Case Study

Question 1

Can you briefly summarise your role in the acquisition at 10 New Burlington Street?

Answer 1

I was responsible for overseeing the acquisition process and ensuring all client objectives were met.

Question 2

What were your client’s key objectives and how did you ensure these were met?

Answer 2

The key objectives included securing a favorable lease and minimizing costs. I ensured these were met through thorough market analysis and strategic negotiations.

Question 3

What challenges did you face during the transaction, and how did you overcome them?

Answer 3

Challenges included legal delays and conflicting interests. I overcame them by maintaining open communication and adjusting strategies as needed.

Question 4

On reflection, what would you have done differently and why?

Answer 4

I would have set clearer expectations with all parties involved to prevent misunderstandings.

Question 5

How did you refine the client’s initial brief and why was this important?

Answer 5

I refined the brief by clarifying objectives and priorities, which was important for aligning expectations and strategies.

Question 6

How did you ensure compliance with conflict-of-interest and anti-money laundering regulations?

Answer 6

I conducted thorough checks and maintained transparency throughout the process.

Question 7

How did you manage client expectations when legal delays arose?

Answer 7

I kept the client informed of progress and potential impacts, providing reassurance and alternative solutions.

Question 8

What steps did you take to ensure your advice was always in your client’s best interests?

Answer 8

I prioritized the client’s needs in every decision and provided unbiased, comprehensive advice.

Question 9

What inspections or checks did you undertake at the subject property, and why?

Answer 9

I conducted physical inspections and legal checks to assess the property’s condition and compliance.

Question 10

How did you confirm the measured floor area, and why is a duty of care letter important?

Answer 10

I confirmed the floor area through professional measurements, and a duty of care letter is important for liability protection.

Question 11

What were the key due diligence matters and how did you advise your client on them?

Answer 11

Key matters included EPC, business rates, and reinstatement obligations. I advised the client on potential impacts and compliance.

Question 12

How did you determine the market rent for the subject property?

Answer 12

I analyzed recent comparable leases and market trends to establish a fair market rent.

Question 13

Which comparables did you rely on, and why were they appropriate?

Answer 13

I relied on similar properties in the area that had recently leased, as they provided a relevant benchmark.

Question 14

How did you adjust the comparables to reflect differences in condition, location, or lease terms?

Answer 14

I made adjustments based on specific property features and market conditions to ensure accuracy.

Question 15

Why did you advise a headline rent of £140–145 psf?

Answer 15

This range was based on market analysis and comparable property performance.

Question 16

Can you explain the negotiation strategy you adopted, particularly around the break clause and rent-free incentives?

Answer 16

I focused on securing favorable terms by emphasizing the client’s long-term commitment and market conditions.

Question 17

How did you achieve a reduction in rent and improvement in incentives?

Answer 17

I leveraged market data and the client’s position to negotiate better terms.

Question 18

What leverage did negotiating on multiple properties provide?

Answer 18

It allowed for stronger bargaining power and the ability to compare offers.

Question 19

Why was it important to secure flexibility on alienation provisions?

Answer 19

Flexibility on alienation provisions allows for future subletting or assignment, which can enhance the property’s value.

Question 20

How did you document and track negotiations for transparency with your client?

Answer 20

I maintained detailed records of all communications and agreements throughout the negotiation process.

Question 21

What is the significance of contracting out of the Landlord and Tenant Act 1954?

Answer 21

It allows parties to exclude certain statutory rights, providing more flexibility in lease terms.

Question 22

How would you explain the implications of a tenant-only break clause to your client?

Answer 22

I would clarify that it provides the tenant with the option to terminate the lease early, which can be beneficial.

Question 23

Why is reinstatement at lease expiry an important consideration?

Answer 23

It ensures that the property is returned to its original condition, which can affect future leasing opportunities.

Question 24

What risks do upwards-only rent reviews present to tenants, and how did you advise your client?

Answer 24

They can lead to increased costs for tenants. I advised my client to negotiate caps on potential increases.

Question 25

You mentioned you would set clearer expectations with solicitors and landlords – how would you do this in practice?

Answer 25

I would establish regular communication and detailed timelines to ensure all parties are aligned.

Question 26

How might you have mitigated the impact of the legal delays differently?

Answer 26

I could have proactively identified potential issues earlier in the process to address them sooner.

Question 27

What have you learned from this transaction that will influence how you approach future leasehold acquisitions?

Answer 27

I learned the importance of thorough due diligence and clear communication to avoid misunderstandings.

Question 28

How do you calculate business rates?

Answer 28

Business rates are a tax on the occupation of non-domestic property, and in England and Wales they are calculated as follows: 1. Identify the Rateable Value (RV) from VOA website: 2. Apply the Uniform Business Rate (UBR) of 54.6p in the pound 3. Multiply the RV by the appropriate multiplier. 4. Adjustments and relief

Question 29

How is stamp duty payable?

