future lease obligations in exchange for completing these surrender conditions

Answer 45

If the tenant was unrepresented, I would advise them of the services available at the RICS Dispute Resolution Service. The most suitable option here would be mediation as it offers a confidential, quicker, and more cost-effective way to reach a mutually acceptable outcome by facilitating constructive dialogue between parties. An impartial mediator, trained in mediation skills and subject matter expertise, helps clarify issues and explore solutions without imposing a decision.

Answer 46

I contacted my leasing team to discuss levels of demand in the area for leasing space matching the subject property so that I could confidently advise my client on whether to pursue a surrender or aim to retain the tenant at a reduced rent.

Answer 47

Section 38(1) renders void any surrender provisions that operate as a penalty for exercising LTA 1954 rights, but does not prevent genuine voluntary surrenders by mutual commercial agreement unconnected to statutory applications, which was the case here as the tenant initiated the Surrender. A deed of surrender legally terminates the lease and statutory protection as it releases and terminates all rights and obligations under the lease. Once validly surrendered, the tenant's right to a new lease under the Act is extinguished. Reference to key lease clauses should be addressed in the Deed of Surrender as once complete, the lease is no longer enforceable - this includes any tenant breaches that need to be remedied before. In different circumstances, other clauses such as upcoming rent reviews may be considered for premium negotiations.

Answer 48

Asset management considerations: - Costs to repair (financial burdens on my client) - breach of any other lease clauses such a Use class, alienation, alterations etc. Inspected alongside building surveyor and facilities manager for the building.

Answer 49

A lease re-gear is a renegotiation of an existing commercial lease, often involving the landlord and tenant replacing the current lease with a new one on different terms. This process is often used when a tenant needs more flexibility or a landlord seeks to improve the property's investment value, and typically results in a longer lease term in exchange for concessions like a lower rent or reduced rent-free period. A common example is a landlord agreeing to a reduced rent or cash flow support, while the tenant gives up a break clause or extends the lease term.

Answer 50

Filing history: • Filing punctuality – late filings may indicate poor management or cash flow issues. • Recent changes – director resignations, new appointments, address changes, or share capital alterations can signal instability or restructuring. Accounts: • Turnover and profit/loss – profitability trends. • Net assets and balance sheet strength – equity, liabilities, liquidity. • Cash flow – if available, shows how easily they can meet rent obligations. • Auditor’s comments – “going concern” warnings are red flags. • Size of accounts – small companies may file abbreviated (“micro”) accounts with limited data. Persons of significant control: Charges & mortgages: Director information: Confirmation statements:

Answer 51

Credit safe: cheaper, easy to interpret, more suitable for UK companies and more commonly used by landlords Dun & Bradstreet: more expensive, more complex, better for international businesses & deeper due diligence into AML/KYC

Answer 52

In 2024, WeWork UK was involved in a significant High Court case concerning a lease forfeiture claim by its landlord, Almacantar, over its flagship London office at 10 York Road (Two Southbank Place). The key developments in 2024 were: The Dispute: Following WeWork's US parent company filing for Chapter 11 bankruptcy protection in November 2023, the landlord, SBP 2 SARL (part of the Almacantar group), sought to terminate the lease for the London office. Almacantar argued that the US bankruptcy of the lease guarantor triggered a forfeiture clause under UK law. WeWork's Argument: WeWork UK, which maintained its separate operations and was up to date on rent payments, argued that the guarantor entity under the lease had not formally been declared insolvent by a UK court, which was a requirement for forfeiture as per the specific wording of the lease's clauses referencing the Insolvency Act 1986. High Court Ruling (Jan 2025): While the primary court judgment fell in early January 2025, the legal arguments and the case itself were ongoing throughout much of 2024. The High Court ultimately ruled in WeWork's favour, dismissing the landlord's first forfeiture claim. The judge determined that a formal court determination of insolvency was a necessary prerequisite for the landlord to re-enter the premises, which had not occurred. Settlement: Shortly after the January 2025 ruling, WeWork and Almacantar reached an out-of-court settlement to end the ongoing legal battle, allowing WeWork to maintain its operations at the flagship location. Separately, WeWork successfully exited Chapter 11 bankruptcy protection in the US in June 2024, having used the process to renegotiate or exit numerous leases globally, including completing its negotiations in the UK and Ireland.

