Propertymark Level 3 Commercial Property Agency cheat sheet

VAT: standard rate 20%; most commercial property sales are taxable supplies unless the seller has opted to tax (option to tax makes the supply standard-rated) or the sale is a TOGC.

TOGC (transfer of a going concern): no VAT charged on the sale if the buyer intends to continue the same business, is VAT-registered, and the property is not a new freehold building; conditions in VAT Notice 742A must be met.

SDLT on non-residential freehold: nil up to £150,000, 2% on £150,001–£250,000, 5% above £250,000 (thresholds and rates are set by HMRC and subject to change).

Leasehold SDLT on non-residential leases: tax is charged on net present value of rent at 1% above the £150,000 NPV threshold, plus 5% on any premium above £150,000.

Capital gains: disposals of business assets may qualify for Business Asset Disposal Relief (formerly entrepreneurs' relief) at 10% on qualifying gains up to the lifetime limit, subject to conditions.

Misrepresentation: under the Misrepresentation Act 1967 the seller/agent can be liable for untrue statements of fact; statements of opinion are generally not actionable.

Consumer Protection from Unfair Trading Regulations 2008 prohibit misleading omissions and false information in property particulars; criminal offence with unlimited fine.

Material information: since 2022, Part A (price, tenure, council tax), Part B (physical characteristics) and Part C (legal title, flood risk, restrictive covenants) must be disclosed in sales listings.

Estate Agents Act 1979 requires disclosure of personal interest in a transaction and separate client/third-party money handling; redress scheme membership is mandatory.

A lease for a term exceeding 3 years must be granted by deed (Law of Property Act 1925 s.52); shorter terms may be created in writing or orally.

Security of tenure: Part II Landlord and Tenant Act 1954 gives business tenants the right to a new lease at expiry unless the landlord proves one of the seven grounds in s.30(1).

Contracting out of the 1954 Act: parties must serve a warning notice (s.38A) at least 14 days before the tenant enters into the lease, or obtain a statutory declaration if the lease starts sooner.

Rent review mechanisms: upward-only, open market, RPI/CPI-indexed, or turnover-based; a typical review is every 3 or 5 years with a minimum uplift clause.

Break clauses: a tenant break is usually conditional on vacant possession, payment of all rent and no material breach; failure to satisfy conditions voids the break.

Dilapidations: tenant liability at lease end is limited by s.18 Landlord and Tenant Act 1927 to the diminution in value of the reversion, subject to the lease terms.

Deposits: since 2019, tenancy deposits in England are capped at 5 weeks' rent (where annual rent is under £50,000) under the Tenant Fees Act 2019.

Alienation: assignment vs underletting; qualified alienation (e.g. landlord's consent not to be unreasonably withheld under s.19 Landlord and Tenant Act 1927) is standard in commercial leases.

Service charge: landlord must comply with consultation requirements (s.20 Landlord and Tenant Act 1985) for works over £250 per tenant in residential; commercial service charges are governed by the lease.

Propertymark Commercial Agency: agents must hold Professional Indemnity insurance and belong to a government-approved redress scheme (e.g. The Property Ombudsman) for consumer work.

Client money: under the Estate Agents Act 1979 and Client Money Protection rules, client funds must be held in a separate designated client account.

Agency types: sole agency (one agent, usually lower commission), joint agency (two agents, commission split), and multi-agency (several agents, commission payable only to the one who introduces the buyer).

Commission is payable on completion of the sale or on exchange of contracts if the contract so provides; the agent must have been the effective cause of the transaction.

Anti-money laundering: estate agents are in the regulated sector under the Money Laundering Regulations 2017; customer due diligence (ID, source of funds) is required before a transaction.

Proceeds of Crime Act 2002: agents must submit a suspicious activity report (SAR) to the NCA if they know or suspect money laundering; tipping off is a criminal offence.

Bribery Act 2010: commercial organisations must have adequate procedures to prevent bribery; facilitation payments are prohibited.

Health and Safety at Work etc. Act 1974 and the Management of Health and Safety at Work Regulations 1999 require risk assessments for managed commercial premises.

RICS/Propertymark guidance: commission terms must be agreed in writing before marketing; sole agency agreements should specify the term and termination provisions.