Tenant Assistance Program

November e newsletter

2011-11-29T12:32:00.000Z

Welcome to our November 2011 e newsletter.
Large energy consumers had their focus on the inaugural CRC league table which made its first appearance this month. Interestingly, a specific building heads the table but promoting a green property may increase business rates; we take a look. Also, inflation may be falling but this September’s figure has an impact on calculating future business rate levels. In the future this could be good for local councils but not necessarily for ratepayers.

Over recent months it’s become fashionable to protest and occupy private property. What can you do if this happens? Take a look at our guidance on the matter. Changes to how you can buy legal services is opening up and you could be putting your legal services in with your groceries as you perform your weekly shop. How will that alter your consumer buying habits? You will remember the severe snow last year so take a look at our Q&A which covers being prepared for the winter.

First CRC League table results; winners and losers

Monday November 8th saw the unveiling of the first Carbon Reduction Commitment (CRC) League table, with mixed fortunes for some of the UK’s largest organisations and its fair share of critics.

Topping the list was a City of London skyscraper, 99 Bishopsgate, owned by Hammerson, one of 22 entrants that scored the same highest weighted figure with other notable names including the Government’s Department for Energy and Climate Change and the energy regulator Ofgem, both of whom must be relieved. Other top performers include Manchester United Football Club, Centerparcs and British American Tobacco.

Generally, there were impressive results from many public sector bodies including hospitals, whilst the lower table performers were in the IT Sector which has led to scepticism and criticism from some about the merits of the scheme. The table lists 2,000 organisations, all of whom had the same amount of time to collate their data and at the bottom it is clear that some entrants have taken little or no action at all to make provision for lowering their emissions.

Whilst criticism could be levelled at those companies, it is important to remember that this is only the first year of the scheme and as the Environment Agency says this is… ’’ a baseline for future years which will also show overall CO2 emissions, annual emissions savings and progress on energy efficiency.’’ They do acknowledge that this is only the start and that it is the future years where the table will become much more relevant; they go on to say,’’…the rankings will increasingly become a public statement on participants’ energy efficiency, giving them an added incentive to cut emissions.’’

However, IT Networking company Cisco, for example feels that they, and others like them, have made significant strides to improve their technology during the course of the year and due to timing none of that is reflected in the table’s results. Ian Foddering, CTO of Cisco says ‘’…but those organisations that make exemplary organisational changes, replacing business travel with intelligent collaborative technology for example can actually find themselves on the wrong side of today’s legislation.’’ No doubt their improvements are likely to be seen coming through from next year but of course some fear that the nature of their business, in keeping up with the latest technological advances, will always place them, and their sector, in the lower half of the table.

To see the table in full you can access it via the Environment Agency’s website.

Inflation rise fears for Business Rates

Last month the Director General of the British Chambers of Commerce (BCC), John Longworth wrote to George Osborne and the Secretary of State for Communities and Local Government Eric Pickles expressing the concerns over the prospect of an ‘up-rate’ in the business rates multiplier to fall in line with September’s RPI figure of 5.6%, its highest for 20 years. As he points out….” The Government has traditionally used the September RPI figure to calculate changes to the business rate multiplier in England and Wales; its decision is then usually mirrored by the Scottish Government.’’ An adoption of this figure would filter through into the rates assessments for 2012-13.

The inexorable rise in inflation and the knock-on effect on business rates would, they claim, have a significant ‘drag-effect’ on shared efforts to promote growth through planning reform, deregulation, and incentives for local growth and business investment and would also pale in comparison to earlier correspondence that the BCC issued to Government about their stance on empty property rates; it seems however that the Government will not be swayed on either at present, and are happy to refer to the doubling of Small Business Rate Relief that they have introduced and the streamlining of Relief claims via the Localism Bill. A spokesman for Mr Pickles’ Department has said....’’We need to balance any further support for business against the tough decisions needed to reduce the deficit.’’

The general tone of this concern is also voiced by the recently formed City Finance Commission who are looking, on a national basis, at how our Cities can set themselves free financially, economically and socially such that they can ‘’become more financially independent, to strengthen their ability to drive both local and national economic growth, deliver localism and to increase care for their communities.’’

They talk of proposing a ’business rate retention scheme’ and in pursuit of Localism are eager to see a much clearer link between local growth and local spend. They refer to the likes of Westminster who by 2014-5 will be raising some £1.5bn from local business rates but see ‘’little of this money invested back into the local community.’’ With the Localism Bill likely to receive Royal Assent next month we are likely to see much more of this rhetoric in a drive to stimulate local growth and devolution of centralised services.

Combating the threats of Protests

Our Democracy encourages freedom of speech and assembly and indeed the Courts are under a duty to protect fundamental freedoms granted by the European Convention on Human Rights, case law and the Human Rights Act 1998…but, in practical terms, what can you do to prevent and break up protests on your land?
The legal procedures for removal of protestors from private land are time consuming and stressful but at least there are several options including: a claim for trespass, a possession order and an injunction to prevent further re-entry. However in many cases these all present practical difficulties in terms of implementation, most notably when the identities of the protestors are unknown. The courts have however seen sense in some instances and allowed for notices to be served in conspicuous places and have shortened the usual time frames for ‘deemed service’ in order for them to have swifter effect. Also, with the use of clear maps attached to the notices, the courts will try to avoid any ambiguity over the actual area of property covered by the notice.

This is all good and well but having a strategy in place in the first place is also prudent, so that you are prepared. Here are a few suggestions:

Nominate a suitable person as a site contact who is both able to witness the activity and communicate this to a lawyer.
Monitor certain websites (such as www.protest.net and www.occupylondon.org.uk) to try to pick up intelligence on planned demonstrations which may affect you, and if relevant notify police of anything suspicious.
Check your own security systems such as CCTV
Have your own legal title documentation to hand, including maps, plans, access rights and public rights of way.

In the event of a protest on your land:

Contact local police
Contact a solicitor to initiate injunction, trespass or possession orders.
Do not ask for individual protestor’s names; it is permissible to issue proceedings against the organisation, and be more wide-ranging.
Collate information about the purpose of the protest, the number of people involved, their activities and details of any damage or disruption.

Speed and accuracy of information is very important and as usual, being prepared in some form is highly advisable.

"Tesco Law"; checkout new liberalisation in Legal Services

Early last month the Legal Services Act came into force, which the Government claims will offer greater choice and value to the public, whilst at the same time allowing firms to access new investment allowing them to explore new markets. In theory lawyers will be able to work in multi-disciplinary companies who can offer a range of advisory services, provided they hold the appropriate licence and are recognised as Alternative Business Structures (ABSs).

So, with this opening up of the market, the natural extension of the legislation could mean that Banks, and even supermarkets, could shortly be offering this ‘value-add’ service as part of a move to offer more variety to consumers. Tesco themselves are reported to have ‘’no current plans to offer legal services’’, however the CO-OP is the only chain to so far comment that it was interested in the idea and has a pilot scheme set up in some branches in Bristol.

Critics of the legislation have been nervous about the proposals since it was first mooted in 2009 and chose to brand it ‘Tesco Law’ in an attempt to belittle its quality and lack of professional credibility. A newly formed group calling themselves The QualitySolicitors.com and a coalition of some 100 firms sought to oppose the Act, and now some of the county’s largest firms have admitted that the opening up of the market could impact on their profitability.

Legal information company Sweet and Maxwell claims that 13% of finance directors at the 100 biggest firms see the move as a ‘’high risk’’ to profitability whereas the previous year none of them saw any risk. As Sweet and Maxwell say: “Over the longer term, new capital attracted to the sector could fund more active competition among law firms for commercial work.’’

As a nervous sector takes in the new Law, it is not the case that there is little or no regulation and, as mentioned, licensing will be necessary via the Council of Licensed Conveyancers who will apply the same rigorous and proportionate approach as always. They believe that this is good news for consumers and they will offer a ‘’new riskbased and outcomes-focused approach to regulation (which) will help ensure high standards of service, and maximise consumer protection.’’

TAP takes a positive view of such liberalisation as it will allow a sometimes unapproachable sector to be more accessible and could encourage more engagement with customers; but nevertheless, if you are a law firm seeking to defend your client base you too can look to remind them of your strengths by more active marketing and communication possibly by Newsletters, Social Media or video blog. Just as the property sector is beginning to wake up to the need for more engagement, so the legal sector must now look to do the same.

Could you be penalised for going green?

Our earlier article refers to the prospect of increased Rates bills for 2012-3 based on the significant rise in RPI as at this September; a traditional procedure but based on an RPI figure being at its highest for 20 years.

Another threat is perhaps even more incongruous... a ‘green premium’. We are constantly being referred to a myriad of Sustainability measures designed to reduce our CO2 emissions in the workplace and at home and the construction industry is under similar pressure to develop the greenest possible new or refurbished buildings to meet UK targets. But the irony is that Rating valuations are based upon prevailing rental values and if higher rents are paid for ‘greener’ buildings due to anticipated lower running costs then the rating valuation is bound to be higher too.

What perhaps should be happening is that the older and less efficient stock is taxed higher which would then reduce rents and value and trigger the necessary upgrade which would then result in higher rents and lower (reward-based) Rates. This approach would then tie in with other sustainability measures, such as low grade EPC rated buildings not being allowed to be leased from 2018, which would stimulate their refurbishment or redevelopment.

Unhelpful changes in green thinking however such as the sudden and earlier-than-planned halving of the Feed in Tariff associated with energy generated from Solar panels tends to slow this thought process down, but the general trend should be towards trying to tie in both a reward-based approach with a stick-imposed tariff on less efficient buildings.

Consistency of approach can also be sought when setting some ‘green’ activities against other revenue-producing schemes, such as the non-taxing of congestion and speed cameras (producing significant income) and the taxing of pay-as-you-go bicycle hire and electric vehicle parking bays. This seems to make little sense in the overall national pursuit of economic growth generation and stated aim of hitting certain emission reduction targets by 2020 and 2050.

What can I do to be prepared for Winter?

Last year’s Christmas was a picture postcard. A blanket of snow covered the entire country and for many of us it was quite a surprise. Planes struggled to take off and even short journeys were difficult and so responding to a property problem became somewhat of a challenge. The country was paralysed by the severe weather but have any of us learnt enough to take extra precautions this year?

Burst water pipes, slippery pathways, staff struggling to make it to work and non delivery of important materials are just some of the issues we faced throughout this period. This year we thought it would be sensible to outline a few tips on being prepared for the unexpected:

Have to hand a copy of the essential papers; your lease and insurance policy
Cash flow is important and relies as much on receiving payment as it does on paying for your suppliers or landlord. If you depend on the post being delivered think about other ways of receiving your money
Have a clear communication tree that allows information to be circulated quickly to your staff, and suppliers
Have a full list of critical telephone numbers; we would suggest your landlord’s/managing agent’s contact details and details of your business- critical staff
Have a list of essential contractor/supplier information and responsive emergency services numbers such as plumbers, electricians, and similar trades.
Make sure your landlord has your up to date emergency telephone numbers and also details of the current key holders should access be required
Should it be necessary, you may wish to think about alternative premises and should this be the case then think about having the number of a commercial property agent or Serviced Office Company.

Pull all this information together and make sure those who need it have easy access to the system. For those who benefit from our system all this information can be contained on our system and if you’re not sure how then please get in contact with us.

Undoubtedly it would be better to avoid such problems and prevention is better than cure! Prevention depends very much on making sure your systems are regularly serviced and monitored and it would be much better so ensure your systems have been tested and serviced before the on-set of winter. It’s not too late to have your CCTV equipment, boiler or intruder alarm serviced for the festive break and we would strongly recommend this is done.

Don’t delay as time is of the essence.

October e newsletter

2011-10-27T07:00:00.006+01:00

Welcome to the October issue of the TAP E Newsletter.

As the Autumnal Firework season is upon us we look at the Regulations controlling their storage; we then take a seasonal look at what to be thinking about in preparing your building for Winter. Other stories focus on dispute resolution at lease renewal, a look forward at the future of the Real Estate Industry itself and The Bill affecting potential changes to the protection of our freedom. Finally our Q & A looks into the voids in our buildings in pursuit of excessive cabling. Take care with those Fireworks.

Firework storage for Retailers

The firework season is nearly upon us and most retailers who are preparing for it will be dealing with Hazard Type 4 fireworks and the storage of these will fall under the Manufacture and Storage of Explosives Regulations 2005 (MSER). Display-rated versions, known as Hazard Type 3 fireworks fall under more stringent regulation.

Under MSER, the licence or registration is granted to a person, not a site and the regulations divide compliance into those holding an all year round licence and those who are registered for supplying fireworks in only the following periods:

Bonfire Night…October 15th to November 10th

New Year…December 26th to December 31st

Chinese New Year…the designated day and 3 days immediately before

Diwali…the designated day and 3 days before.

You should apply to your Local Authority for the requisite certification.

The MSER refer to quantities in NEQ, ie Net Explosive Quantity, which is the amount in the firework,not the gross weight and it is an offence to store more than 5kg NEQ on a site that have not been registered or licenced. REGISTRATION is required if storing up to 250kg NEQ…a LICENCE is required for more than 250 kgNEQ and an HSE LICENCE is required if storing more than 2000 kg NEQ. This applies to storage on a shop floor or in storage areas.

On the shop floor the fireworks should be kept in a designated area well away from sources of ignition and in a display case or cabinet which must:

Contain no more than 12.5kg NEQ

Be designed to protect against sparks or sources of ignition

Contain no other goods

Have any lights or electrical fittings disconnected.

Be waterproof

Be kept closed and only opened when needed

For general storage, if you employ 5 or more staff then an assessment of the risks must be undertaken and documented and suitable precautions taken as well as having fully operational fire extinguishing appliances on site.

If you are planning to store them in a warehouse with other combustible materials then they should be held in a separate metal container or similar cupboard/cabinet or a small mesh metal cage…the separation is key, as is the need to have at least a 30 minute Fire Resistance barrier between the storage area and the sales area.

For further information visit the HSE Website or the Chief Fire Officers Association, or contact us at TAP.

The Lease Renewal PACT; how to avoid going to Court

PACT, or to give it its full name. Professional Arbitration on Court Terms,is the result of a late 1900s consultation between the RICS, The Law Society and the ISVA who were looking for a method of resolving disagreement as to rent in the lease renewal process. Other lease terms can also be referred to a PACT qualified surveyor so as to limit or avoid the time and expense of taking the dispute through the Court process and this can have obvious benefits for both a Landlord and Tenant. Under the Civil Procedures Rule (CPR) this and other forms of alternative dispute resolution must be considered by the parties prior to litigation, or they risk punishment of costs by the courts.

The PACT surveyor is appointed by the RICS following a simple application process and forms are available for download off the RICS Website at a cost of £369, inc VAT. This is now a joint process between the parties, whereas up until 2003 it had to be the Tenant who made the initiating application; the idea being to try to maintain as much collaboration as possible which can lead to a swift and binding resolution. The professional who is appointed may be a surveyor or solicitor who has been specifically trained in this area and he/she may act as an arbitrator or independent expert, as chosen by the parties.

