Leasing and letting, purchase and sale and property management are often collectively referred to as the “agency competencies”. Candidates declaring these competencies will need experience in the real world marketplace where commercial property changes hands.
Leasing and letting is one of the most commonly declared competencies for the RICS assessment of professional competence on valuation and commercial property pathways. It also regularly appears in planning and development, residential and property finance and investment pathways. In other words, it has broad application across the property profession.
Property economics crops up in most competencies and in leasing and letting the context is the ability of an asset to produce an income within a marketplace. Assessors will expect a good knowledge of the drivers of supply and demand in a particular market as well as a well-developed client focus. In other words, the big picture, as ever, is important.
Thankfully, there is a lot of crossover with both landlord and tenant and purchase and sale competencies and they do tend to sit comfortably together in a well- rounded surveyor.
Level 1
The knowledge and understanding needed to show Level 1 competence in leasing and letting will be driven by the requirements described by the RICS in the pathway guide for each pathway. This refers to the legislative framework and RICS guidance. A great tip is to read the RICS Commercial Real Estate Agency Standards. This is also known as the Purple Book and the residential version is the Blue Book – the RICS does like to be colourful!
The Purple Book contains references to the legislative framework and processes to be followed with an ethical client focus that assessors will be keen to see demonstrated at interview.
The candidate will need to learn key parts of the Estate Agents Act 1979. The six principles of the Act, section 18 (terms of engagement) and section 21 (disclosure of interest) will also be particularly relevant.
In addition to the law and RICS guidance, market knowledge is needed and a general chat about the market operated in can give valuable clues on a candidate’s commercial awareness and level of responsibility.
Handling money is a key part of agency competencies and candidates should ensure they have studied the Money Laundering Regulations 2007 and RICS Guidance Note – Protection Against Money Laundering 2010 as well as the requirements under RICS rules for handling client’s money.
Knowledge of the legal principles in marketing is likely to be probed. Candidates will need to understand the Consumer Protection from Unfair Trading Regulations 2008 and the Consumer and Business Protection Regulations 2008 in addition to the fundamental differences with the position under the Property Misdescriptions Act 1993 (which was repealed in 2013). In other words, candidates should not focus solely on accuracy but on ensuring nothing is omitted which may affect the transactional decision of the average consumer.
It should be noted that permitted development under the Town and Country Planning (Control of Advertisements) (England) Regulations 2007 controls the size and position of a “to let” board. A standard “to let” sign on commercial property should be no more than 2m² (or 2.3m² for a V board).
Energy performance certificates (which are regulated by the Energy Performance of Buildings (England and Wales) Regulations 2012) and the impact of BREEAM certification will also be relevant Level 1 knowledge.
Level 2
As with all Level 2 competencies, candidates will need to describe the application of their knowledge and understanding in specific examples. A good way to do this is for the candidate to choose a favourite example and describe the process of leasing or letting (depending which side of the fence the candidate is on). This can include taking instructions (including the contractual basis of agency), marketing strategy, market rent valuation, incentives, viewings right through to negotiating terms of the new lease. The EPC or health and safety checks should not be forgotten.
Candidates will need to show a good understanding on the meaning of lease terms to both landlord and tenant in terms of management obligations and rental value implications, as well as the associated negotiations on lease terms like break clauses or repairing obligations.
A valuation specialist assessor is likely to probe a candidate’s rental analysis of comparables and the calculation of net effective rent from headline rents. Good records should be kept and evidence tabulated.
Assessors often like to kill two birds with one stone and the leasing and letting competency can provide an opportunity to tackle several mandatory competencies at the same time. There can be some crossover with data management, property records, sustainability, accounting principles and procedures as well as communication and negotiation. It would be wise to give general business skills some thought while demonstrating leasing and letting.
Level 3
Level 3 includes the usual complex reasoned advice to a client but also a “holistic view of the entire transactional market”. This is because a candidate’s market awareness will be central to the advice to a client.
Examples of complex reasoned advice in leasing and letting include reporting on strategy and options relating to a property’s suitability or otherwise, advising on offers and counter offers regarding lease terms and advising on tenant covenant strength after carrying out appropriate checks.
Dealing with problems and changing tack in marketing can make a good example of advice to a client. The advice can take many forms – presenting, explaining, suggesting, recommending as well as traditional advice, verbally or in writing.
Kate Taylor FRICS is an APC chair and a DeLever APC consultant trainer.
Follow Kate Taylor and Jon Lever on Twitter: @katetay73593006 and @deleverapc
