RICS Assessment of Professional Competence (APC) Commercial Real Estate and Property Management Syllabus

Commercial Real Estate and Property Management syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Commercial Real Estate and Property Management in RICS Assessment of Professional Competence (APC), not a summary of it.

1. 1

   Landlord and Tenant

   4 topics

   • Lease structures, terms and heads of terms
     • Repairing obligations and FRI leases
     • Break clauses, assignment and alienation
   • Rent reviews and lease renewals
     • Open market and indexed reviews
     • Security of tenure under the Landlord and Tenant Act 1954
   • Dilapidations from the surveyor's perspective
   • Service charges and the RICS service charge code
2. 2

   Property Management and Asset Performance

   4 topics

   • Managing commercial property portfolios
   • Service charge management and apportionment
   • Lease compliance, arrears and risk management
   • Sustainability, MEES and building performance in management
3. 3

   Agency, Sales and Acquisition

   4 topics

   • Commercial agency and marketing strategy
   • Inspection, measurement and disposal advice
   • Acquisition, due diligence and heads of terms
   • Investment agency and purchaser requirements
4. 4

   Property Finance and Investment

   4 topics

   • Property as an asset class and portfolio strategy
   • Investment appraisal and performance measurement
     • Total return, income and capital growth
   • Debt, equity and finance structures
   • Market analysis and economic drivers

Commercial Real Estate and Property Management flashcards for RICS Assessment of Professional Competence (APC)

23 of 59 cards from the Commercial Real Estate and Property Management deck — real questions with worked answers.

1. What are 'heads of terms' (HoTs) in a commercial lease transaction?

   A non-binding (usually 'subject to contract') summary of the principal commercial terms agreed between landlord and tenant — e.g. rent, term, break clauses, rent reviews, repairing obligations and incentives — used to instruct solicitors to draft the lease.

2. Distinguish a Full Repairing and Insuring (FRI) lease from an Internal Repairing (IR) lease.

   Under an FRI lease the tenant bears the full cost of repairing, maintaining and insuring the whole property (directly or via service charge), giving the landlord a 'clear' income. Under an IR lease the tenant repairs only the internal/demised parts, with the landlord responsible for the structure and exterior.

3. What is a 'Schedule of Condition' and why is it attached to a lease?

   A photographic and/or written record of the property's state at lease commencement. It limits the tenant's repairing liability so they need only return the property in no worse condition than recorded, protecting against having to improve on the original state.

4. Define a break clause and explain the difference between a rolling and a fixed break.

   A break clause allows landlord and/or tenant to determine (end) the lease early. A fixed break can only be exercised on a specified date (or dates); a rolling break can be exercised at any time after a given date, usually on serving a set notice period.

5. What is privity of contract versus privity of estate in leases, and how did the Landlord and Tenant (Covenants) Act 1995 change it?

   Privity of contract binds the original parties for the whole term; privity of estate binds whoever currently holds the lease/reversion. For leases granted on or after 1 Jan 1996 the 1995 Act abolished continuing original-tenant liability, replacing it with Authorised Guarantee Agreements (AGAs) on assignment.

6. What is an Authorised Guarantee Agreement (AGA)?

   An agreement under the Landlord and Tenant (Covenants) Act 1995 by which an outgoing (assigning) tenant guarantees the performance of the lease covenants by the immediate assignee only, until that assignee in turn assigns the lease.

7. What is the difference between an 'upward-only' rent review and an 'upward/downward' review?

   An upward-only review means the rent can only stay the same or increase at review, never fall below the passing rent. An upward/downward review allows the rent to move to open market level in either direction, so it can decrease.

8. In an open market rent review, what are the typical key assumptions and disregards?

   Assumptions: the premises are available to let, vacant, in good repair, on the hypothetical lease terms. Disregards: tenant's occupation, tenant's goodwill, and the value of tenant's improvements carried out otherwise than as an obligation to the landlord.

9. What is a Calderbank offer in the context of rent review/lease renewal disputes?

   A 'without prejudice save as to costs' settlement offer. If the dispute is later resolved by an arbitrator/independent expert at a figure no better for the rejecting party than the offer, the offeror can rely on the Calderbank letter to recover costs from that date.