The idea is to give choice to the parties and their advisors as to ways of resolving disputes and it can incorporate all or some of the terms of the new lease or it may simply come down to determining valuation and rent. Surveyors are deemed better placed to adjudge this than the Courts. It may also be used in conjunction with court proceedings (which have to be stayed whilst this ADR is ongoing) and be viewed as the most efficient out of court method of resolving a key term, and this should have a positive bearing on cost, thus possibly avoiding full trial.

Whilst there are clear benefits here for both parties the actual number of applications to the RICS for PACT remain disappointingly low, rarely getting above 20 per annum since the late 1990s, which compare poorly with RICS applications for rent review resolution (running into thousands per annum) so perhaps there is more needed to promote this PACT approach which seems to offer flexibility, speed, low cost, a forum of choice and adaptability.

Worth considering in market conditions that indicate the need for all these factors for both parties.

After the heatwave, think about winter

"Prevention is better than cure", as the old adage has it,and when it comes to addressing the simple measures required to prepare a building for winter, now is the time to mobilise.

The last 2 winters should have alerted us all to what may be in store over the next 4 - 5 months and as occupiers, owners and employers we need to take responsibility for the manangement and control of premises and give thought to staff, customers and visitors especially with regard to snow and ice. In an increasingly litigious society we all need to be wary and plan ahead to make sure we have done all we can to prevent accidents, as well as deal with them when they happen.

Having some sort of winter plan is sensible business practice and a first step may be to actually appoint someone to oversee this. It will, of course depend upon the management regime in place at your building and an understanding of this will certainly help, as will input and suggestions, but if you are an owner occupier or renting unmanned premises you should consider certain things for yourself.

Plan ahead and purchase supplies of grit or sand or rock salt, and know where it is kept.

Check to see if you have enough brooms and shovels, or indeed are specialist grit spreaders needed?

Keep a watchful eye on the weather forecasts

Act quickly; snow is easier to clear before it becomes compacted.

Think about gritting in the evening so that its ready for the next morning’s workday.

Be aware of the busy routes to and from the building including the car park paths, goods delivery areas and pathways between buildings.

Set up a plan to prioritise the process so as to know what takes precedence.

Ensure that outward facing doors are clear of build-ups of snow, ESPECIALLY Fire Exits, and that the routes from these exits are treated.

Notify ALL staff, including mobile workers,about protocols and the conditions that they are likely to face when arriving at work, as this might be different from conditions at home.

As usual much of this is common sense but it does require a degree of responsibility to staff and visitors, so be prepared,be aware and act promptly.

For further guidance you can visit both the Direct Gov website (Advice on preventing different types of emergencies) and/or the Health and Safety Executive.

The Future of the Real Estate industry… revealed!

In an extensive, wide-ranging and influencial report sponsored by the The Royal Institution of Chartered Surveyors (RICS), professor John Ratcliff was asked to assess the challenges and influences facing populations and demographics over the next 20 years and the impacts that these are likely to have on the built environment, and therefore how the RICS and other bodies could and should respond. The report is entitled RICS Strategic Foresight 2030.

No easy task, especially as the brief works across a global landscape and canvasses a huge and multi-disciplinary audience, resuting in a weighty document running to well over 100 pages.

The report identifies some large and common themes including pressures on resources, rapid technological change, increasingly mobile workforces, a new age of responsibility and collaboration, viewing property as an ‘experience environment’, a service industry with heightened expertise in management service and operational relevance, prioritising risk management and the re-assessment of valuation criteria over and above the traditional methodologies.

This latter point looks at the differing ways investors may begin to look at property, some of which has emerged already with Socially Responsible Investment (SRI) and the view that a building’s value may be "determined more by talent and function than by access and location."

The report goes on to say that... "Owner-occupiers and tenants alike will demand higher levels of environmental performance in the buildings they purchase or rent. A two-tier market will quickly emerge between ‘green-rated’ and ‘other’ properties. The future of global property is green."

TAP has noticed a growing trend of commentators using this language but as yet there is little or no evidence to suggest it has arrived. The results of a survey conducted by Tuffin Ferraby Taylor show that investors are split between those who think a more sustainable building will produce a higher value and those who would expect no rise. Indeed only 11% of the property owners surveyed believed that they would gain extra income from a ‘greener’ building, with 39% foresaw a reduced tax burden.

As always the future is hard to predict, but the RICS Report had drilled down into some detail on the influences that are likely to shape our future and that of the property industry and you can read it for yourself in the downloads section on the RICS Website, www.rics.org and search for Strategic Foresight 2030.

Potential impacts for Landlords and Tenants in the Protection of Freedoms Bill

Whilst still being subject to a 3rd reading in the House of Commons and consideration in the Lords, the Bill seems likely to contain certain changes to the way private Landlords can control certain activities on their land. Those that may affect Landlords and Tenants could include the use of CCTV, the use of wheel clamping, powers of entry and, more topically, the freedom to protest in areas open to the public but privately owned; ie shopping centres.

Dealing with each of these in order; the Bill is looking to regulate the use of CCTV, and is intending to introduce a code of practice which would initially only cover the use of systems by Local Authorities and the police. However pressure is being applied by certain groups, notably the Civil Liberties organisation Liberty, who want to see some regulation and licencing introduced to those areas that are used by the public which would naturally include shopping centres. At present the only regulation over CCTV covers personal details captured and is held within The Data Protection Act 1998, and The Regulation of Investigatory Powers Act 2000 which deals with covert surveillance.

Wheel clamping is,theoretically, operated under licence following the Private Security Industry Act 2001 and can be undertaken by the landowner himself or by a licenced wheel clamping company; this licencing was introduced to address the activities of unscrupulous clampers. However following a consultation in August last year the Government are intending to ban clamping on private land, in this Bill. If passed,the Bill will make it a criminal offence to clamp and also for those who chose to flout the ban. Police and Local Authorities will not be covered by the ban in respect of public highways however the police can still be called to deal with illegally or dangerously parked vehicles on private land. A landlowner’s options may then only be limited to the introduction of barriers or fines,and the Bill sets out a scheme for the recovery of unpaid charges.

The Bill also responds to a review of Powers of Entry and is likely to have Landlord and Tenant implications both residentially and commercially. However the review covers powers only currently contained in primary or secondary legislation and would not affect a Landlord’s common law right to forfeit a lease by peaceable re-entry or to distrain goods for unpaid rent. Unnecessary and inappropriate Powers are also being looked at with a view to being repealed and some 1200 powers could be affected.

Finally, The Bill looks to control protests on private land but which are open to the public (a ‘’quasipublic place’’). Clearly this will affect Shopping Centres and whilst one particular amendment currently proposes allowing such activity, the property industry is resisting this in the light of the recent Riots. In reality, the economy can ill afford the consequences of increasing protestors’ rights, but the debate is sensitive seeing as it has implications for human rights too. This is a controversial area and TAP will endeavour to keep an eye on it.

Should I be worried about excessive amounts of cabling in my space and what should be done to control it?

As part of good ‘housekeeping’ it is advisable to try to keep tabs on what cabling is being used for and whether or not it is actually live and belonging to you. Often in a second-hand building or unit you may well inherit a previous occupier’s cabling, which should have been removed in the event that none of it was re-usable. However it is notoriously difficult to do this and speed and efficiency usually means that new cables are laid adjacent to old ones.

This does present difficulties, namely with identification and possible fire risk which leads to the need for some kind of cable management. Sophisticated systems include colour coding, barcoding, position logging and radio frequency identification (RFID) and those businesses that have high intensity intallations such as data centres will certainly be required to incorporate one or indeed a combination of them. For most businesses however a visual marking system will be sufficient.

As TAP has reported, leases are at an all time low in terms of length which implies that floorspace can and does change hands more frequently than ever before and this can introduce yet more cabling into the void spaces in commercial buildings. This build-up is further compounded by more frequent upgrades in computer and telecoms technology even though wireless networks are becoming more efficient and reliable. But limitations in bandwidth can still mean that hybrid wire/wireless systems are needed, which still maintains a need for more cables.

As part of a Fire Risk Assessment you should have a clear idea of what risks are presented to you by both yours and your legacy cables and both Landlords and Tenants need to be cognisant of the overall picture in any building. As a Tenant you can play your part by an early occupational assessment of what surrounds you and adopting a visual labelling process to give you peace of mind that legacy cables are not presenting a hazard of any kind. Preferably, before you move in you should insist that old cables are removed to add extra clarity to the situation.

Further information can be gained via the HSE and also in the detail contained within the BS 8492:2009 which addresses the segregation of telecoms and power cables.

September e newsletter

2011-09-30T10:12:00.000+01:00

Welcome to our September 2011 e newsletter.

It may not seem so, but the autumn and winter seasons are upon us and as the number of day-light hours reduce we look at whether Shopping Centres can reduce their energy consumption by 2.56% per annum for the next 39 years.

We also take a look at what we can all do to reduce waste and why some companies restrict access to the social media world. It’s official, the service to occupiers, by their landlord and property manager, is improving and we take a look the results. What do data centres offer? We take a look.

Finally our Q&A takes a look at virtual security patrols and whether they can would benefit the service charge?

Can we deliver 2.56% reduction each and every year until 2050?

The Energy Savings Trust states that shopping centres contribute 3 million tonnes of CO2 to the UK’s total emissions each year. This is equivalent to the emissions of nearly half a million homes. The Government has set a challenging target of reducing CO2 emissions (50% by 2030 and 80% by 2050 from a base measure recorded in 1990) and if shopping centre owners want to meet this level they will have to reduce energy consumption by 2.56% per annum until 2050.

In an attempt to outline how this can be achieved, the British Council of Shopping Centres (BCSC) has issued a report entitled ‘Accelerating Change towards low carbon Shopping Centres’ with the aim of identifing areas that may accelerate the implementation of energy saving projects. After speaking to a variety of stakeholders a number of elements were identified, where improvements can be made:

A high turnover of staff at grass root level should encourage companies to place the role of energy reduction at Board level.

Retailers are seeking better financial incentives from the Government.

Landlords can play an important part in spreading knowledge of ‘what changes work and what do not’.

In the long-term investment in energy efficiencies must go beyond that which is easy to achieve. We at TAP sense this stage is not too far away.

Communication is often highlighted as a cause for concern in any aspect of property management and all this needs to be improved.

Examples of areas where retail occupiers could achieve savings are numerous but a couple of the lesser known ideas are to reduce the light intensity – 70% of the total intensity before 11am; or look at moving away from the profession norm – large retail units normally have a fit out criteria of 40 watts per m2 and smaller retail units 80 watts per m2 but perhaps look at using high efficiency lighting where it is possible to have 14 watts per m2 in a large retail unit and 40 watts per m2 in a smaller unit.

These are simple wins but the opportunity to take advantage of these situations will become limited as the need to make greater savings takes over. Such projects will need greater occupier collaboration and so communication will inevitably become more important to enable energy to be reduced at the rate the Government wants.

Hardly a Waste of Time, get thinking about your Waste

We all know we should!... and at home our Local Authorities are loading us up with new bins and new pick-up schedules in an effort to get us to focus on how much we are throwing away and where it goes. This also ties in with the current packaging debate about “Sell by’’ dates, “Best before’’ dates and so on, but within your business, who is taking the lead for what we dispose of and where and should we be thinking about this more responsibly?

Unsurprisingly we believe that we should and set out below some areas for your business to consider:

Waste is a huge subject and not only covers the refuse we collect in bags/bins but also Water, Electricity, transport, fuel, office stationary, pollution and time. It can also attract certain tax breaks and financial incentives, so its worth spending a bit of time on.

If you already use Waste Transfer Notes or have a hazardous waste consignment, from 28th September 2011, you will have to have shown that you have applied the Waste Management Hierarchy when choosing a waste option, and essentially this means you must have looked at:
- prevention
- prepared it for re-use
- give consideration for recycling
- give consideration for other uses…. ie as a biofuel or energy recovery
- disposal options

Consider looking at the useful guides and training offered by WRAP (Waste and Resources Action Programme www.wrap.org.uk). Amongst a mass of very useful information they run online training programmes such as The Ripple Effect and ReThink Waste.

Consider contacting the Resource Efficiency Helpline on 0808 100 2040

As ‘easy wins’ in the office you can look at:
- refilling toner and inkjet cartridges
- using waste paper as notepaper
- using durable drinking cups not disposable ones
- reusing envelopes and other packaging
- donating used equipment and furniture to charities, including electrical items (see The Furniture Re-use Network)
- using greywater recycling systems in toilets
- read your meters and monitor usage
- print double sided and re use print paper in fax machines
- try not to over-order raw materials which may never be needed
- when replacing energy and water equipment consider buying items on the Enhanced Capital Allowances and Water Technology Lists for tax benefits

As mentioned this is a huge area and we cannot cover all of it in a Newsletter of this size, but there is plenty of advice out there, but some of those organisations above will definitely be of assistance.

Social Media – Many companies are still unsure about the its security

Company managers remain uncertain about the benefits that social media offers the workplace. Many of these managers also believe viruses, loss of confidential data and the fear that their employees are spending too much time surfing the net also contribute to the idea that restricting access to these services is a safer option.

A survey produced by ClearSwift Research asked 1,529 employees and 906 managers in companies across the world about social media in the office. Interestingly the results were: -

60% of employers worried about potential virus contamination
49% were concerned about loss of confidential information
40% felt viewing these facilities impacted on productivity
37% believed it could have a negative impact on the reputation of the company

This survey also covered the question of technological advancement in the workplace and concluded that companies were still taking a cautious approach to the introduction of new software systems based upon these results.

However the potential exposure to these security risks has resulted in a number of companies either banning access to the social media platforms or monitoring the individual employee’s use of the web. Of those employers questioned 71% had in place a practice policy on the use of the internet, 68% monitored employee internet activity and 56% blocked the use of certain social networking sites. But this last policy does have an impact on the younger generation as only 35% of 18-24 year olds and 44% of 25-35 year olds would remain at their job if their employer banned the use of certain social media websites.

It's official: Occupier satisfaction is getting better – but not by much

The latest Occupier Satisfaction Survey has been released and occupiers have improved their weighted score to 5.4 (where 1 is dissatisfied and 10 is extremely satisfied) on their landlord’s performance, although when considered more closely 10% felt their satisfaction improved, 75% felt their satisfaction remained the same, and 14% rated their satisfaction as worse than the previous year, so has there been any real change? This is the 5th year the survey has been undertaken.

To give you a feeling for the depth of research to achieve these results, the survey was conducted across a broad section of commercial occupiers although only 159 responses were ‘usable’ and were conducted by a Steering Group from the Property Industry Alliance with Corenet Global. The result can be broken down further and as with previous year’s occupiers, the industrial sector remained less satisfied with their landlord than office or retail counterparts. Smaller medium-sized enterprises (those with less than 250 employees) are also less than content than their larger counterparts. However don’t take our word for it click through and have a look at the report.