Answer 53

Penetrating damp causes by leaking pipework 🔹 1. Likely Materials in the Affected Areas Ceiling & walls: • The ceiling appears to be painted plasterboard (gypsum board) fixed to a suspended or direct-fix metal framework. • The walls below look like skimmed plasterboard or painted plaster over blockwork. • There’s evidence of emulsion paint on the surface, which can blister or peel when exposed to moisture. Pipes & services: • The visible pipework (white and red) looks like PVC or ABS waste/vent pipe and metal (possibly copper or steel) water or heating pipework. • The leak staining runs from the junction of these pipes, suggesting the leak originates from plumbing or HVAC condensate above the ceiling line. ⸻ 🔹 2. Type of Damp Present The staining pattern, streaking, and localised damage are consistent with penetrating damp from a plumbing leak, rather than condensation or rising damp. Indicators: • The brown/tan discolouration suggests dirty water or corrosion in the leak source. • The flow pattern (vertical streaking from a concentrated point) indicates pressurised or intermittent water flow. • No evidence of widespread condensation patterns — so this is almost certainly leak-related damp. ⸻ 🔹 3. Associated Risks and Issues a) Plasterboard deterioration: • Gypsum board loses structural integrity when wet — it can sag, crumble, or delaminate, particularly around screw fixings. • Even if dried, salts and mould spores can remain embedded in the surface. b) Mould growth: • The discoloured and textured staining suggests potential early mould colonisation. • The area behind the ceiling and near the pipe insulation is at high risk of hidden mould due to limited airflow. c) Corrosion of fixings and metalwork: • Prolonged damp can lead to rusting of ceiling fixings or metal framing supporting the plasterboard. • Any electrical conduit or trunking nearby could also be compromised (safety issue). d) Paint and finish failure: • The bubbling and flaking you can see is from paint film separation caused by trapped moisture and salts migrating through. e) Persistent moisture and latent damp: • Even after a leak is stopped, trapped moisture within the ceiling void can take weeks to dry fully without ventilation or dehumidification. • There’s a risk of recurrence or concealed damage if drying isn’t verified with a moisture meter. ⸻ 🔹 4. Recommended Next Steps 1. Confirm the source: Trace and repair the leaking pipe or joint above the ceiling (plumbing or condensate line). 2. Moisture testing: Use a calibrated protimeter or thermal imaging camera to confirm the extent of saturation. 3. Strip back damaged materials: Remove any wet plasterboard, insulation, and mouldy finishes. 4. Drying: Employ forced ventilation or dehumidifiers until moisture readings are within acceptable limits. 5. Reinstatement: Replaster or reboard only once the substrate is dry and mould-free.

Answer 54

Pillar Denton Ltd and others v Jervis and others [2014] The Court of Appeal has returned to the ‘pay for what you use’ principle in its decision in the Game appeal handed down on 24 February 2014. The Court of Appeal decided that an office holder (be it an administrator or liquidator) must make payments at the rate of the rent for the duration of any period during which he retains possession of the property for the benefit of the administration or liquidation. The rent is to be treated as accruing from day to day and is payable as an expense of the administration or liquidation. If a tenant goes into administration how should you advise your landlord client? Get in contact with your administrator and find out what’s on offer, do they intend to leave the property and surrender the lease? or do they intend to sell the business and negotiate a temporary rent concession until this is agreed? If the administrator is willing to try to find a buyer for the property but only if the landlord agrees not to claim rent for any period while they are doing that, an express agreement will need to be entered into.

Answer 55

I was aware from my inspection and from talking to their representative that occupancy rates fluctuated and this branch had one of the lower occupancy rates across London and that it had not recovered from pre-pandemic demand. However, they did not disclose exact figures when requested. West End also has the highest rents and the lease was agreed pre-pandemic. If they were to increase costs for members to make the rent affordable they would likely see a bigger decrease in demand as many flex space competitors and many customers are small start-ups that would opt to work from home.

Answer 56

They advised that occupancy rates were not as high at this branch as demand had dropped significantly since the pandemic. The rent at the property was agreed pre-pandemic. Flex space membership prices were increased but wasn't enough take up due to increase in hybrid working.