10. Compare resolving a rent review by arbitration versus by independent expert.

    An arbitrator decides on the evidence the parties submit, is governed by the Arbitration Act 1996, gives reasons, and is generally not personally liable. An independent expert can use their own knowledge and investigations, is not bound by the Act, and can be sued for negligence.

11. What is the procedure and time limit for a tenant to apply to court under the Landlord and Tenant Act 1954 (Part II) following a section 25 notice?

    A business tenant with security of tenure must apply to court (or the landlord may apply) for a new tenancy before the date specified in the s25 notice (or before the s26 request date), unless an extension is agreed in writing. Missing the deadline forfeits the right to renew.

12. Under the Landlord and Tenant Act 1954, on what grounds can a landlord oppose renewal of a business tenancy?

    The seven grounds in s30(1): (a) tenant's repair failures, (b) persistent rent arrears, (c) other substantial breaches, (d) suitable alternative accommodation offered, (e) sub-letting of part, (f) landlord's intention to demolish/reconstruct, (g) landlord's intention to occupy. Grounds (e),(f),(g) attract compensation.

13. How is the interim rent determined under the Landlord and Tenant Act 1954?

    Interim rent applies for the period between expiry of the old tenancy and grant of the new one. Since the 2003 reforms it is normally set at the same rent as the new tenancy, unless that would be substantially different from a market rent for the interim period.

14. What is the difference between a 'protected' and a 'contracted-out' business tenancy under the 1954 Act?

    A protected tenancy carries security of tenure (the right to renew). A contracted-out tenancy excludes ss24–28 of the Act via the prescribed warning notice and tenant declaration/statutory declaration procedure, so the tenant has no automatic right to a new lease.

15. Define dilapidations.

    Breaches of a lease's covenants relating to the condition of the property — typically repair, decoration, reinstatement and yielding-up obligations — and the remedies (usually damages or works) a landlord may pursue for those breaches.

16. What is the statutory cap on dilapidations damages under section 18(1) of the Landlord and Tenant Act 1927?

    Damages for breach of a repairing covenant cannot exceed the diminution in the value of the landlord's reversion caused by the disrepair (the first limb); and no damages are recoverable if the premises are to be demolished or structurally altered shortly after the term ends, rendering repairs valueless (the second limb / supersession).

17. What is the difference between an interim and a terminal schedule of dilapidations?

    An interim schedule is served during the lease term (often with a s146 notice) requiring the tenant to remedy breaches while occupying. A terminal schedule is served at or near the end of the term setting out breaches to be remedied or compensated on yielding up.

18. What is 'supersession' in a dilapidations claim?

    Where the landlord's own intended works (e.g. refurbishment, redevelopment or alterations) would render the tenant's repairs valueless, the relevant items are superseded and the landlord cannot recover damages for them, reflecting the s18(1) second-limb principle.

19. What protections does the Leasehold Property (Repairs) Act 1938 give tenants?

    For leases originally granted for 7+ years with 3+ years unexpired, a tenant served with a s146 notice can serve a counter-notice within 28 days; the landlord then needs the court's leave before enforcing the repair covenant or claiming damages.

20. What is the purpose of the RICS Dilapidations Guidance Note / Professional Statement and the associated Pre-Action Protocol?

    They promote a consistent, ethical and proportionate approach to dilapidations claims, requiring surveyors to consider the landlord's intentions and the s18(1) cap, and the Protocol mandates early exchange of a Quantified Demand and tenant Response to encourage settlement and avoid litigation.

21. What is the primary objective of the RICS Service Charges in Commercial Property Professional Statement?

    To ensure service charges are administered and accounted for to good practice standards — transparency, fairness, and that costs reflect value for money — so that, broadly, no profit or loss is made by the landlord/manager from the provision of services.

22. List three of the mandatory requirements for RICS members under the Service Charges in Commercial Property Professional Statement.

    Examples: expenditure must be in accordance with the lease terms and recovered only as the lease permits; service charge monies must be held in a separate (often trust) account; an annual reconciliation and certified statement of actual expenditure must be issued; budgets must be issued in advance.

23. What is the difference between a service charge 'budget' (estimate) and the 'reconciliation' (actual)?

    The budget is the estimated annual expenditure issued in advance to set on-account demands. The reconciliation is the certified statement of actual costs at year-end, against which balancing charges or credits are issued to occupiers.

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