Areas where improvements were seen as significant are the process for applying for consent, and the process of handing back a property to the landlord. However, aspects that scored low related to service charge arrangements and the landlord’s communication and involvement with the occupier on Environmental matters.

This survey continues to highlight that smaller occupiers still find it difficult to engage with their landlord despite forming the largest “occupier” when you combined the total amount of space they occupy. Much of this is because their access to the right information, (that helps them understand their obligations and commercial requirements), is often priced out of their reach. For tenant satisfaction to greatly improve landlords will have to demonstrate a willingness to find a conduit to ensure that regardless of size, all occupiers receive the right amount of communication.

Off site data storage; the general principles

Companies need to make the best use of their floor space, and many are wondering why they are spending prime city centre rents on technical areas that could easily be housed off-site in secure, managed locations.

The data centre market is big business, and growing and can present opportunities for owners of vacant buildings with the prospect of relatively secure long term income streams (many with fixed increases) and the security and cost effectiveness that many business require for their data.

Essentially a data centre’s function is to provide uninterrupted, resilient services with the necessary cooling and ventilation that the systems best perform within. Additional services will include security, repair, common part maintenance and back-up against service interruption and it is usually these features that represent the components of a separate services agreement which is best linked to the ‘lease’ so that the termination of one can include the other. This ability for the tenant to terminate in the event that the services are unacceptable or breached is an important detail. Furthermore, a tenant can expect to have their non-interruption backed up by service credits, liquidated sums which can be credited against rent or service fees. These features are key to the agreements and tend to illustrate where differences lie between tradition occupational leases, which tend to focus on alienation and repair obligations.

In such a model the actual lease rent can be as low as 10% of the total agreement, the balance representing the receipt of services. Such a low rent percentage also has the benefit of minimising Stamp Duty Land Tax applicable to the rental consideration. Electricity tends to be charged separately, as are any other services requested.

Difficulties can arise when the centre needs to undertake repair or upgrade works and these need to be handled very carefully between the parties, bearing in mind the sensitivity of the ‘business critical data’ that is stored there. Back up plans should be drawn up to deal with this and should accommodate sensitive timing to minimise impact. Care should also be taken when dealing with a departing ‘customer’ as many tend to leave the equipment behind which causes uncertainty for the data centre manager who will be unsure if it can be re-used or not. Document drafting should cover this from the outset. This can depend upon whether or not the customer has actually entered a collocation licence and had leased racking space or installed their own.

The immediate future sees increasing use of internet based back- up via Cloud based services which, once one is confident about data security issues, can allow for much greater employee participation and behavioural change, plus the usual benefit of reducing floor space usage for data equipment. You can anticipate data centre operators to be looking at using Cloud technology to meet this growing trend.

For further guidance on this area, TAP can direct you to industry experts.

Security Patrols – Can they be undertaken remotely?

If you work on an industrial estate or retail park, security of the common parts is often provided through regular manned patrols which are scheduled outside of the normal operating times of the estate or park. In the current climate many managing agents are looking at ways of reducing the cost and one way maybe to replace these with a virtual patrol.

Virtual patrols operate through utilising a CCTV system that is linked via a wireless or broadband internet connection to a manned monitoring station where the cameras are regularly monitored. Typically a manned patrol can cost between £50 -£100 per patrol however there is a huge benefit as a security guard is capable of judging a situation and responding immediately to a potential issue, whereas a virtual patrol may cost as little as £3 - £6 per review.

A virtual patrol operates on the basis that the camera monitoring company can sweep the property using the images provided by the cameras at set and agreed times of the day. The cameras can also be set up to provide alert alarms that would highlight a potential situation and bring an issue to the attention of the monitoring company. With the images being provided through the internet, this allows the property manager to also view the site from any computer which aides the management of the property.

Using a virtual patrol can reduce the traditional routine, out of hour inspection cost, but there is an up front installation cost and broadband/wireless connectivity. Depending on the number of cameras a property manager may be looking at a capital expenditure amount above £10,000. This level of cost does depend on the number of cameras required to properly monitor the property. The return on capitalfor such a project will depend on the number of years savings you apply to the project but based on 2 routine out of hours manned patrols per weekend at £60 per visit would result in an annual saving of £6,240.

As technology improves there will always be opportunities to offer a service in a different and potentially cheaper way so it is worth looking at what new innovations are out there.

August E Newsletter

2011-08-30T12:52:00.000+01:00

Editorial: Welcome to the August edition of the TAP e Newsletter

Whilst the traditionally ‘slow’ month of August sees many property professionals taking annual holidays, the riots that have shocked the world have highlighted the vulnerability of high profile real estate and the businesses that operate from within them. High-end brands were targeted across the country but many lower profile businesses and dwellings have been lost or damaged leading to questions over what, if anything, can have been done to protect the lives and bricks and mortar when committed attacks occur.

Tap, does not promise a silver bullet solution but this month we look at what the Government’s immediate response has been and this may be a continuing theme in the coming months.

We also look at market conditions which still seem to be favouring tenants, the need to challenge unnecessary bureaucracy in the Red Tape Challenge, issues affecting empty property and then the prospect of changes in consumer protection in property transactions.

Finally our Q and A asks; what are the main Green Tax incentives?

England’s Riots; can the High Street recover?

The UK’s High Streets have been struggling for too long already and any shopper will be able to vouch for the abundant vacancy that pervades most shopping districts, and the casualties continue to mount up, month on month.

So to be assaulted in such a manner by sustained rioting with some stores not only looted but burnt to the ground, can any local or central government action be enough to compensate Landlords and Tenants for such damage?

Early figures put the damage at £150m however this pales in comparison to the wider and longer term issues of UK regeneration, economic recovery and business confidence which needs to flow through to the High Street.

So, in the immediacy, the official response to those affected can be summarised as follows:

A government led £20m high street support scheme to help affected business get back up and running

An extension for claimants to seek compensation (from 14 days to 42 days) for those suffering damage or loss of their building, under the Riot Damages Act 1886, even for those uninsured.

A business rate relief for those affected, with Central Government funding at least 3 quarters of local authority costs, plus a council tax cessation for affected residential ratepayers.

Deferment of tax payments for businesses in greatest need

Relaxed planning regulations, where appropriate, for businesses to rebuild

A £10m Recovery Scheme to provide additional support to councils to make areas safe and clean

A government pledge to meet the immediate costs of emergency accommodation for families left homeless as a result of riot damage

In London, a £50m pledge from Mayor Boris Johnson to deal with affected areas and as part of a longer term regeneration programme.

Useful police websites to visit include:

Association of Police Authorities

http://www.apa.police.uk/your-police-authority/contactinformation

…and Banks have also joined forces to offer funding advice and can be viewed at:

Business Banking contact telephone numbers

Heartening scenes of local communities helping in the clean up have confirmed local resolve and it’s clear that businesses are not deterred by the damage they have sustained, but will continue to look to trade, and the help outlined above is a welcome relief to most. Tragic and tough as last week was, the High Street is still in dire need to help and a far wider programme of ideas are needed to assist all retailers who are suffering through this downturn and the notable changes in shopping habits that affect them.

Consumer Protection for you instead of the limited scope of the Property Misdescriptions Act

For those involved in transactions in property there may be a change in the way you are protected by the materials and actions of the seller/lessor.

The Department of Business, Innovation and Skills (BIS) undertook a 3 month consultation at the beginning of this year to look into the workings of the Property Misdescriptions Act 1991 with a view of having it repealed and replaced by the Consumer Protection from Unfair Trading Regulations 2008(CPR).Their findings and recommendations are expected very shortly.

The CPR implements an EU Directive on unfair trading practices (Unfair Commercial Practices Directive 2005/29/EC) and, whilst it has never been used to deal with offences under the PMA, it does prohibit commercial practices that do not show the necessary standards of professional diligence as well as those that are misleading or involve misrepresentation.

Currently the PMA only applies to property SALES, so Tenants remain largely unprotected and it only covers defects in specific pieces of information which means that those who spot inaccuracies are often reluctant to bring forward a prosecution on one point alone. The information can be judged to be ‘false’ if it is false to ‘a material degree’ and is referenced to what a reasonable person would infer from it, or its omission. Agents and/or Vendors can use the defence of due diligence only, however the PMA can claim to have had some benefit as the number of prosecutions has fallen from 26 in 2001 to 12 in 2009 (and only 3 in 2008).

The scope of the CPR however is wider than the PMA which may cause greater concern for agents as the BIS sees that an offence under the PMA would also be so under the CPR. The whole area would be covered by the Office of Fair Trading whose proactive steps would involve the comparison of particulars to properties and the seeking of injunctions to prevent the use of specific misleading statements.

Because CPR is more principle-based, a consumer would need to show that an agent’s actions had led it to be influenced by the unfair practice and to have made a transactional decision. Again, the only real defence is to prove that all it was a genuine mistake and that all necessary due diligence was undertaken to avoid it. If found guilty, an offender may be liable to a fine of up to £5,000 and/or face a prison term of up to 2 years ,with limited company directors also being pursued alongside the Company.

As mentioned, the BIS’s findings are expected shortly but it seems inevitable that CPR will play a far wider role in property transactions, including those affecting Tenants, as all the factors that lead the consumer to a transaction are open to scrutiny.

Lease concessions continue to benefit Occupiers

In their 14th Annual review of UK property leases the joint findings of the Investment Property Databank (IPD) and the British Property Federation (BPF) are that rent free periods are getting more generous alongside shortening lease lengths and the increasing prevalence of break clauses.

As global economic data continues to cast doubts about sustained economic recovery the UK property market is reflective of this as vacant space struggles to find occupiers. Not only are Landlords(whether they be Owner Landlords or sub-letting tenants)having to find creative ways of mitigating the payment of Empty Property Rates (as we comment elsewhere in this e Newsletter) but they are having to offer greater incentives to attract tenants to their space.

The Review finds that the average rent free period for a new office lease has pushed out from 14.5 months a year ago to 18.5 months in a study covering the period from January 2010 to March 2011 over 52,500 tenancies. The upward trend is reflected across all Sectors and on an overall basis it produces a figure of 13.4 months as against last year’s figure of 10 months.

Regional Offices seem to be faring the worst followed by Retail rising from 7.3 months last year to 10 months now and Industrial up from 8.1 to 9.1 months.

Not only are concessions still proving necessary to attract tenants across all sections but the average lease lengths also appear to be falling too with many incorporating break clauses to afford the tenant greater flexibility.

The review shows that across the country and across all sectors typical lease lengths are now only 5.8 years, down from 6.3 last year set against a figure of 17.5 years back in 2001; hard to imagine.

With rents barely growing too across most regions it would seem that favourable conditions for new tenants should continue to offer some attraction, however without the economic conditions into which to grow, many businesses are still not in a position to take advantage of the situation and relocate or grow. A Catch 22 for those disposing of space.

Your chance to cut down Red Tape

From April this year, the Government, via The Cabinet Office, launched the Red Tape Challenge which is designed to harness your views on necessary and unnecessary regulation and to make whatever reforms are deemed appropriate following a consultation period. The default position for Ministers is to cut away red tape unless Ministers can prove its necessity. In total some 21,000 regulations could potentially be looked at, however only those considered by you to be the most burdensome will attract the most attention.

The process is set to last until April 2013 and your comments can be submitted via their website at www.redtapechallenge.cabinetoffice.gov.uk. The process has been designed to address regulations on a subject by subject basis and, currently the site is taking observations for the Manufacturing arena. As of July 28th the section on Health and Safety closed however comments can still be directed to the Health and Safety Executive as part of the Government’s long term plan for regulatory reform.

Forthcoming subject areas include Environment, Employment and Utilities/Energy and the Challenge will also deal with EU Regulations which may be deemed overly burdensome, in conjunction with other EU Countries. The Government is keen to ensure that its commitment to SMEs are met whereby companies with fewer than 10 employees are exempted from new EU Regulation.

At the end of each sector’s comment period, relevant Ministers will review the submissions over a 3 month period and will then present their findings publicly on the website which will contain details of those regulations that they plan to repeal and within what time period.

TAP recommends that businesses keep a watchful eye on the website (above) in order to maximize this valuable opportunity to streamline regulation and enforcement, especially on those areas that continuously place the biggest burdens on business and society as a whole.

The Rating Game

Local Authorities around the country are playing a cat and mouse game with ratepayers who are looking at innovative ways of exploiting minor loopholes in Rating Law to avoid paying Rates on ‘empty’ property…or at the very least obtain a temporary exemption of 3 or 6 months(the longer time frame applying to Industrial property).

In a lot of cases the issue comes down to whether or not the property is actually empty and whether or not it is lawful or unlawful to occupy due to its condition or the presence of hazardous materials.

However, there are other approaches being tried and in a recent case in the North of England The Insolvency Service investigated a scheme being run to help numerous Landlords avoid rates payment due to the insolvency of the relevant rate paying company. Their investigation led to the winding up of 13 separate companies which had been set up to sign leases on property which would otherwise have been vacant and these companies were then placed into members voluntary liquidation, but no liquidators were then appointed. The effect of this was then that the Landlord was no longer liable for the business rates and councils were no longer able to collect. In total it was found that over a 3 year period the scheme had avoided some £8.9m in rates liability and that some £1.4m had been earned in fees by the scheme’s operator.

Another topical example involves the tiny presence of a new marketing device which sends out, via Bluetooth, a continuous series of adverts to nearby, passing mobile phones. These have been placed in empty properties such that, if the Valuation Office deems this to be ‘’occupation’’, then upon its removal, the ratepayer would be entitled to a 3 month exemption from rates payment.

Similarly, the presence and use of an alarm system in an empty property has been attempted to be regarded as ‘’occupation’’ by the ratepayer in an attempt to gain a later exemption.

Ratepayers, whether a Landlord or Tenant are clearly prepared to try whatever route they can to save money and in this downturn that is not too surprising and the result of that is that Local Authorities are increasingly eager to collect money owing to set against their frozen budgets. The downturn has led to a vicious circle in some retail parades where charity shops have emerged as leading takers of vacant space, and provided they can vouch for their charitable status, they can claim either the mandatory 80% relief of even a 100% discretionary relief. Good news for a Landlord in that he is no longer responsible for Rates but for the Rating authority the presence of a new tenant in the high street does not generate any tax revenue.

Being a Landlord or Tenant means little if you are in fact the Ratepayer, but be aware that most local authorities are very wise to scams and will be asking more questions than usual about claims for relief.

What are the principal incentives open to me whilst investing in Green Technology?

You would have done well to have missed Government rhetoric and initiatives about carbon emission targets, and in simplistic terms the UK are intending to reduce emissions by 80% from 1990 levels, by 2050.

