Property Management - Level 1

Question 1

What is the RICS Professional Statement: Real Estate Management, 2016?

Answer 1

It outlines the principles that share the culture of fairness and transparency that underpin the activities by real estate managers. It is mandatory.

Some of the Principles:
1 - Act in a honest, fair and transparent manner
2 - Carry out work with due skill, care and diligence and ensure competency
3 - Ensure clients are provided with terms of business that are clear, with CHP
4 - Do everything to avoid conflicts of interest and if there are, manage them properly
5 - Not to discriminate unfairly in any dealings
6 - All communications with clients are fair, decent, clear and timely
7 - All advertising and marketing material is honest and truthful
8 - Client money held separately and covered by appropriate insurance
9 - Hold appropriate PII cover

Question 2

What are the different types of advice given for a different variety of aspects of property management?

Answer 2

Ethics - my duty of care as a property manager, dealing with conflicts of interest and corporate social responsibility

Managing real estate - collection of rent, repairs, insurance and service charges

Safety and security - confidentiality, data protection, H&S and personal safety

Question 3

What is the RICS Guidance Note on Commercial Property Management?

Answer 3

Guide to best practice for commercial property management, focusing on how PMs can be efficient, and effective to their client. Gives guidance on the PM’s duties of rent collection, service charges and managing buildings.

Question 4

How would you find the alienation clause?

Answer 4

Reading the lease

Question 5

What are alterations?

Answer 5

Alterations are carried out by a tenant during the lease. They are usually approved in writing by the landlord prior to undertaking works.

Question 6

What is a licence for alterations?

Answer 6

Documents agreed works to be carried out by the tenant. It is to be completed before works commence.

Question 7

How would you deal with a licence for alteration application?

Answer 7

1. Read the lease - see if the tenant requires Landlord approval for works
2. Ask for plans/specification
3. Obtain an undertaking for the surveyor’s and legal costs
4. Check compliance with Equality Act and if there is a risk assessment and method statement
5. Check long-term impact on the property- and provide recommendation to the client.
6. Liaise with solicitors and the landlord to complete the application
7. Inspect property once works have completed

Question 8

What is the Landlord and Tenant Act 1927?

Answer 8

Section 19 - States that landlord consent cannot be unreasonably held. Compensation payable if not followed.

Question 9

What are dilapidations?

Answer 9

These are negotiations at the end of the lease to bring the property back to its condition before the tenant occupied the space.

Question 10

What would you do if a tenant is vacating the property?

Answer 10

1. Read the lease for the reinstatement obligations for both parties
2. Check for licenses for alterations
3. Liaise with building surveyors to prepare schedule
4. Liaise solicitors to serve Section 146 (Law of Property Act 1925) with schedule

Question 11

What are the different options for dilapidations?

Answer 11

1. Tenant can do works
2. Tenant can pay sum to the landlord to undergo the works

Question 12

What are the different types of schedules for dilapidations?

Answer 12

1. Interim - during the lease with at least 3 years remaining
2. Terminal - Last 3 years of the lease
3. Final - Expiry of the lease

Question 13

What is the RICS Professional Standard for Dilapidations?

Answer 13

RICS Professional Standard: 7th edn, 2016

Question 14

What are the reasons why dilapidation settlements are not agreed?

Answer 14

1. Tenant has gone into administration
2. Reinstatement not required by the landlord
3. If a schedule of condition limits the repairing liability

Question 15

When a building is void, what should you do as a property manager?

Answer 15

1. Tell insurers
2. Maintain the fabric of the building
3. Obtain an EPC
4. Undertake regular inspections
5. Undertake a H&S and fire risk assessment
6. Inform council for payment of empty rates
7. Seal letter box

Question 16

What are the fundamental principles of rent collection?

Answer 16

1. Accuracy of information
2. Timing

Question 17

What do you have to be careful of when collecting rent from an expired lease?

Answer 17

If the lease is outside the LTA then it may create a new protected tenancy.

Question 18

How would you deal with arrears?

Answer 18

1. Speaking to the tenant - finding out why they’re in arrears and attending site (to speak to the tenant and see if they’re in occupation)
2. Agree a payment plan
3. Commercial rent arrears scheme
4. Stat demand (wind up)
5. Pursue guarantor if there’s an AGA
6. Use rent deposit (tenant must top up)
7. Court proceedings
8. Forfeit the lease

Question 19

How would you pursue a guarantor?

Answer 19

Check to see if there is an AGA in the lease. Under the Landlord and Tenant (Covenants) Act 1995 - must pursue the guarantor within 6 months.

Question 20

What is a statutory demand?

Answer 20

The prelim step to pursuing bankruptcy or winding-up proceedings, to put pressure on the tenant to pay arrears.

Question 21

How long does the tenant have to pay the arrears after a stat demand has been served?

Answer 21

21 days

Question 22

What is the process for the commercial rent recovery scheme?

Answer 22

1. Minimum of 7 days unpaid rent
2. Minimum of 7 days warning notice
3. Enforcement agents visit
4. 2 clear days to follow
5. Re-entry by enforcement agent to seize goods
6. Allow 7 days before sale of goods
7. Fees must be specified on the entry notice

Question 23

How would a landlord serve notice of arrears to a sub-tenant?

Answer 23

Section 6 of the Law of Distraint Amendment Act 1908. The sub-tenant can pay the superior landlord directly.

Question 24

What is the Landlord & Tenant (Covenants) Act 1995?

Answer 24

Relates to the assignment of leases.

Introduced AGAs

Section 17 - Notice must be served upon a guarantor within 6 months of the tenant defaulting

Question 25

What is lease engineering?

Answer 25

To maintain value in their investment or retain a tenant. They do this by them: - Granting a longer lease in return for a lower rent or rent-free period - Agreeing to CVA - Agreeing to monthly payments - Inserting or removing break clauses subject to the payment of a premium

Question 26

What is the Notice to Repair?

Answer 26

Served under Section 146 of Law of Property 1925 maybe served by a landlord during the lease. Notice served to remedy specific repairing or decorating breach. Must be in writing and comply with the terms of the lease.

Question 27

What is the leading case for the Landlord's entry to do the works?

Answer 27

Jervis v Harris Used when: - The tenant is solvent - LL wants the lease and rent to continue - LL wants to retain control to carry out repair works

Question 28

What is the Leasehold Property (Repairs) Act 1938?

Answer 28

Applies to leases granted that are more than 7 years or more, and has at least 3 years until the lease expiry. AIms to protect tenants against onerous interim schedules of dilaps

Question 29

What is a service charge?

Answer 29

Charges to tenants for multi-tenanted properties or estates of costs incurred by a landlord to maintain and manage a property.

Question 30

What RICS document do you refer to when dealing with service charges?

Answer 30

RICS Professional Standard: Service Charges in Commercial Property 2018

Question 31

What does the RICS Professional Standard: Service Charges in Commercial Property 2018 aim to do?

Answer 31

- Improve general standards - Promote best practice, fairness and transparency in the management and administration of service charges in commercial property

Question 32

What are the some of the 9 principles for service charges?

Answer 32

1. Apportionment matrix must be provided annually to all tenants 2. Only 100% of the proper and actual costs must be recovered 3. Service charge budgets incl. appropriate commentary is to be issued annually - a month before budget start 4. Rec must be done within 3 months 5. All expenditure recovered must be in accordance with the tenant's lease.