From a residential perspective, leasing and letting is one of the most commonly declared competencies for RICS Assessment of Professional Competence on valuation and residential property pathways.
It also often appears in planning and development. The residential pathway to full membership has grown in recent years as routes to qualification become more diverse.
In a residential context, leasing and letting has an additional frisson, as it is the subject of a highly charged political debate. There is a whole lexicon associated with residential leasing and letting – such as “generation rent”, “housing crisis” or “bedroom tax”.
HOT TOPICS
■ RICS Professional Statement “Real estate agency and brokerage”
■ RICS Professional Statement “Conflict of interest”
■ International Property Measurement Standards (IPMS) for Residential Buildings
■ Rental market – are rents decreasing and why?
The UK population is expected to grow to 73.2m by 2035 but housing supply is failing to keep pace. It has been estimated that 290,500 new homes need to be built each year to meet this growing demand, yet only 141,000 homes were built in the UK in 2014 (according to the Office for National Statistics). Current supply, while increasing, is failing to meet demand across all tenures – owner occupation, private rented sector (PRS) and social housing – placing pressure on the overall housing stock and on the PRS.
PRS is now an established asset class in its own right, with institutional investment expanding the sector. Social housing also falls into this competency – both council housing (with its distinct public sector tenancies) and registered social landlords offering assured shorthold tenancies (ASTs) at affordable rents.
The legislation is complex and surveyors need to be careful not to inadvertently commit civil or criminal offences, or provide incorrect advice to their clients.
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. The residential rental market is more imperfect than most, as a result of legislation affecting the operation of the market and lay clients.
Level 1
The knowledge and understanding needed to show level 1 competence in leasing and letting will be driven by the requirements described by RICS in the Pathway Guide for each pathway. This refers to the legislative framework and RICS guidance.
Candidates should ensure they know about different types of tenancies and their requirements. Don’t rely on urban myths or office policy – read the law and understand principles, especially around the most common form of residential tenancy, the assured shorthold tenancy.
Make sure you are up to date by checking the Department for Communities and Local Government (DCLG) website on how to rent (www.gov.uk/government/publications/how-to-rent/how-to-rent-the-checklist-for-renting-in-england).
SUPERVISOR AND COUNSELLOR TIPS
Give candidates a chance to deal with problems and provide complex advice (under supervision). Often residential examples are too simple. It is a potential pitfall for candidates to be too inward looking, especially in a public sector role, so encourage political awareness.
There is also a raft of health and safety-related procedures such as gas safety certificates, fixed wire electrical testing and legionella testing. Ensure you understand which ones are legally required and which are a best-practice legal defence.
Tenancy deposit schemes are required by the Housing Act 2004 and you need to know the detail of how and when to register deposits and deal with disputes.
The Immigration Act 2014 and the Deregulation Act 2015 are examples of recent changes to primary legislation that assessors will wish to check.
The Minimum Energy Efficiency Standards (MEES) will affect residential new lettings. From 1 April 2018 it will be unlawful to let a property with an energy performance certificate (EPC) rating of F or G. Furthermore, from 1 April 2020 this will apply to existing tenancies holding over (for commercial property, the relevant date is 1 April 2023).
All this residential-specific legislation is in addition to the usual agency knowledge and understanding.
Handling money is a key part of agency competencies, and candidates should ensure they have studied the Money Laundering Regulations 2007 and the RICS guidance on money laundering, as well as the requirements under RICS rules for handling clients’ money.
EXAMPLE QUESTIONS*
Level 1
■ What are the legislative requirements when letting property?
■ What are the changes to EPC from 2018?
Level 2
■ Talk me through your protection of the tenant’s deposit.
Level 3
■ Describe your advice to client on the most suitable tenant. What tenant covenant checks informed this advice?
*Don’t assume that the questions given here will be asked at an APC assessment. Assessors will focus on and pose questions on the basis of the candidate’s declared competencies, pathway guide requirements, up-to-date developed knowledge base and the examples provided in their summary of experience, etc.
Knowledge of the legal principles in marketing is likely to be probed, and candidates will need to understand the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the Business Protection from Misleading Marketing Regulations 2008 (BPRs). In practice this means ensuring nothing is omitted, which may affect the transactional decision of the average consumer.
Don’t forget that permitted development under the Town and Country Planning (Control of Advertisements) (England) Regulations 2007 will control the size and position of a “to let” board. There is also the new mandatory global RICS Professional Statement “Real estate agency and brokerage” (third edition, August 2016). There is also the brand-new (June 2017) RICS UK Professional Statement “Conflicts of interest”. This is relevant to all surveying work but especially agency.
These points are all covered in the RICS APC Quick Start Revision Guide Residential.
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 to choose your favourite example and describe the process of leasing or letting. This can include taking instructions (including contractual basis of agency), marketing strategy, market rent valuation, deposit protection and viewings, right through to negotiating terms of the new lease. Make sure you don’t forget anything such as EPC or health and safety checks.
A valuation specialist assessor is very likely to probe your rental analysis of comparables, so keep good records and tabulate your evidence.
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. It would be wise to give your general business skills and interpersonal skills some thought while demonstrating leasing and letting.
Level 3
Level 3 includes the usual complex reasoned advice to client but also a “holistic view of the entire transactional market”. This is because your market awareness will be central to the advice to 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 can make a good example of advice to client. In residential this can often be in relation to tenancy deposit disputes or complaints. More complex lettings are needed at level 3 and houses in multiple occupation (HMOs) or unusual tenancies can make good examples.
USEFUL RESOURCES
APCeye magazine
Critical APC information in a free monthly magazine. www.mydelever.com
APC101 – WhatsApp
Open group on APC Process discussions. All welcome. www.delever.co.uk/whatsapp
APC presentation
Online masterclass discussing key elements of the APC final assessment interview. Hints and tips on best practice. www.delever.com
Free timeline wallchart
A2 pictorial view of the APC process, based on the RICS guides and Jon Lever’s professional knowledge. www.delever.com
Supervisor and counsellor APC training – formal CPD
Tips on how to manage and support your candidates. www.delever.com
APC mock interviews
Practice your APC final assessment interview, including your presentation and specific competency-based questioning. A full-hour interview just like the real thing and immediate feedback from the two assessors. www.delever.com
APC commercial property and residential revision guides
Every forward-thinking APC candidate’s reference book for APC preparation. www.apctaylormade.co.uk
Free trial: myAPCDiary
This resource can save up to 60% of a candidate’s day-to-day APC administration. www.apcdiary.com
RICS APC guides
These should be read at least once every three to four months. Candidates from outside the UK also need to check their regional websites for any local APC requirements. www.rics.org
Kate Taylor FRICS is an APC chair and a DeLever APC coach. Follow Kate Taylor and Jon Lever on Twitter: @katetay73593006 and @deleverapc