But are there sticks or carrots being used to encourage us to participate?

Essentially the sticks are taxes imposed on environmentally damaging activities and the carrots are tax reliefs or reductions relating to ‘’green’’ activities.

So whilst the damaging activities are generally being priced away from us the main incentives pertaining to UK property are:

Enhanced Capital allowances: these are applicable to expenditure on capital assets such as plant and machinery which would not otherwise be deductable for tax purposes and being ‘’enhanced’’ could give a 100% relief on environmentally friendly equipment in the year in which the cost was incurred. Such a % compares very favourably with standard rates and could provide substantial cash flow benefits as well as helping to meet a company’s CSR commitments.

Reduced VAT; installation costs in residential property for the likes of insulation, solar panels, wind/water turbines, biomass boilers can attract a reduced rate of VAT.

Feed-in tariffs and RHI (renewable heat incentive); whilst not technically tax incentives these are designed to provide home and business occupiers a set level of investment return on the installation and running of energy efficient technology. Combined with the EHA’s above relating to the plant and machinery tax incentives, these tariffs can provide a double benefit for users. However be warned, as the Government is in consultation to have certain limitations placed on the %’s available as on April 2012.

SDLT exemption; again this applies to the residential sector and specifically on new zero carbon homes and provides savings on the levels of acquisition tax within certain pre set price brackets. Reductions in SDLT could be up to £15,000 in the £500,000-£1m price bracket. Certification is required by way of an EPC to enable qualification.

More generally, changes to the planning system through the National Planning Policy Framework (NPPF) are intending to mean that the default assumption is ‘yes’ to development, except where such a project would compromise the sustainability principles set out in the NPPF.

This ‘wrap around’ position is designed to incentivise development which might otherwise not have happened.

July E Newsletter

2011-07-25T10:10:00.000+01:00

Editorial: Welcome to our July 2011 e newsletter.

Many of us our looking forward to well earned summer holiday but before you go you may be interested in our latest snippets of news. We highlight the potential fines you may receive if you treat a property without having an EPC. When a lease expires have your given thought to considering what gas is in your air conditioning compressor? It may have an impact on any dilapidations claim.

Energy prices continue to rise and people are trying to harness solar energy, but have you thought about the terms a company may want to site their panels on your roof? We take a brief look at the Climate Change Committee’s latest report on the state of our emissions – it seems they continue to rise, not fall!

Do you know the definition of ‘structure’ we look at a case that helps clarify this and finally our Q&A takes a look at pest control.

Avoid being fined for failing to get an EPC

Since 2008, The Energy Performance of Buildings Directive (EPBD, 2010/31/EU) has been the impetus for the ‘relevant person’ (i.e. the Seller/Lessor) to commission an Energy Performance Certificate prior to the commencement of marketing a property for Sale of Lease. Should Trading Standards Officers check and find that person to be non-compliant, then they can impose a fine of up to £5,000 per property, dependent upon the Rateable Value of the property.

The Government recently announced that it was extending this responsibility to include property agents too, such that both parties would become liable for a lack of EPC, and both be fined. Such an inclusion was to have taken place on July 1^st 2011 however at the last minute they postponed the change to an ‘unspecified date’, but there is no doubt that a re-formatted timeframe will be announced shortly to ensnare both parties. The change is also to include a reduction from 28 days to 7, within which the ‘responsible person’ has to secure the EPC, once its omission has been identified.

Government intentions to reduce emissions within the property sector are becoming more stringent and, albeit some way off yet, they have announced that as of April 2018, it will be illegal to attempt sell or lease a property that has an EPC rating of F or G. A long lead-in time, but illustrative of the need to make necessary alterations.

Real Estate commentators are also confident that the more relevant Display Energy Certificate (DEC) that is currently applicable to public buildings, will become the norm for all properties and view April 2013 as the likely introduction date, warranting the commissioning of a further detailed inspection. TAP suggests that pre-empting this further change should best involve the collation of energy data from at least April 2012, to be able to show a clear 12 months of data. If no data is provided at the relevant time, Government has indicated that a property will automatically be awarded a Grade G certification.

TAP recommends that if your organisation is contemplating disposing of space, then the commissioning of an EPC is one of the first steps you undertake, and similarly, if you are looking to commit to new space you are confident that you know its energy rating before signing.

We can direct you to a suitable Assessor if required.

Matters to consider for both parties at lease end or break

In the lead-up to a Tenant leaving a property, whether by effluxion of time, sub-letting or by way of exercising a break clause both the landlord and tenant should be looking closely at the lease to establish whether or not ‘vacant possession’ has been achieved.

Regrettably the phrase has no firm legal definition but the wording’ physical or legal impediment to enjoying the property goes a long way in helping. This may involve tangible impediments as well as chattels and fixtures, and their retention at the property may often lead to a break clause condition failing. Both parties to the lease need to look closely at the wording and seek advice if necessary.

Another specific issue that may arise in a dilapidations negotiation involves the treatment of Ozone Regulations and in particular how the HCFC known as R22 is viewed. This is the coolant commonly used in air-conditioning systems and since 2000 its use has been banned in new systems. Since 2010 it has been banned as a top-up fluid for existing systems and from 2015 its use as a re-cycled top up will also be banned. An alternative, R422d is traded as a drop in replacement but has varying effectiveness, so looking forward there may well come a time when replacement of the entire system is necessary. This will have implications at lease end, where a Tenant is obliged to adhere to statutory compliance clauses and may be asked to replace cooling systems that they control as a condition of departure. At this time, provided they can show that a recycled R22, or equivalent, can still be used, then replacement is unnecessary…so far.

Two other matters are worthy of note: firstly that under the Financial Reporting Standard 12 a future dilapidations liability can be treated as a deductable expense for Corporation Tax purposes and can be excluded from the Company’s calculations until spent, therefore illustrating the benefit of undertaking a review of anticipated liability, in preparation for lease end. Secondly, if a tenant has been occupying a multi-let property its worth taking advice on the treatment of service charges, especially if one is looking to sub-let or break the lease and any ongoing liabilities. Both a landlord and tenant should refer to the latest RICS Code of Practice for Service Charges in Commercial Property to assist in clarifying uncertainties.

Finally, there is no substitute for consulting the exact wording of the Lease to be clear about conditions attached to a lease ending and in many cases professional help should be sought.

TAP can assist by pointing you in the right direction for such help.

Make sure you get it right when agreeing a lease for solar panels

It’s become quite common for companies, offering to install and operate solar panels, to canvass commercial property owners as an opportunity to help the property owner reduce the cost of energy to their tenants. With the introduction of the Feed-In Tariff (FIT) and the strict carbon reduction targets the government has identified, the use of solar panels to generate electricity offers companies the ability to try and take advantage of the large roof spaces on offer across many of the commercial properties in the UK. Often the installing and operating company will require of lease of the roof space. But is it just a simple task to sign the agreement offered by the installing company or are there elements you need to think about?

If you are a leaseholder you may have to obtain your landlord’s consent. That may not be difficult although give thought to the terms of the lease that may involve sub-letting of part of the premises and security of tenure.

These solar panel installations can take up a large amount of the roof space and so if the property is multi-let consideration may need to be given to space required by other occupiers for additional equipment.

The importance of having the installation properly fitted and in compliance with the manufacturers specification is equally important as it will ensure no faults can be attributed to the building owner should it not function properly. How are the panels maintained? How often and by whom? What about the removal costs and reinstatement of the area at the end of the lease? Who takes the responsibility for these elements in the agreement?

Understand the insurance arrangements, does the installation come under the buildings insurance and who covers the extra cost?

It is not only the solar panels that are covered by the agreement but also the FIT meter. Access will be required to the meter for routine maintenance.

It is fair to say that with increasing energy prices the attraction to look at ideas which clearly have a financial benefit for all concerned is tempting but with all such proposals it would be sensible to carefully look at the terms of any agreement.

If you have had such an approach and would like to discuss the potential terms being offered then please do call us on 0800 865 44 50.

Climate Change Committee says new tools are needed to hit reduction targets

In its 3^rd Progress Report the CCC has shown that during 2010, overall emissions actually rose by 3%, which is clearly incompatible with the 3% cuts that the Government claims are needed on an annual basis. The CCC claims that, set against its “carbon budgets”, 2010 was actually within budget but only by virtue of the ongoing economic downturn which reduces activity and hence emissions.

The Committee’s CEO David Kennedy pointed out the whilst the economy grew by 1%,overall emissions stayed flat, and he remained unsure what would happen if the economy grew by 2%...i.e. would emissions go up, or remain flat?

Either way it seems to point to the fact that there still exists a historical link between economic growth and C0₂ emissions; Methane emissions, on the other hand actually fell. Mr Kennedy went on to say that in each of his committee’s 3 reports to date, a “step change is needed” and that the UK “needs clear, stable and strong policies that will unlock the potential of a low carbon economy” and that new tools are required to meet reduction targets. He referred to virtually no progress being made on insulating cavity walls and changing transport trends, with the exception of an above expectation fall in the average emissions from new cars, from 149g/CO₂/km to 144g/CO₂/km. He called on the Government to be consistent and clear about the functionality of the Green Deal, The Green Investment Bank and an electricity market reform, akin to the de-carbonisation witnessed in France, leading to a slower rate of price rises as they move away from the dependence on fossil fuels.

Also commenting on the CCC’s report is the UK Green Building Council, who’s CEO Paul King points out that whilst it makes disappointing reading there may be a glimmer of hope in the construction industry via the Government’s long awaited response to the Low Carbon Construction Innovation Growth Team’s recommendations and the fact that Mark Prisk, the Minister responsible for Construction, has personally committed to Co-Chair a new Government/Industry Green Construction Board to oversee a new action plan for the sector.

Maybe, at least, the construction industry is set to take a lead in this essential battle to address meeting emissions targets regardless of economic circumstances.

Is the plaster, covering the wall, part of a building's structure?

The recent case of Grand vs Gill saw the Court of Appeal judge rule that in this case the plaster formed part of the structure. This case involved a residential tenant but the facts and conclusions can be referred to in commercial cases.

The circumstances involved a tenant claiming that repairs to the defective plaster were the responsibility of the landlord. The damage to the plaster was caused by condensation which the courts rules was as a consequence of a design defect to the property.

The court ruled that the plaster formed part of the structure and this was distinctive to the definition of decoration which was the finish that was applied to the plaster’s surface. Why is this ruling important? Many leases refer to the structure of a property without any real definition of the term. This case helps to define the definition of the term structure and will assist tenants, landlords and property managers to further understand the meaning when interpreting the lease.

Question & Answer

Pest Control - Do I need to have my own contract?

It’s not unusual for a property manager to be challenged over whether it’s necessary to have a pest control contract for the property; especially if there’s been no sign of any pests. It’s often said that those using the building never see any pests but that phrase alone supports the notion that the pest control contract is working well and keeping rodents and other pests at bay. However, generally any pest control contract will take a proactive approach keeping mice, rats and the odd pigeon infestation at bay and react to other pest sightings as and when they occur.

It is known that when properties are demolished and rebuilt this has the tendency for mice and rats to be displaced leaving them no alternative other than to move into another property. Over recent years the development in some areas of the country has dried up but with the dust sheets being pulled off the tower cranes it now maybe the time review the pest contract arrangements.

Additionally, the action of tenants can sometimes be the source of rodent activity especially if employees eat at their desk or store food in their pedestals. If it’s noticed that rodent activity has taken place then it would be wise to inform the property manager immediately.

As Mike Williamson of Cleankill points out “A mouse can get in through a gap the width of a pencil, cockroaches can be brought in on cardboard packaging, fleas may be picked up on public transport, pigeons will make the most of those wonderfully designed architectural ledges on the outsides of buildings – and flies will just fly in!” So the fight against pests is a never ending saga.

So is there anything the facilities manager could be doing to limit the risk of pest infestations?

See what the landlord or their property manager has in place. It may be that they have put in place a suitable contract for the common parts but that you as a tenant may need to add to this basic arrangement.
Look at reducing the areas that rodents could access.
Remove food from draws on a regular basis to ensure rodents aren’t enticed with biscuits, fruit or other nourishing substances. If you’re looking at pigeons you may wish to ensure the netting or windowsill spikes are in place.
Work with your property manager, and their pest contractor, to ensure a strong understanding of the concerns you are experiencing are dealt with in the most efficient manner.

If you have any question please call us to discuss.

June E Newsletter

2011-06-22T09:59:00.086+01:00

Welcome to our sixth e newsletter of 2011.

It’s Wimbledon already and the drought has broken so we take a look at comfort in the workplace to see who and what can make a difference. The occupier is again the focus of high level strategy within the BCO and BPF and we draw attention to this, following recent public declarations. We again find the need to touch on CRC reporting and introduce some potential assistance, up against an end of July deadline and identify new legislation within the Bribery Act which has significance beyond real estate.

We top and tail the Newsletter with a commentary on the hot topic of Sinking Funds, and close off with our Q and A - Occupier’s security.

Enjoy your strawberries and cream.

Are sinking funds a thing of the past?

The rise of the serviced office network, mobile working and the change in business sentiment towards shorter leases, has seen less and less sinking, reserve and depreciation funds (‘Funds’) being used. Typically new lease terms are generally 10 years and often contain break clauses which, if actioned would reduce the duration of the term. Together with the questions over how these funds are treated for tax, is it not surprising that rarely do we see these funds being used and we ask if there’s a future need for them?

These ‘Funds’ were used as a means of spreading the cost of large scale repairs or replacement of plant and machinery serving the common parts of a property. By smoothing out these potential peaks and troughs in an annual service charge allowed occupiers to better predict costs over the lifetime of the lease but not all landlords were deemed trustworthy and this frequently led to mistrust between the landlord and the tenant on how the money was being held, and more importantly spent. Was the tenant right in believing the landlord was using this money to improve HIS property?

The traditional 25 year lease allowed property managers the chance of introducing an element of certainty to maintenance and repairs within a property. But these ‘Funds’ work best for large projects such as replacing the air conditioning, lifts or heating system, which are expensive, so collecting tenant contributions over a long period of time can prove helpful. Shorter leases however, do not afford the same luxury and increases the possibility of tenants having to meet large scale cost in a single year. But the possibility of establishing a ‘Fund’, collected over a shorter period, for smaller projects and using it for works that would improve the operation of the property may be worthwhile. We see energy efficiency as an area where this could work.

With mounting pressure to see energy efficiency improved in the commercial property market, property investors are looking at ways of meeting the goal set by the Government (cutting carbon emissions by 50% by 2025). This ambitious target will involve a collaborative approach by both landlords and tenants. So to answer our earlier question, we strongly believe a sinking fund approach on a project by project basis over a shorter period will work well in delivering operational changes to the building which could skew a single year’s service charge.

The Bribery Act 2010 – What does it mean for business?

The Bribery Act details both general offences in relation to bribing another person or being bribed and a specific offence relating to bribing foreign public officials, and introduces a specific corporate offence for failing to prevent bribery.