Answer 29

SDLT is worked out on the Net Present Value (NPV) of the rent over the term of the lease. The thresholds are: 0% up to £150,000 1% between £150,001 and £5 million 2% above £5 million If a premium is paid as well as rent, SDLT is also due on that, at the non-residential freehold rates. When it’s paid: The tenant must file an SDLT return and pay the tax within 14 days of completion. Even if no SDLT is due, a return is still required if the NPV is over £250,000. Case study example: At 10 New Burlington Street, the rent is £1,043,700 per year. Over a 10-year term this produces an NPV well over £5m, so SDLT would be charged at 1% up to £5m, and 2% on the excess. The exact figure would be confirmed using HMRC’s SDLT lease calculator.

Question 31

How did you determine the shortlist of 6 properties in your case study?

Answer 31

Based on specific criteria and analysis of available data. ## Footnote Consideration of location, property type, price, and client requirements may have influenced the selection.

Question 32

Did you conduct the viewing tour on your own, how did you ensure your own safety and that of your client?

Answer 32

Implemented safety protocols and possibly conducted risk assessments. ## Footnote This could include ensuring presence of another person, informing others of your location, and following health guidelines.

Question 33

When are business rates reassessed and who does this?

Answer 33

Business rates are reassessed periodically, typically by the Valuation Office Agency (VOA). ## Footnote Reassessments usually occur every five years in the UK.

Question 34

Do you know what has happened recently to business rates in London?

Answer 34

There have been changes in rates due to new policies or economic factors. ## Footnote Specific details may include increases or adjustments based on market assessments.

Question 35

Your comparable evidence at 10 New Burlington St was a lease renewal what allowances did you make to account for the fact it was not a new lease?

Answer 35

Adjusted the rental value considering market conditions and lease terms. ## Footnote This may include factors like tenant improvements or market fluctuations.

Question 36

Was the terrace at 30 Berkley Square rentalised? Should it have been rentalised as part of IPMS-3 standards?

Answer 36

Assessing whether it was included in the rental calculation according to IPMS-3 standards. ## Footnote IPMS-3 standards provide guidelines for measuring and reporting property areas.

Question 37

If you had measured the property, tell me how you would have done so?

Answer 37

Utilized standard measuring techniques according to relevant guidelines. ## Footnote This may involve using measuring tapes, laser measures, or software tools.

Question 38

Why did you not measure the property yourself?

Answer 38

Outsourced the measuring to a professional or relied on existing measurements. ## Footnote This could be due to time constraints or lack of expertise.

Question 39

Tell me about the different types of alienation.

Answer 39

Includes assignment, subletting, and novation. ## Footnote Each type involves different rights and responsibilities regarding lease agreements.

Question 40

What is the difference between a lease and a licence?

Answer 40

A lease grants exclusive possession, while a licence permits use without possession. ## Footnote This distinction affects tenant rights and landlord obligations.

Question 41

What are typical conditions of a break clause?

Answer 41

Conditions often include notice periods and specific circumstances for termination. ## Footnote This can vary widely based on lease terms and negotiations.

Question 42

How would you calculate your client's SDLT for this transaction?

Answer 42

Based on the purchase price and applicable rates. ## Footnote SDLT (Stamp Duty Land Tax) is calculated according to thresholds set by HMRC.

Question 43

Do tenants pay SDLT on carpet and floor box allowances?

Answer 43

Yes, unless specifically excluded in the lease terms. ## Footnote Allowances may be subject to SDLT if they are considered part of the property value.

Question 44

Did you know if Asbestos was present in the building, how would you have checked?

Answer 44

Conducted an asbestos survey or review of existing reports. ## Footnote Checking for asbestos is crucial for health and safety compliance.

Question 45

What was the initial brief?

Answer 45

Timing - ahead of April lease expiry Location - West End Term - 5-10 years Size - 60 desks Spec - High quality unfitted Budget - Market

Question 46

What was the rent at the 3 Shortlisted options?

Answer 46

10 NBS - £145 14 StGS - £130 1GCP - £92.50

Question 47

What was the break clause subject to?

Answer 47

6 months written notice. Could also be: vacant possession, full payment of rents, s/c

Question 48

What were the capital contributions?

Answer 48

Carpets - £25 per sq m Floor boxes - £75 1:10 sq m ratio

Question 49

Business Rates

Answer 49

£55

Question 50

Dilaps provision

Answer 50

CAT A

Question 51

Alterations provision

Answer 51

with Lessors approval

Question 52

Alienation provision

Answer 52

Sublet in whole of part (2 occupiers) Assign Can sublet at below passing rent but must be above MR accounting for rent free

Question 53

What are typical lease break requirements?

Answer 53

Subject to written notice Full payment of rent full payment of s/c Free from occupation Vacant possession - bad one

Question 54

Service charge

Answer 54

£16.00

Question 55

Size of demise

Answer 55

7,455 sq ft

Question 56

What are typical rent review provisions in leases?

Answer 56

Both parties appoint specialist rent review surveyors. Review lease means a lease granted with VP, 10 year term, property used as offices Assumptions - no special interests - compliance with lease covenants - fit and ready for immediate occupation Disregards - goodwill - tenant improvements