What are the penalties for non-compliance with MEES?
o Commercial:
Less than 3 months = 10% of RV or £5k max
More than 3 months = 20% of RV or £10k max
o Residential:
Less than 3 months = £2k
More than 3 months = £4k
What can you tell me about the RICS UK Residential Real Estate Agency ‘Blue Book’?
- Professional Statement
- Provides:
o Legislation
o Standards and Ethics
o Marketing
o Acting for the vendor
What can you tell me about RICS UK Commercial Real Estate Agency 2016?
- Professional Statement
- Provides key information on areas:
o AML checks
o Marketing the property
o Methods of Sale etc - List of Core Principles for Agents:
o Act in honest, fair and transparent way
o Due diligence and care
o Provide clients with terms of business
o Avoid conflicts of interest
o Do not discriminate
o Client Money Handling Procedure
o PII
What is the RICS document for Clients Money Handling and what can you tell me?
- RICS Clients Money Handling Professional Statement
Areas of good practice:
- Holding clients money
- Providing information to clients
- Compliance
What are the sections of the Landlord and Tenanct Act 1954?
Section 24 = Holding over
Section 25 = Landlord notice to end or seek new lease
Section 28 = Agreement to renew
Section 30 = Grounds for refusal of a new lease (7 grounds – must be proved to court)
Breaches of tenancy
Owner occupation
Redevelopment
When can business rates relief be applicable?
Temporary exemptions for vacancy:
o 3-months offices and retail
o 6-months industrial
o If occupied for 6 weeks again then becomes available for relief once vacated
Exemptions:
o Vacant listed buildings
o Charities
o Companies in administration
What can you tell me about the performance on the Leeds Industrial market?
o Prime Rent = £8.25 psf
Pegasus at Logic 30,000 sq ft - £8.75 psf (brand new)
o Vacancy Rate = Very Low driving increasing rent
o Doncaster and Sheffield slightly lower rents
o Speculative developments increasing
o Average Yield = 4.7% (moved down from 7% 5 years ago)
What can you tell me about the performance on the Leeds Office market?
o Prime Rent = £36.00 psf (11+12 Wellington Place – Lloyds 125,000 sq ft)
o Out of Town = £24.75 psf
o Take up = Consistent
o Prime Yields = 5.75%
o Out of Town Yields = 6.75% (Knight Frank)
o Flight to Quality = smaller but better-quality space (over half of the deals are below 5,000 sq ft)
Case Study: What was your best comparable for establishing MR?
Comparable 5 – Hedon Road – 9.5-acre site with 86,000 sq ft unit (20% site density)
- Series of similar type units
- Holiday Home manufacturer (Willerby)
- Similar location
- £3.37 psf rent
- Sale and leaseback however
Case Study: What did you learn from the comparables when establishing MV?
Yields comparables – 6% to 13.5% (provided on NIY)
Investment rates psf - £12 to £60 psf
Case Study: What was your best comparable evidence for reaching MV?
Comparable 5 – Hedon Road – June 2021, £33 psf and 9.4% NIY
Comparable 7 – Grimsby – July 2020, 13.55% NIY – let on 2 leases
Case Study: What was the turnover of the tenants?
- Omar = £70M
- Rettig = £80M
Why did you apply the same yields to both of the leases on the Term?
- Both under-rented
- Both similar covenant strengths
- Omar =
Worse condition - Rettig =
Land-locked
You have identified a comparable at West Carr Business Park which is very similar. Why is the rate so different from £5.01 psf?
- Far smaller unit
- Quantum reflected for the difference in size of the property
- Similar at Amsterdam Road
Your comparable at Seafood Village Grimsby has a Long Leasehold with ground rent of £75,000 p.a. How do you reflect this when assessing the comparable?
- Deducting the ground rent from the income would create a profit rent
- This is then reflected in the yield which will be altered
What do you know about demand from this type of tenant in this location?
- Large quantity of caravan manufacturers in the location
- Willerby Homes
- Europa
- Delta
Are Rettig and Omar connected?
- Not connected
- Checked on Companies House
Why did you adopt a void period of 9 months to the Rettig reversion?
- Both 9 months
Landlocked… however: - Better quality unit than the other (more attractive)
- Less maintenance works to be done
How would you account for dilapidation’s in your valuation?
- LL has potential liability over dilapidation’s
- Lease stated to be returned to condition of occupation
- Some roof works to undertake
- Valuation reflects this in the yield
- Assume return to condition
- Building Surveyor for further investigation into dilapidation’s
How does the shared access route work? Who is responsible for it?
- The access is not within the demise of either tenant and is a communal area
- Therefore the Landlord charges a service charge to maintain the shared yard
- The rent I have capitalised is net of costs
- Yield reflected the condition of the property and site
- Can’t capitalise or profit from a service charge
What RICS document is there for conflicts of interest?
- RICS Conflict of Interest Professional Statement 2017
o Conflicts checks
o Informed consent
o Information Barriers
o Guidance on record keeping
- When can conflicts not be managed?
o Confidential Conflict
o Prohibited by law
o Prevents competent service
o Individual undertaking both services
What do you know about the RICS Countering Bribery and Corruption, Money Laundering and Terrorist Financing professional statement (1st edition, 2019)?
Bribery:
- Must not accept or offer anything constituting a bribe
- Must report any breaches
AML:
- Not facilitate money laundering
- Firms must have systems to prevent
Guidance:
- Encourage transparency by having e.g. a gift register
- Provide training for employees
What is included within an Annual Return?
- Type of business and staff details
- Name of Responsible Principal
- Statutory Regulated Activities – such as financial services
- Nature of Clients
- CHP and records
- PII details
- Whether clients’ money is held