This new crime, ‘failure to prevent’ bribery, will result in companies having to introduce policies and procedures that prevent corrupt practices within their ranks or by 3^rd parties on their behalf. The consequences of not being able to prevent bribery are unlimited fines as well as other consequences such as being struck off the register for public/government contracts. Individuals found performing that act of bribery may incur a prison sentence of 10 years and an unlimited fine.

Corporately, the only defence is where you can show that adequate procedures are in place which are designed to prevent bribery occurring. What are ‘adequate procedures’? At the moment it is not clear, but the Act does specify that the Secretary of State for Justice will issue ‘guidance about commercial organisations preventing bribery’. To introduce the right procedures will involve a combination of departments ranging from human resources, internal auditing, legal compliance and finance to name but a few.

In a recent survey conducted by PwC, 75% of Non Executive Directors, Heads of Internal Auditing, Heads of Risk Management and Senior Executives asked said their Boards or audit committees had not considered the implication of the Bribery Act.

Consideration should be given to the policies of the current Government where they are encouraging the private sector to participate in Government contracts which can often include overseas contracts. This in itself will require those companies seeking such appointments to have adequate measures in place to avoid potential prosecution.

Landlord’s rushing to meet July 29^th deadline

In compliance with the CRC Energy Efficiency Scheme, which was introduced in 2008, companies which consume large amounts of energy are required to report their carbon consumption figures every year. This Carbon Footprint Report, which must be submitted by July 29th, will define which sources they have to report every year over the next four years, and will say how much energy was used, and carbon emitted, from 1 April 2010 to 31 March 2011.

According to a survey conducted by the accountancy firm PwC earlier this year, only 21% of large public and private organisations had previously reported carbon emissions which meant 79% had never looked at, or collected data, on this subject. To get it right you must work with a company who has a deep understanding of the subject. Here we look at one company.

Carbon Guerrilla is a web based platform for clients to track and manage their energy consumption and generation and associated carbon and Greenhouse Gas emissions. The CG dashboard provides quick and easy user access to multi-portfolio data management and reporting:-

Identifying and calculating all sources of emissions directly and indirectly attributable to the operation – from 500+ emission categories, from electricity to aviation to waste

Allocating these emissions to individual sites, cost centres or assets to build a comprehensive and robust inventory, benchmark against others, set budgets and monitor targets

Analysing where hot spots of energy use occur and run 'What If' Scenarios to work out reduction strategies

Complying with legislation such as the Carbon Reduction Commitment Energy Efficiency Scheme (CREES), UK Emission Trading Scheme, EU Emissions Trading Scheme, ISO 14064 (Reporting of Green House Gas emissions at an organisational level, PAS 2050 (standard method for assessing GHG emissions of goods and services; and, later in 2011, American, Australian and Japanese carbon schemes,

Managing reputational and financial liabilities by producing accurate reports for Footprints or Annual reports and, maintain an auditable evidence trail for regulators and stakeholders.

Many of the reports that the system can produce help to identify areas of occupation where overly high energy usage has taken place. Armed with this information the property manager now has evidence to engage both their client and occupiers and collaboration is something we continue to promote on a monthly basis. To find out more information visit their website www.carbonguerrilla.com for tutorials links to YouTube videos and pricing. Alternatively call the Carbon Guerrilla team on 0207 956 8698, especially if you are struggling with your CRC reporting.

If you’re too hot or too cold then take a look at this.......

Weather patterns are changing and seasons are becoming more extreme. This year the UK has seen a very cold winter, the driest spring in 100 years and there is talk of a possible hot summer. These unusual climatic changes may result in the office worker finding it difficult to be thermally comfortable. An odd term but the Health & Safety Executive (HSE) has found it important enough to devote a whole microsite on ‘Thermal Comfort’.

So what is thermal comfort? Well according to the HSE it’s a person’s state of mind that determines if they’re too hot or too cold. The microsite goes on to say that thermal comfort is not simply down to the temperature in the room but will also include other aspects such as environmental conditions; the heating, personal factors; the clothes an individual is wearing and how hard the individual is working.

At the heart of this microsite are the six factors that affect a person’s thermal comfort; air temperature, radiant temperature, air velocity, humidity, clothing insulation and metabolic heat. The importance of understanding how these inter-relate with one another is important in determining how someone’s thermal comfort is affected. The HSE has produced a very useful checklist to help assess thermal comfort and a link can be found on our website. Throughout the year, but particularly in the summer hot working conditions can lead to a contentious relationship with the landlord or property manager and the root cause isn’t always down to the management of the heating or air-conditioning system in a building.

As it is seen from this article there are a number of factors which contribute to a person’s thermal comfort and certainly it would be helpful for occupiers to review these before contacting the property manager about a problem. In many situations it may be quicker for the occupier to eliminate any other factors before determining if it’s the heating/cooling system or control mechanism that is causing the problem.

BT is aiming for 1.6 – What is your business aiming for?

Both the British Property Federation (BPF) and the British Council for Offices (BCO) have recently commented that developers, employers and property managers need to be more cognisant of the needs of the end-user in their thinking towards the creation and use of real estate.

In a recent interview with the Estates Gazette, the BCO’s incoming president, Gary Wingrove commented “It’s time now for occupiers to drive the agenda for space and for Landlords and developers to help us to do that, rather than to say that we have to take what’s there because they’ve decided that that’s what we want’’. As part of implementing this, Wingrove is suggesting an Occupier-focused accreditation scheme for property agents so as to ensure that areas such as design and sustainability are understood and form part of the advice that an occupier should expect from his property agent.

Wingrove himself works for one of the UK’s largest corporate occupiers, BT, and is acutely aware of changing working practices and the need for rationalisation across large portfolios. He is also a major advocate for flexible working and sees how improved technology is determining property space requirements. Indeed, BT now claims that over 60% of staff has no allocated desks and that their targeted workspace ratio is 1.6 people per desk.

This shift was picked up at the recent BCO Conference where Head of Innovation at Ove Arup and Partners, Dr Chris Luebkeman said that graduates were far more likely to be fluid workers who are familiar with high levels of engagement with evolving technologies. He branded the new generation ‘’clickizens’’ who present both a challenge and an opportunity to those involved with designing workplaces of the future. The ‘clickizen’ would expect to be able to work at any time and any place and it is to them that designers need to turn in order to understand what is meant by ‘normal’, and design accordingly.

Aside from the physical aspects of occupation, the BPF is supporting the Best Practice Index (BPI) which looks to measure best practice in property management, and as Liz Peace of the BPF says’’. This is an excellent example of property owners and managers working in collaboration with occupiers to improve customer service in the property industry’’.

The occupier’s voice is at last being heard in the right places within the industry.

Question & Answer

The property manager takes care of the security in the common areas; does that mean we do not need to take any extra security measures for our demise?

It’s not unusual for a tenant to believe that the property manager is responsible for securing a multi-let building from potential break-ins or breaches in security. Where the property lacks any on-site presence from a building manager, a security guard or receptionist then the property manager will rely on other elements to secure the building such as an access code, access cards, CCTV or video entry systems. Despite having an array of equipment at their disposal if an intruder is determined to get into the building then they will find away.

Using a number of factors such as size of property, its location, where it’s situated, and how it’s being presented to the market the property manager will define and manage the security arrangements. So if the property is located in the City of London then the security arrangements will differ to those of a retail shopping destination or an industrial estate. But what is important is that these measures are conveyed to the occupiers so they can dovetail their own arrangements which may include sharing the costs of a mobile security guard or linking in to the building’s CCTV system by locating cameras dedicated for your demise.

Although the property manager oversees and manages the security strategy for the common parts they are NOT responsible for the security arrangements of the individual leased units. This falls firmly in the lap of each individual tenant. The security of a tenant’s demise must still remain with the occupier and as such a prudent tenant would review the security arrangements in the building and supplement these with their own bespoke requirements. However, security should not just relate to the physical nature of the property but may also include looking at protecting the power source and telecommunication cables coming into the building.

Ultimately the tenant is responsible for securing their own demised premises and can achieve a more secure environment by understanding the building’s security strategy operated by the property manager. As with all cases, working together and avoiding duplication will deliver better results.

If you would like to discuss your specific circumstances please call us on 0800 865 44 50.

May E Newsletter

2011-05-26T07:00:00.000+01:00

Welcome to our fifth e newsletter of 2011.

This month we start with commentary on the eagerly awaited review of the Service Charge Code by a range of Industry heavyweights and follow this up with an article about other influential property leaders taking the DEC debate right to the PM’s door, in the pursuit of pressurising the Government to keep to its Green promises.

We then look at how local authority funding is likely to embrace the Community Infrastructure Levy, highlight changes in ownership and maintenance of our sewers and also question value-for –money with certain building projects. We finish with our Q and A section which seeks to explain what’s out there…. in The Cloud.

Take a look at the 'New Code'

Launched and ready to take effect from the 1st October 2011 the revised Service Charge Code (‘New Code’) is here. The ‘New Code’ has been drafted by a steering group which comprises representatives from a number of real estate groups including, the British Council of Offices, British Council of Shopping Centres, British Property Federation, British Retail Consortium, Corenet, Property Managers Association, and the Royal Institution of Chartered Surveyors. You can take a look at this new document which we have uploaded to our Knowledge Centre but how does it differ?

The New Code has been revised after a consultation period managed by the RICS. During this consultation the RICS received over 200 responses covering a variety of issues which they were able to review.

The ‘New Code’ primarily is concerned with the management and administration of service charges which remain the single largest area of concern for occupiers. This ‘New Code’ also extends to assisting those involved in drafting service charge clauses and directs them in using the right phrases and language.

The ‘New Code’ covers a number of core principles and these are set out in 26 points, the more relevant principles being: allocation and apportionment, certification, proportionality, anticipated future expenditure, environmental sustainability, and standard cost classifications.

In all situations the need for effective communication cannot be underestimated. Occupiers have a need to understand how a service charge account is constructed as without it there’s an element of uncertainty and doubt over how the on-account and reconciliation sums are reached. If doubt and mis-trust creep into a relationship then achieving a collaborative working partnership becomes much harder to deliver. The ‘New Code’ identifies the importance of good communication and timely responses and TAP’s clients do favour our proactive and strategic methods of liaising and supporting their occupiers.

We would urge you to take a look at the ‘New Code’ and if you’re unsure about any of its contents then contact us where we can discuss any points you may have.

The Community Infrastructure Levy continues to gain support

Property consultancy, Drivers Jonas Deloitte, has published its 3rd annual review of the popularity of the Government’s proposed Community Infrastructure Levy (CIL) as a favoured method for Local Authorities to secure funding from development, and whilst this initiative was originally promoted by the Labour Government, it seems to be gaining momentum now that the Coalition administration has given backing to the scheme.

The results show that 68% of Authorities are now proposing to adopt the CIL, compared with only 20% in the 2009 survey, although you should be cautious with these figures as many Authorities still have other priorities ahead of adopting the CIL.

Julia Chowings of DJD comments, “Only a small number of authorities are advanced on CIL and the Government has recognised this in identifying them as Front Runner authorities. We anticipate that their progress will be watched closely with many learning lessons and best practice from their experience. It is apparent that many authorities are keen to share costs and resources by joining forces with neighbouring authorities to work on CIL.’’

So what is the CIL all about? Briefly, the levy is designed to help pay for the infrastructure required to support new development and may sit alongside the more commonly known planning obligations (Section 106 agreements). Charges will be based upon net additional sqm of floorspace in buildings that people normally use and will be calculated on evidence of the infrastructure needed, but in no way is the levy intended to be the main source of finance. Local authorities CAN apply the levy, but do not have to, however if they do then the infrastructure project must be set out on the authority’s website. Other than money, the levy can be paid in kind (i.e. the acceptance of any land or existing buildings).

For further specific information on this important planning improvement, TAP would be delighted to direct you to an industry expert.

It hasn’t changed in 74 years but now costs will rise

The Government is proposing to change the ownership of sewers and lateral drainage systems with effect from the 1st October 2011. The effect of this change will be to remove the uncertainty of who should repair and maintain the sewer system and make long term planning, in the light of changing climate conditions, easier.

Currently the majority of properties are connected to the sewer system from a private pipe or lateral drain and on the 1st October these will move across and become the responsibility of the statutory water authority. In a written Ministerial Statement by James Paice on the transfer of 200,000kms of private drains it was said “Private sewers serve more than one property so ownership is shared and usually a large extent of the sewer will lie outside a property’s own boundary. Lateral drains serve one property but always lie outside the property’s boundary. Transfer provides the only comprehensive solution to a range of private sewer and lateral drain problems affecting householders. These include a lack of awareness of owners’ responsibilities and unwillingness or inability to co-ordinate or contribute to potentially high costs of maintenance and repair. It will bring simplification and clarity to owners, local authorities and sewerage companies, all of whom typically become involved when these problems arise.

Transfer will also significantly help address a lack of integrated management of the sewerage network as a whole, and provide much greater efficiency of effort, environmental stewardship and expenditure at a time when climate change impacts and housing growth may impose greater demands on urban drainage systems. Having a much greater proportion of the sewer network in the management of the water and sewerage companies means they will be able to plan maintenance and resolve problems more easily and comprehensively.”

This transfer of responsibility will lead to higher sewerage charges for the repair and maintenance of the extended system. Early indications are that annual bills for residential properties, with shared sewers will increase by about £14 per annum.

Pressure increases on PM to deliver on promises for energy efficiency ratings

As a follow up to our comments in last month’s e Newsletter we draw further attention to the DEC debate with the news that some of the property industry’s heavy hitters have signed an open letter to the Prime Minister and Chris Huhne urging them to make DECs mandatory for the private sector.

The letter was initiated by the British Property Federation and the UK Green Building Council but attracted top level signatures from Hammerson, Land Securities, British Land and Legal and General, inter alia all of which is timed to escalate the debate such that A-G Energy ratings form part of the Energy Bill which is about to be debated in the House of Commons.

Following widespread criticism of EPCs and DECs only a few years ago by the property industry as yet another piece of EU Red Tape, it is ironic that the private sector is now calling for such mandatory
measures. As the letter says, “Unfortunately, a voluntary approach to take-up in the private sector will not work, because without a level playing field there is a reputational risk for those businesses that voluntarily adopt certification and achieve poor ratings.’’

As Liz Peace of the BPF observes, “Savings of between 5 and 30% can be made through simple no and low cost changes to the way a building is managed and occupied. A rating based on actual energy use will highlight these opportunities, which could otherwise remain hidden.’’

Additionally, Paul King of the UK Green Building Council adds, “It’s very simple - if you don’t know how much energy you are using, you cannot manage it. We’ve simply no idea how our buildings, up and down the country, are actually performing, so mandatory A-G ratings are the crucial first step in helping businesses understand and reduce their energy use…Government needs to listen to the property industry - this is something that will cut carbon, cut energy bills and create new market opportunities in green technologies.’’