Answer 57

The key issue here was that the security under the lease was a parent company guarantor, which was the US Parent Company, meaning there was no security available if the tenant defaulted. Although the UK and US companies are legally separate, group companies operate as an integrated economic unit with extensive financial interdependencies. Based on their company house filings they owed an overall debt of over £500million Net to their group companies worldwide. Formal Insolvency Procedures: Administration - likely outcome given net liabilities of £531 million Liquidation - if no rescue possible CVA (Company Voluntary Arrangement) - potential restructuring option

Answer 58

The tenant was paying rent, however this was not a profitable branch for them as per communications with the tenant. The wider company was performing badly with pre tax loss of 147 mil.

Answer 59

With permission discussed with leasing team.

Answer 60

Given the large debt they owed and operational losses, 50% reduction was still over £1million and I had to consider that the tenant had many other branches across the UK too, which based on their financial position they were not financially capable of honouring. It was unclear at the time which of the branches they were considering closing, but based on the tenant's communications this lease was not affordable or profitable.

Answer 61

Both administration and liquidation are formal insolvency procedures under the Insolvency Act 1986 (as amended), but they serve different purposes:

Answer 62

Rescue a business from insolvency.

Answer 63

Not necessarily - it depends on how the administrator decides to handle the assets. If moratorium then cannot collect rents post administration date - if they leave the premises or disclaim lease they have no liability to pay If Pillar Denton applies then can demand full rent from the administration date - becomes expense of administration Pre-administration arrears can be claimed - rent is treated as unsecured debt - claimed via standard proof of debt form under Insolvency Rules 2016 - unlikely to get full amount as secured debts are prioritised.

Answer 64

Attended alongside building surveyor and my client. Building surveyor determined reinstatement costs and Client chose which fixtures and fittings they wanted removed.

Answer 65

No, as damage was not caused by an insured risk, it was caused by tenants breach of lease and failure to repair and maintain. Insured risks include events like, fire or floods. If the leak had been caused by a burst pipe from frost damage where tenant was not at fault, it could be claimed.

Answer 66

One option could have been to negotiate a short term lease that included a mutual agreement to contract out of the LTA 1954. However, there was still a risk that the tenant could become insolvent and my client could be unable to claim repossession of the property. The tenant also wanted to agree a long term restructure and my client wanted to remove the tenant as soon as possible.

Answer 67

I recognise the risks of a quick surrender given the lease term, but my client was concerned about the financial risk of the tenant and the associated reputational issues and therefore wanted to remove the tenant. Risk vs. Reward Balance: Although retaining the lease theoretically provided income security until 2034, the practical risks of tenant default, associated legal costs, void periods, and reputational damage outweighed the benefits of holding a deteriorating covenant. The proactive approach aligned with my client's risk appetite and strategic objectives.

Answer 68

The tenant closed several across the UK - I don't have the specific intel on these properties or their rent structures but I think this highlights the high risk associated with the tenant and reinforces that this decision best protected my client. The widespread closures, combined with the tenant's explicit statement that they would not pay surrender premiums to any landlord due to bankruptcy risk, indicated their financial position was deteriorating rapidly across their entire portfolio.

Answer 69

Not to my knowledge as if there was, this was not publicised. The company seemed to be prioritising closures in an attempt to rescue the company from its debts.

Answer 70

When negotiating I look to understand both sides goals and look for a win-win result. I was aware the tenant was experiencing financial distress and wanted a much more affordable rent. However, I also had to ensure I protected my clients interests and consider how this could negatively impact my client. Therefore, I advised my client that negotiations should be expedited to secure their key interests being: - removal of tenant - recovery of rent to date - property in good repair & to do this, I had to prioritise goals and assessed that it would not be suitable to spend time negotiating a surrender premium that the tenant did not have the financial capability to pay and would only enhance the risks around the tenant.

Answer 71

All stakeholders were well engaged in this negotiation as all stakeholders had clear outcomes they wanted to achieve quickly. I advised my client to maintain their position initially, explaining that I believed the tenant intended to stay and their agent was incentivised to secure the best deal. In the meantime, I conducted essential due diligence by reviewing their arrears, companies house and credit check to verify the significance of the risk and agents communications. I supplemented this with further research into ongoing court cases. I ensured I conducted these reviews quickly and verified them with a qualified accountant. Given the high stakes involved, I advised my client to engage their solicitor from the beginning and if the stakeholders were not responsive, I would have sought legal advice on how best to protect the clients interests taking into account their objectives.

Answer 72

Conferred with leasing team with clients permission who confirmed tenants in market willing to pay market rent.

Answer 73

Building surveyor to assess and recommend the necessary contractor. Dry out - assess damage to materials - remove mould if any - then re-decorate.

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