TAP remains of the opinion that mandatory DECs are on their way, and as we have already suggested, it can do little harm to start introducing measuring methodology now, in order to be able to assemble backdated usage data which will undoubtedly be requested as benchmarking information.

TAP can direct you to experts capable of assisting with this procedure.

Lowering costs may not always be the answer...

Trying to balance the cost of a service with the value it provides isn’t always easy. In the current climate the tendering of contracts, to seek the lowest possible price, can occasionally undermine the standard being delivered and according to a recent survey undertaken by Lockton, an international insurance business, there is a suggestion that, when it comes to building works, cutting costs can increase project risk and reduce quality.

The survey interviewed a number of medium to large building contractors who primarily specialise in commercial fit-out and refurbishment projects. The results found that many are busier than they have
been in the last 2 years but because of the tough economic conditions the quality of the projects being finished in the next 24 months will be compromised. Why? Because many believe ‘short-cuts’ have to be made to support the quicker delivery times and cheaper prices.

A number of issues were cited as being of concern such as risk of injury to others, especially when the property is occupied, exposure to harmful substances (and in a few cases asbestos was referred to), solvency of the main contractor, lack of clarity in the client specification, and general pressure to have a fixed price contract.

Overall it seems that whilst people are looking to achieve lower prices for services they aren’t always thinking about the potential risks associated with ‘cutting corners’. Remember, value for money isn’t always about having the cheapest contract in place. Please speak to us if you feel concerned about how a contractor is performing or the potential risks associated with reducing the cost of a contract.

Question & Answer
With my new premises, should my IT infrastructure be based in The Cloud?

Establishing new business premises involves a vast range of choices and in an established business, many operational functions are taken for granted; however moving premises can throw up choice which may impact on working practices or floorspace usage. The locality of the IT infrastructure need not be present within your workspace anymore and can be housed in what’s commonly known as ‘The Cloud’. There is no clear definition of what is meant by this phrase but its common traits tend to be that it’s off-site, on-line and is paid for as part of a service with flexible costings based upon what you need and when.

One of the leading industry analysts, Gartner, describes it as ‘’A style of computing where massively scalable IT-enabled capabilities are delivered as a service to external customers using internet technologies’’.

Such an approach can lead to significant working efficiencies with staff all being able to access files and data from anywhere in the world, with negligible back-up, maintenance and storage worries and peace of mind from a business continuity perspective. It is anticipated that costs maybe as little as 10% of your current on-site costs but this depends on your requirement. Current examples that many are familiar with include Google G Mail, photo storage on Flickr and of course Facebook, all of which form part of a virtual desktop for individuals and their employers.

Topical language talks about the Public Cloud which refers to off-site data storage facilities that are usually provided by third parties on an ‘’as required’’ basis and the Private Cloud where there exists on-site pooling of available computing facilities, the latter of course still requiring maintenance, but resulting in reductions in equipment, energy consumption and the ability to decommission old equipment.

Typically, Cloud based projects are cheaper, quicker to deploy and offer greater flexibility.

Are there any drawbacks? Understandably, there is a perceived loss of control with the Public Cloud and questions about data security, limited redress in the event that things do go wrong, with cancellation of the contract being almost the only sanction and the fact that residual systems (if you have them) will still need maintenance and transitional attention. The first of these (data security/loss) is the most frequently raised however some would argue that with the regular automatic back-ups (and reputational pressures of the 3rd parties involved) data is more secure here than it might have been whilst resting on individuals under conventional operations.

For Private Clouds there still exist issues with the physical conditions prevailing in one’s building; namely, sufficient air-conditioning for equipment cooling, provision of multiple data cables and secure routes, access arrangements to data rooms, Landlord consents for new infrastructure, cabling, antennae, plus the whole issue of re-instatement when you move out again.

In summary, The Cloud (in whatever form) is both for now and the future and modern businesses need to constantly question the best route for themselves to allow for flexibility and mobility, but also to creat business efficiencies that were perhaps not possible when a company was originally formed.

April E Newsletter

2011-04-26T14:46:00.000+01:00

Welcome to our fourth e newsletter of 2011.

The budget was delivered last month but we look at what it means for property. Costs, collaboration and energy are also covered in this edition. People talk about working with the property manager and we open with a view on how working with them can result in lower budgets. We review the possibility that EPC’s may contain stronger teeth in an attempt to ensure recommendations are undertaken and also we examine the idea that DEC’s may replace EPC’s. There have also been a couple of worrying reports about how companies are performing in these difficult times and it’s not all good news. Do your liabilities continue once your lease has been assigned? We look at this question which isn’t straightforward.

Collaboration from occupiers will lighten operational costs

The latest RPI figures indicate inflation is falling but commodity prices remain strong and this situation continues to apply pressure on the property manager to maintain service charges at a reasonable level. Property Solutions, a Commercial Service Charge Consultancy is due to publish their most up to date report on service charges. This report, researched by Kingston University, suggests that tenants require greater transparency and accounting procedures from their property managers who manage approximately £4.06bn of annual expenditure on behalf of the occupiers. We ask, are costs the sole responsibility of the property manager or does some of the responsibility lie with the occupier?

Occupiers accept that service charges are wholly controlled by the property manager but what influences their decisions on how they budget monies and how do they prioritise projects? It’s relatively simple; external factors such as the retail price index, new legislation and commodity prices have a huge effect on annual expenditure and many have seen these impact costs over recent years. Of late, we have seen financial pressure on service charges from such issues as the heightened awareness of asbestos management and more recently the civil unrest in the Middle East, impacting on energy prices; this latter element affects every element of the service charge budget as it is such an integral part of transport.

Older buildings suffer from disrepair and obsolescence and so in these situations repair or replacement costs become even greater.

Many property managers are focusing on energy monitoring where costs can be saved through collaboration with the occupiers. Simply changing your working behaviour could reduce energy consumption and save up to 15% in costs. By turning off lights and office equipment, when not being used, is the simplest way to reduce wastage and we know of one property manager who is using their security guards to take photographs of the building at night to identify occupiers who leave their lights on.

So as an occupier how can you collaborate with the property manager? The property manager needs to understand how your organisation works and what is important to your business, so work with them and re-state these. Form a working party with other occupiers to see how you can introduce working practices that may have a positive impact on costs, for example look at when the building is occupied and judge if the heating/air conditioning times are set properly. With landfill costs increasing, try and look at increasing the recycling rates, and reduce the amount of tonnes of waste that is sent to landfill. Think about water, use optimisers or ‘hippo’s’ to reduce the amount used.

Overall working with your property manager will enable a stronger working relationship to be established and this will lead to more benefits being created. Shy away from being obstructive as this will not assist the relationship and is more likely to damage and future goodwill.

If you’re unsure about any of this do call TAP and discuss any points you may have.

Government support for Energy Performance Certificates (EPC’s) gains momentum

Alongside another Article in this edition about Display Energy Certificates, we observe that the EU Directive (EPBD) is being recast and must be implemented into National Law by July 2012 and take effect from January 2013. Following a Labour Government consultation which finished over a year ago it was interesting to see how a new Coalition Government would react to the 140 respondents to the initiative entitled, ‘Making better use of Energy Performance Certificates and data’.

However it seems that both Brussels and Westminster are keen to give greater ‘teeth’ to EPCs and encourage higher rates of compliance.

The consultation was not all focused on EPC’s however, notably because the Directive also covers wider regulation for energy reduction in domestic and commercial properties, and accordingly the Coalition has identified, inter alia, 5 areas for further consideration:

Wider freedom of information .i.e. to make all EPC data freely available, including the energy rating and recommendations for individual properties.

Inclusion of EPC data in all advertisements about a particular property

Extending the EPC net to include homes in multiple occupation and certain holiday lets

Extending the requirement for DECs into the private commercial property sector (see separate article)

The mandatory requirement to have air-conditioning reports lodged on the EPC register. This falls short of requiring the need to have regular boiler inspections too, which should be encouraged but remain voluntary. That being said, one has to assume that such inspections are very likely to become mandatory too.
Much of the above will be enforceable under the Energy Bill, which is introducing The Green Deal (.i.e. Energy efficiency measures funded by savings in energy bills) and the support that the Coalition is making does indicate that amongst other measures, it will be giving EPCs greater clout, enabling far more transparency into those properties which will need to be improved, perhaps even before they are capable of becoming lettable or re-lettable.

Businesses need assistance more than ever......

Firms showing signs of financial distress have increased by 15% this quarter according to the most recent Red Flag Alert Report from Begbies Traynor, Corporate Recovery Experts. The Report identifies that 186,554 firms are suffering from "significant" or "critical" financial distress in the first quarter of 2011, in contrast to 161,601 at the same point last year.

The Report monitors those elements of a company that may result in financial woes and highlight the leisure sector as an area that is experiencing most risk. The cause of such problems seems to be down to the public reducing their discretionary spending in these areas. The number of firms which have seen an increase in financial distress in the leisure and cultural sector has risen by 60% and the service sector has seen a 61% increase.

Factors such as significant numbers of redundancies in the public sector linked with high fixed costs is contributing heavily to this situation and it is now time for landlords and property managers to be aware of this issue and where possible provide greater support than they are already doing.

As expected, Display Energy Certificates (DEC’s) are proposed to become mandatory, PERHAPS ultimately replacing EPC’s

The Government and respected Property bodies such as the BPF and the UK Green Building Council (UKGBC) are calling for this inevitable regulatory evolution in a focused attempt to stimulate, measure and publish energy reduction in the UK’s non-domestic building stock.

To date DECs have been mandatory in public buildings of over 1000 sqm since 2008, but as they are formulated to record actual energy usage, as opposed to the more generic notional parameters of an EPC, it has been viewed as an inevitability that the DEC’s relevance would supersede its predecessor, and voices are now getting louder for their widespread implementation.

Such a rollout will not happen swiftly however and commentators anticipate a ‘soft start’ in 2012 such that sufficient time is given to measure and collect data and the production of Certificates in perhaps 2012/3; moreover, its proposed that results maybe treated as confidential initially so that benchmarks can be established and thereafter, akin to the CRC league table, the results will become widely available for scrutiny of both Landlord’s and Tenant’s energy usage/reduction.

Compliance costing is another factor for Occupiers and Landlords alike but the UKGBC can see a developing scenario of very low cost compliance once measurements are directly linked to Utility metering data thereby allowing mass participation at low cost. This however is unlikely to be widespread until at least 2015. In the meantime, a growing need for more qualified assessors will emerge to implement policy; and such policy is anticipated to come via the Energy Bill which is currently passing through Parliament.

So, barriers to entry certainly exist, but the DEC ball appears now to be rolling and the UK’s drive toward a low carbon economy will appear in the ‘stick’ that the authorities will introduce for non compliance…as yet we have yet to hear about enforcement and sanctions.

The Budget 2011; what’s in it for the TAP audience?

Billed as a Budget for Growth, this year’s announcements contained the usual mixed bag of news for property occupiers, owners and investors.

Short of listing every measure in detail, we have identified some that will touch business and property:

A 5 year extension of the Business Premises Renovation Allowance, whereby 100% tax relief is available on the Capital Expenditure incurred on bringing buildings back into business use. This was originally a temporary measure which was due to expire in 2012, and is now extended to April 2017.

A 1 year extension to the Small Business Rates Relief from October 2011 whereby eligible ratepayers with an RV of £6,000 or less receive 100% relief, and those with RVs of between £6,001 and £12,000 receive relief on a sliding scale from 100% to 0%.

The creation of 21 new Enterprise Zones nationwide which will benefit from Rate Free occupation for a fixed period of time.

Four annual 1% reductions in the main rate of Corporation Tax, taking it down to 23% by 2014

Smaller company (profits of less than £300,000) Corporation Tax reduction to 20% from 2011.

A moratorium on new domestic regulation for Start-ups and SMEs with less than 10 employees for the next 3 years.

Research and Development tax credits for SMEs will rise to 200% this month and up to 225% in April 2012.

Oh, and let’s not forget the £100m set aside for pothole repairs!

These measures were all well received by the industry and small businesses; however the glaring concern for many was the lack of any U-turn on the Government’s stance on Empty Property Rates. The decision to slash the threshold for empty rate exemption on vacant properties with an RV of less than £18,000 to only £2,600 remains an enormous burden for many businesses to bear and pre Budget expectation that this measure may be re-thought was short lived.

As with all Budgets there are winners and losers but the general scope of tax reduction and simplification (both in taxation and bureaucracy) should help stimulate some much needed confidence back into the business community, with obvious advantages for the ownership and occupation of property.

Question & Answer –
Does my liability end when I’ve assigned my lease?

We recently received an enquiry about this very subject. The question came after the tenant had trawled the internet for the answer but was confused by what they had learnt.

The question is, once I’ve assigned a lease do my liabilities cease or is there a chance I may become liable again should the new occupier default?

A lease assignment is the legal process of transferring a lease from one business or person to another. It is a transaction that is driven by the tenant and is subject to the consent of the landlord. Turning to the question, and assuming the lease agreement doesn’t say otherwise, the simple answer to this question is yes the original tenant will remain liable should the new tenant fail to meet their contractual obligations. However, if we look at this in more detail we can introduce the Landlord and Tenant (Covenants) Act 1995 as this Act loosened the grip of the original Landlord and Tenant Act 1954 (Pt II).

For any lease granted before the 31st December 1995 a (an Old Lease) the liability of the original lessee will continue until the lease expires regardless of how many times it is assigned. However, any lease granted on or after the 1st January 1996 will be subject to new rules which were designed to restrict any on-going liability by introducing an Authorised Guarantee Agreement (AGA). This AGA (between the landlord and the current lessee) commits the out-going lessee to ‘guarantee’ the performance of the leasehold covenants for the duration the assignee holds an interest in the lease. Once the assignee has assigned the lease the original tenant’s liability stops. Although it seems complex it proves to be a better situation as an original tenant could see his liability being curtailed whereas under the old rules his liability remained in place for the term of the lease.

If you are faced with this situation and would like to discuss your specific circumstances please call us on 0800 865 44 50.

March E Newsletter

2011-03-21T17:09:00.001Z

Welcome to our third e newsletter of 2011.

As the world focuses its eyes on the horrific events in Japan, the primary focus is understandably on the human toll. Needless to say, the horrendous destruction of property compounds the abject misery and shock for survivors. Whilst our industry can make every attempt to safeguard life and property, last week’s events give us a sobering reminder that almost all that we do is at the mercy of nature.

Our first article talks of a related, but, in context, relatively minor story about water damage to business and the approaches taken by the AIB and Government. We then look at 2 issues where the property overhead is being highlighted; increased litigation levels between Landlords and Tenants as the downturn brings to the fore the part that property plays as an overhead, and the lowering of the business rates relief threshold on empty property.

We then look again at the 2 most high profile Best Practice guides for the property industry and the adherence or not, to them; another VAT related story on Waste removal and then we conclude with a valuable reminder about the dangers and importance of asbestos and the need for strict compliance with the rules surrounding its management.

The price of keeping your head above water is going up.

Changes are afoot that may result in property insurance being harder to obtain after June 2013. It seems that the Association of British Insurers (ABI) and the Government have an agreement whereby the ABI will continue to offer cover for flood damage whilst the Government continues to support the cost of shoring up our flood defences. However this agreement expires in June 2013 and at the moment it will not be renewed; this is even more likely following Autumn’s Comprehensive Spending Review.

The summer flood of 2007 resulted in claims in excess of £3 billion, the Carlisle floods of 2005 had claims of £272 million and the Cumbrian floods of 2009 resulted in claims of £174 million. These claims are met whilst flood insurance remains available and if the Government removes their commitment it is likely premiums will rise and in some instances cover will no longer be offered. How will this affect the property industry?

The insurers are not just concerned by rivers breaking their banks or coastal erosion but also groundwater flooding, which is where the drainage system cannot cope with heavy rainfall or melting snow.

As a consequence both Landlords and Tenants will be affected by this potential drop in cover and/or increased premiums. For a landlord, not having cover may infringe their banking covenants or result in them needing to enhance their flood defences which in turn may result in consultation about any consequential loss. This will have an impact on the property’s valuation. For tenants it will result in business interruption as there are still properties that locate their generators and electrical switch rooms in the basement and, in many cases, ill-prepared businesses may not survive a major interruption.

What can be done to help Tenants prepare for such a hazard? The Environment Agency is beginning to work with utility providers, emergency services, insurers, transport and the retail sectors to develop flood warning products and services. Organisations will need to obtain a licence to use the data but it is hoped that using this information will enable responsive action to be taken either to assist in preventing damage from a flood in a known area or reacting to an imminent flood warning. Additionally, we suggest that you think about the critical components that may cause interruption to your business. We have previously mentioned that this could include emergency power generation, telecom racking and important filing and data which is stored below ground all of which would be critical to your business. Also look at staffing arrangements; often business interruption results from people not having access to their place of work. Here having a ‘cloud’ based IT network may assist in getting through such an issue.

We have looked for useful websites that may help you think about business continuity. London has a useful website that can assist businesses in thinking about preparing their business for such an event. We have uploaded a link on our site to both the London and Business Link website but if you’re not one of our subscribers click here for the link to London Prepared and here for Business Link.

Landlord and Tenant High Court disputes rise by 43% in one year

A recently published report by the legal information provider, Sweet and Maxwell (S&W) has shown a significant rise in the number of disputes reaching the High Court. The statistics show that in the recessionary years of 2008 and 2009 (the most recent figures) the numbers rose from 28 to 40 and this has been put down to a rise in the number of companies trying to reduce property overheads, especially in the methodology used in attempting to dispose of surplus property.

Whilst S&W point out that many disputes are resolved by negotiation and arbitration, the increasing High Court numbers illustrate the importance that is now being placed by both parties on property matters. On a wider scale, the High Court (Chancery Division) numbers show a dramatic rise from 2005,where only 2 cases are listed, then rising to 3 in 2006 and still only 5 in 2007.The huge % rises in the 2008 and 2009 numbers is clearly linked to the economic downturn.

Examples cited include sub-lettings that are attempted by Tenants at below the passing rent, which is in contravention of their Lease’s Alienation clause, and actions brought by Tenants where Service Charge contributions are in dispute.

The other key areas that have triggered Court actions lie in Break Clauses where Landlords will be particularly keen to see that Tenants have fully complied with all contractual terms and conditions; in Lease Assignments where a Landlord will be looking closely at the financial strength of the proposed Assignee; and in the area of Dilapidations (often contentious anyway) where Tenants may feel that Landlords are being excessive in their Claims and where Landlords believe that Tenants should adhere accurately to their reinstatement obligations.

Whilst more up to date figures are still not available, TAP can only assume that figures for 2010 will continue to evidence that upward trend as economic conditions dictate and prioritise a business’ overhead exposure.

Lowering the business rates relief threshold may impact quoting rents

April 1st sees a change to the rating relief available as the Government reduces the Rateable Value threshold level from £18,000 down to £2,600. From this date forward vacant properties that have benefitted from the higher threshold will now have to pay full business rates.

It is expected this will have the greatest impact on industrial space where rents are generally lower but offices and retail may still be impacted. It is unlikely to have an impact on Central London property where the business rateable values are more likely to be above this level but it will impact properties in poorer parts of the country.

Older buildings that have not been modernised and provide smaller units could be caught by this change. Start-up space or incubator units may well fall into this category and Landlords or occupiers who have surplus space may feel the financial pinch. If they are marketing vacant space whose Rateable Value is less than £18,000 they may now be faced with the dilemma of perhaps reducing their rents to encourage a letting. In the past, Landlords have sought to remove similar financial burdens by looking at demolishing the property. This may seem a drastic measure but in some instances this is by far the cheaper option. The Federation of Small Businesses believes this change will badly affect small landlords and leaseholders. Andrew Carter argues that April will push firms to the edge. He says “Business rates are in the top three of the largest overheads that a small business has to deal with. Add to that the higher chance that, because of the economic situation, businesses will have properties that are left empty. So stopping rates relief serves to penalise those businesses that are suffering most.”

Have you cracked The Codes?

In our earlier e Newsletters, we have made mention of both The Code for Leasing Business Premises in England and Wales 2007 and the 2006 RICS Code of Practice; Service Charges in Commercial Property, both of which came into force during 2007.

We still believe that, whilst both are still voluntary, they set helpful parameters within which leasehold participants should operate, so long as enough participants actually know of their existence.

Who then should be promoting them?

Whilst Tap’s full name might hint at some form of allegiance, we do in fact operate impartially and seek to offer Guidance to Landlords and Tenants alike, such that property-specific information is made available and, in the absence of any other body proactively drawing attention to both Codes, we are happy to keep referring to them.

The RICS has been mooted as the best professional body to promote and maintain/amend the codes and to date a couple of University surveys (Reading and Loughborough) have reported that widespread take up and attention has not been achieved, mainly as the industry has relied on surveyors, landlords and lawyers to employ the Code clauses only where it suits. Their voluntary nature plays a part in this, although the Service Charge Code appears to carry greater weight as it has been issued as an RICS guidance note and as of December last year the RICS submitted a new version of it for consultation which closed on January 21st,with results expected at the beginning of May.

The purpose of each Code is to act as a guide to best practice and depending upon whom a surveyor or lawyer is acting (Landlord or Tenant) there is bound to be varying opinion as to what this actually means in practice and hence there is always likely to be evolution and adaptation being advocated by the advisory side of the profession. However current feedback suggests that most surveyors find them helpful, but the reality is that market forces will play a large part in their adoption, namely that with a trend towards shorter leases and capped service charges there has been less of a need to fall back on best practice guides.

Certain property markets(notably London Offices) are showing signs of recovery as Tenant demand picks up which may lead to lengthening leases and a re-emergence of Rent Reviews, both of which could see a move towards closer equilibrium between Landlord and Tenant and hence a more likely application of one or both Codes.

The market will determine take up, and TAP will keep on promoting them.

Local Authorities no longer charge VAT on waste collection

After a recent policy review, HMRC now consider the provision of trade waste collection services to be non-business. However, as the sector includes collections from public organisations and also commercial companies, removing the VAT element for those in the public sector does raise questions about unfair competition. In spite of this observation HMRC does not feel this is the case.

The letter from HMRC to the local authorities summarises the position as: -

We have been fortunate enough to be provided with comprehensive data from DEFRA about the whole commercial waste collection market. Both Local Authorities and the private sector collect commercial waste, and so there is at least a theoretical possibility that relieving Local Authority commercial waste collection services from VAT could result in the ‘significant distortions’ of competition referred to in the second part of Article 13(1) of the Principal VAT Directive. However, having considered DEFRA’s data and CJEU precedent, we have concluded that, in this instance and under these particular circumstances, there is no evidence that such significant distortions would arise.

According to articles we have seen a few experts believe this may lead to the possibility of reclaiming VAT going back several years. Whilst TAP is not in a position to offer advice on this,it is fair to say that it may be a question for your accountant.

Question & Answer
As an employer what actions do I have to take if the building has asbestos?

Recent judgements have seen large compensation claims awarded to people suffering from asbestosis. Asbestos is a natural fibre which is mined predominantly in South Africa and can take the form of blue, brown and white material. Because of it’s ability to withstand heat, electricity and sound it has been useful in the construction of properties throughout world.

As it is no longer used in the construction of buildings and associated mechanical systems, properties built after 2000 are generally clear of any potential hazards. However, there is still a need to manage the material which remains present in those buildings constructed before 2000, as it can still be found in pipe lagging, floor tiles, roofing, soffits, pipe gaskets and so on. Consequently there’s still a need to manage the material and monitor its condition as any damage may cause loose fibres that can be detrimental to health. Components that contain asbestos are often referred to as ACM’s (Asbestos Containing Material). So what does an occupier have to do?

Under the Health & safety at Work Act 1974 and employer is required to ensure the working environment is safe to work in and the duty to manage asbestos is contained in Regulation 4 of the Control of Asbestos Regulations 2006. Unless a building is new or has been fully refurbished there is a strong possibility that asbestos may have been used in the construction of the property. If this is the case and you are part of a multi occupied building then request from the landlord or his agent a copy of the asbestos survey and management plan. This will indicate if the there is asbestos in the building and what regime the owner or manager has in place to monitor and manage the material. It is unlikely that this survey will have covered a Tenant’s demise and so there will be a need to undertake your own.

The survey may need to identify and test material and if necessary an element of intrusion and investigation will be required in be sure of its identification. By knowing where it is located enables an occupier to fulfil its obligation of monitoring and managing its condition by conducting reviews through regular inspections.

If you aren’t aware of your own situation please don’t delay in finding out.

Should you require any further information on this subject then please call us on 0800 865 44 50.

February e Newsletter

2011-02-21T11:00:00.000Z

Welcome to our second e newsletter of 2011.

So much is happening in the property world that on occasion it is hard to decide which elements we should comment on. However here are a few which may be of interest.

We tackle a growing view that there may be a case to replace the open market rent review with a review linked to the Retail Price Index. We also take a look at draft proposals that allow local authorities to have a greater say in determining the level of business rates as a way of stimulating growth in the local community. How to introduce greater energy efficiency may allow an opening for the energy companies to fund such works. We also look at the increasing scarcity of water, the need for air conditioning inspections and finally the rules governing CCTV – not everyone seems to comply.

1. Is the Open Market Rent Review on the wane?

Recent reductions in the average length of lease terms, favourable tenant leasing conditions and the use of break clauses have led to increasing pressure on the traditional upwards only, open market review as a standard lease clause.

Traditionally, property is valued using a few primary factors one of which is the level of rent achievable. Where it is anticipated that rental levels will increase, due to open market forces of supply and demand, the value of an investment should appreciate and this is particularly important where the property is purchased with the use of bank finance.

However, owners who are free of debt restrictions are able to be less constrained in the way that they structure leases and the methods that they use to ‘review’ rent and, coupled with the introduction of the ‘Code’ (the Code for Leasing Business Premises in England and Wales) much greater emphasis is placed on looking for flexible alternatives.

So what are they and how widespread is this move away from the traditional method?

Looking at European models, they tend to favour Index-linked increases and in a low inflationary environment this may be acceptable to occupiers, but now, with inflation rising so rapidly one can imagine certain resistance in new lease negotiations. It must also be said that we are a long way from agreeing terms that would see a reduction in rent should inflation be negative.

So perhaps a fixed increase method is more equitable whereby both parties agree that the rent will rise to a pre-agreed figure after a certain amount of time, as a way for the Landlord to try to keep pace with inflationary pressures and rising rents and providing certainty for the occupier too. Some Landlords, however are not prepared to restrict themselves to such certainty and would rather speculate on rents rising, as has been forecast in Central London Office markets, for example, thereby trying to insist on regular open market reviews.

Turnover rents have often been popular in the Retail sector whereby the rent is linked to the trading success of the tenant, but again, in a downturn, this may not be great news for the landlord who owns retail centres with decreasing footfall and trading conditions, but it does mean the overall success of the Centre is shared with the landlord taking a keen interest in making the trading environment right.

As can be seen, timing and market conditions play an important role in rent review negotiations, but alongside this sits a trade-off in lease terms whereby concessions in some clauses (service charges/reinstatement/shared energy costs etc) might be appropriate for some parties dependent upon their view of the future; thus, the review of rent might not be the centre-stage issue that it once was.

2. Local Government Resource Review – It may affect you?

In January 2011 the Department for Communities and Local Government issued an Impact Assessment aligned to the Localism Bill concerning Discretionary Business Rate Discounts. We said in our November newsletter that we would follow events arising from the Localism Bill and this is one which may have an impact on business rates.

Currently business rates are collected locally, passed back to Central Government and then redistributed back to the local authorities as part funding of their services. The Government is looking at ways of allowing the local authorities the ability of influencing these business rates locally in an attempt to stimulate growth.

The ‘Barker Review of Land Use Planning’ identified that UK has some of the highest occupational costs in the world and that where industries are property dependant they will find it hard to compete and also stifle new business entry. The Government believes that by reducing this burden businesses may have more money to invest in their company’s expansion and so help to fuel a recovery in the economy. However, they do also accept that where rates may be lower this could assist in supporting increased rents and so the occupier may lose out on the benefit.

This would be a radical change to the current system and may see some businesses prosper as a result of the changes however as it’s just a discussion paper at the moment it may not happen, so let’s wait and see.

3. Leaving the cost of energy efficiency behind when you move...

The Energy Bill is making its progress through Parliament and one aspect which will grow in prominence is their ‘Green Deal’. As part of the Coalition Agreement’ the Government made a Commitment that: “through our ‘Green Deal’, we will encourage home energy efficiency improvements paid for by savings from energy bills”. It is intended that the Green Deal will also help to enable improved energy efficiency in non-domestic buildings. So, broadly how will this work?

The Green Deal Finance develops a new legal mechanism whereby the obligation to repay the costs of the energy efficiency measures is attached to the property and not the bill payer. This basis will enable the energy provider to develop various finance packages that can be utilised for projects that will improve a property’s energy efficiency. The over-riding principle is based on the assumption of making sufficient savings by introducing more efficient technology. So it is feasible that people can move out of a property and not only pass on the benefit of the works but also the costs involved on their installation. At the same time it is possible for a company to move into a property and inherit the costs associated with earlier works.

The dilemma a property owner has faced in the past is where do they get the finance from to undertake energy saving projects? We at TAP can see that this initiative from the Government will answer that question with one caveat; it must be able to show that enough savings can be achieved as a result of these improvements in the property.

This Green Deal will have provisions attached which may include:

The original and proposed assessments must be accurate to provide the comfort of knowing how much energy will be saved.

Only accredited measures can be installed.

Limits on how much finance is available.

The ability for the energy providers to collect the agreed repayment amounts

When is it hoped the Green Deal may begin? Well the literature on the subject suggests the second half of 2012 so let’s wait and see how this initiative develops.

4. Water; when will it become a scarce commodity?

The pressure on water resources is growing and according to the UN World Water Development Report, the quantity of water available could decrease by 30% in the next 20 years as demand increases. In the UK it is suggested that demand will be influenced by both climate change and population growth. With the population expected to increase to 65 million by 2018 (a rise of 5 million from 2008), this will lead to greater household use which will increase the strain on the available water. All this will lead to the need to have better water management both in houses and commercial premises.

Our ability to take the supply and availability of water for granted is no longer acceptable and Fiona Mannix, Associate Director of the RICS Land Group comments ‘Fresh water in the UK is now more precious than ever for its extensive use in essential activities.’ This view is supported by the Environment Agency (EA) who believes it is in part due to the increase in climate temperature and changes to the rainfall pattern. They say ‘Summers are likely to get hotter and drier, significantly increasing demand for water, and winters warmer and wetter’. Coupled with the change in the weather pattern whereby Britain is subjected to increased intensive rainfall which produces more frequent surface floods, the ability of water to infiltrate into vital ground stores is likely to decline.

With the ability to capture water efficiently ever decreasing, the water companies are having to try harder to extract this resource from the underground basins which in itself can cause further environmental damage. It won’t be long until the tables turn with the water companies looking to the consumer to be more prudent in how they use this vital resource. New developments, whether they are houses or commercial buildings, are already starting to incorporate water harvesting ideas such as using grey water for flushing toilets but more will be needed. This won’t be enough and before long there will be a need to retrofit water saving equipment to existing properties. TAP would advocate the need for managing agents to begin looking at ways of conserving the use of water in buildings as there is still time to reflect on the benefits of various projects in an attempt to meet this challenge head on. However, in the next decade the importance of water will become increasingly important in all of our everyday lives.

5. Air Conditioning Inspections – Are you too late?

You may have heard of the need for Energy Performance Certificates (EPCs) in both Commercial and Residential property, but the same EU Directive that brought you those also contained an obligation on the company who controls the technical functioning of Air-Conditioning systems to have them inspected by a certain deadline. Why? To make sure they function properly and, where possible, to reduce energy consumption.

For smaller systems, that deadline was January 4th 2011.

The key points to consider are:

Are you the company responsible for the system’s operation?

Is the system’s output over 12kW (i.e. the power required to air-condition an office or retail unit of approximately 1,500 sqft)

…if Yes to both then you should look to appoint an accredited assessor to inspect the system, with the intention of ensuring that it is functioning as efficiently as possible in a general drive towards maximised Energy Efficiency. The Assessor’s Report will indicate where the system can operate better.

You may not require a survey as in most multi-let buildings it will be the Landlord’s responsibility to ensure the central air-conditioning plant conforms to current legislation but if you have installed a separate stand-alone system, or occupy the entirety of a building, you are likely to be the responsible party.

For large systems, i.e. those with outputs greater than 250kW, the system should have been inspected by January 4th 2009; in both cases, Trading Standards Officers can and will check that Inspections have occurred, and fines will be applied for non-compliance.

For more information view our Guidance Note or alternatively contact us to discuss how you can arrange an inspection.

Question and Answer – CCTV; what are the rules for filming?

The UK is a heavy user of CCTV equipment and your image is probably captured and held on numerous systems as you go about your daily routine. Many of us have come to accept this ‘Big Brother’ society without question and recognise it’s a common means of keeping property and the environment safe. So what are the rules governing the operation of a CCTV system?

Helpfully the Information Commissioner’s Office has issued the CCTV Code of Practice (‘Code’). The ‘Code’ has been drafted to help ensure that good practice standards are adopted by those who operate CCTV systems and covers certain elements such as how to capture, store and when is it appropriate to release images to a third party. By doing so it overlaps with the requirements of the Data Protection Act 1998 which also plays a part in how information is managed.

For those who operate a CCTV system they must consider who is responsible for the control of the images and how it is used; they must notify the Information Commissioner’s Office that they are the data controller, and put in place a clear procedure on how the images should be handled and stored in practice.

Importantly an operator of a CCTV system must put in place sufficient signage which alerts a person they are in an area which is under CCTV surveillance. The signage has to be descriptive enough and mention who is operating the system, why it’s being used and who to contact should you wish to view the images.

The operator must also ensure that any information stored is done so in a way that maintains the integrity of the images. This then enables the information to be of a good standard should it be needed as evidence in court but there is no time scale for the length of time images must be held.

What everyone wants to know is can they view the images that have been recorded? Well, in general the answer is yes albeit an organisation can reject such a request if they believe there could be a risk to other people. Interestingly where you have had your image recorded, such as a shopping centre then those people have a right to have a copy of those images and these must be provided within 40 days of the request. The organisation can charge you for this service but the maximum charge is £10.

Should you want more information on this subject then please feel free to call us on 0800 865 44 50.

January e newsletter

2011-01-25T07:00:00.001Z

Editorial:

Welcome to our first e newsletter of 2011.

We continue to draw your attention to topical issues affecting the occupation of commercial property and intend to complement these with Case Studies throughout the year which illustrate some of the points that we make, and in some instances with worked examples of how certain savings can be made.

Initially,however we start the year off with articles on:

Interest free Energy reduction loans, the impact of League Table positions for those within CRC, a VAT ruling for Hot Food retailers, a glance at the Service Charge Code, workplace and the mobile workforce and a Q and A on Greenhouse Gases. We hope you find it all of interest.

Would you find an interest free loan helpful?

2011 will see the start of the CRC Energy Efficiency Scheme and with it a renewed focus on driving down energy usage. Energy prices continue to rise with E-On being the latest to increase residential tariffs. Often, to reduce energy usage requires capital investment but in these austere times it can be difficult to get funding; why not take a look at the Carbon Trust?

Regardless of what business you operate, lighting may represent up to 40%1 of your annual electricity costs and so working towards improving the efficiency of your lighting system could provide worthwhile savings. Whether you are thinking about replacing all your light bulbs for a more efficient element or taking a more long term view and doing this as part of a larger energy efficiency overhaul considering a loan may prove beneficial. A small business can apply for a loan ranging from £3,000 - £100,000 but there is an eligibility criteria that will need meeting. The Carbon Trust has issued a useful eligibility flow chart that will assist in determining if you can apply for a loan and we have added a link to our Environmental page on our Knowledge Centre website.

So are you eligible?

All Small or Medium-sized Enterprises (SME)
Private sector organisations can apply for a loan.
Trading for at least 12 months

To qualify as a small or medium company you have to employ less than 250 full time employees. The loan is only available for projects that reduce CO2 emissions and £1,000 is available for every 2.5 tonnes that the project will save per annum. There are a range of projects the Carbon Trust would be looking to provide support for and these include Air conditioning and lighting, amongst others. A full list can be found on their website (www.carbontrust.co.uk).

With the growing need to be conscious of your energy usage, being aware of these types of services is important and where possible we will bring you more information on other initiatives as and when we are made aware of them.

Footnote - 1Carbon Trust Technology overview on Lighting

Will the CRC league table change the way you procure services?

Together with E.On, Imperial College Business School have researched what effect the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) league table will have on business’ reputations. To be captured by the CRC programme a company has to have at least one half hourly electricity meter and be spending in excess of £500,000 on energy per annum. With this said, would you change your procurement habits based on a company’s league table position?

It would seem that high profile brands will need to be aware of their shoppers’ habits and always be conscious about their league position in the CRC league table, the first of which is planned to be published in October. It would be prudent for many well known brands to aim to hold a position as high as possible, with a minimum being the attainment of the highest rank amongst their peers. Those companies that are less well known may not be as concerned over their position unless they form an integral part of a procurement process where their environmental attributes are considered significant enough for scrutiny.

An interesting point to note was that those companies where their parent company name differed from their trading name felt their results would be cloaked in anonymity. However, how long this secrecy could last couldn’t be said and it would only be a matter of time before they would be exposed.

The conclusion to the Business School’s research is that a league table position IS likely to effect how customers perceive the company.Similarly,a company’s ethical approach to manufacturing could deal an adverse blow to their customers buying habits. Stacey Sunderland, an MBA student at Imperial College Business School, has found that some firms will take the league table extremely seriously and one large energy company said they were committed to being in the top quarter of the league table “at any cost”. Their fear of losing credibility was enough to warrant the expenditure. Consulting firms also felt they were being watched and believed that their reputation and validity were on the line.

Although the jury is still out it seems that people may vote with their feet and be more selective in how they shop.

Please Sir, can I have some more...VAT?

Whilst all the recent talk is all about the 2.5% hike in VAT to 20% from January 4th, a recent case has highlighted the importance of the definition of ‘HOT FOOD’ for VAT purposes with implications for TakeAway food operators and their rent negotiations.

The case involved the food retailer Subway and their efforts to avoid having their products deemed to be ‘’hot food’’ so that their supplies would be Zero Rated for VAT purposes. As their food is prepared for consumption off the premises it was seldom heated up but was stored, in what the Tax Tribunal claimed, was at a temperature above that of ambient air at the point of supply.

It is this specific point which, unfortunately for Subway, led the Tribunal to find that their heated products fell within the ‘hot food’ definition in the VAT Act 1994, and accordingly were Standard Rated. As a result Subway faces a bill for retrospective VAT on hot supplies made in preceding years and they now need to factor in ongoing VAT for such supplies in the future; now at 20%.

The case raises issues for both the supplier/Tenant and their Landlord, as there will clearly be turnover and profit implications which could become a negotiating point in certain leases, notably Turnover leases. This is something which is worth both parties considering.

The Service Charge Code; does it need revising?

The RICS has recently closed the door on a consultation of the Service Charge Code which was initially adopted in April 2007. Concern over disputes and apparent lack of transparency has resulted in a review of the current document. But why would it need revising?

The adoption of the Service Charge Code is not obligatory but should a dispute occur between a landlord or tenant then the courts may look at any documents which identify best practice; and certainly the Code is one such document. Graham Chase, President of the RICS in 2006/7 said of the original Code: “Poorly managed service charges are a frequent cause of disputes between landlords and tenants, owners and occupiers, and whilst the Code cannot override existing leases it provides the property industry with a clear set of recommendations which, if implemented, will benefit all sides.“

Even with the Code disputes continue to be arise and many are not as a result of monies being inappropriately spent but more because a tenant doesn’t necessarily have the time, inclination or experience of knowing what to look for in a service charge budget or reconciliation. In these current times costs are rising daily as a result of imported inflation and increases in commodity prices. Managing a service charge and getting it to balance at the end of the year can therefore be difficult, even for experienced property managers.

Generally disputes occur at specific points in the life of a service charge; drafting and issuing the budget, reconciling the annual expenditure, and where an over spend occurs. Why do disputes occur at these points? Primarily because service charges increase year on year and many companies either cannot afford the continual increase or that they haven’t budgeted for an increase. But is it all down to the property manager trying to fleece the tenant? Our experience is no.

It is important for an occupier or tenant to take a keen interest in the costs associated with managing a property and throughout the service charge year could do more to enquire how forecasted costs are performing against the budget. Understanding cost and the apportionment of expenditure is essential for any occupier and although the Code does outline the need for occupiers to be informed where costs vary this may not always happen.

Does the Code need revising? A revision to the Code will not necessarily remove any future disputes as there is more to it than just having a property manager feed information to the tenant. It has been highlighted that the tenant needs to take a keen interest on costs throughout the year and, where the opportunity exists, take action to reduce expenditure. Equally the property manager may wish to explain when costs are increasing and suggest ways of reducing annual expenditure. It is these measures which would promote a better working relationship between the landlord and tenant, not just revising a Code.

Making your space work harder!

These austere times make us think twice about the space we occupy and whether we can be more efficient in the way we use our workplace. The British Institute of Facilities Management and Leesman, the online survey data capture, and audit service provider for the workplace design and management industry have produced a piece of research entitled ‘The Role of the workplace environments in a post recessional British economy’ with the conclusion that many organisations will see more of their staff working remotely.

Traditionally the proven way to improve space efficiency is to reduce the amount of desk space an individual has; so for example replacing desks with a return with those of a bench style, or reduce the number of meeting rooms. However, this will only deliver a certain amount of saving and does remove the possibility of similar changes in the future. So could more people work remotely? Interestingly the research identifies that ‘Increasing numbers of European employees do not consider they need to be in an office, to be productive’. However, the research goes onto comment that ‘71% of respondent organisations positively supported the notion of a corporate workplace as a strategic asset in the development of the organisation’.

Again the research raises some interesting points, no less than the difference in working practices of the young and the old. With the Government changing the retirement age there will be a greater number of older people in the workplace and so the variation in working practices between the generations will widen. BIFM Strategy Director Stephen Bennett says ‘The oldest and youngest employee groups look for very different things in their workplaces. So those responsible for the workplace are going to have some big issues to address in the way that they create effective office spaces for an increasingly diverse workforce, not to mention an increasing mobile one’.

The biggest factor in planning space is to allow the individual the ability to choose where they can work for each task they perform. This increased mobility will have a huge impact on how workspace is used in the future and combined with increased travel costs organisations may have little choice other than to allow more of their employees to work from home.

Question & Answer – Greenhouse gases; what are they?

People use the phrase ‘’Greenhouse gas’’ but do they understand which gases are included and which ones are more harmful than others? We have drafted a short Guidance Note on Greenhouse Gases and Carbon Footprints which can be found on our website but here’s a brief explanation.

So what Gases make up the term Greenhouse Gas (GHG)? The Kyoto Protocol sets out the binding targets for 37 industrialised nations and the European Community for reducing GHG emissions. This Protocol defines the ‘gases’ which are considered harmful to the environment.

The Gases
Carbon Dioxide Symbol (CO2) GWP 1

Methane Symbol (CH4) GWP 21

Nitrous Oxide Symbol (N2O) GWP 310

Hydroflurocarbons Symbol (HFC’s) GWP 140 - 11,700

Perflurocarbons Symbol (PFC’s) GWP 6,500 - 9,200

Sulphur Hexaflourides Symbol (SF6) GWP 23,900

In the UK, CO2 accounts for 86% of the climate impact while CH4 is 7%, N2O 6% and HFC’s 1%.

The Global Warming Potential (GWP) is the measure of how much a given mass of GHG is estimated to contribute to global warming and is usually based on a set period of years, such as 20, or more commonly 100. Evidently, Methane is worse than Carbon Dioxide,with Sulphur Hexaflourides substantially more detrimental than Methane and so we all need to be aware of how we work and what we work with, and how that can impact our Carbon Footprint.

A ‘Carbon Footprint’ is measured in tonnes of CO2 equivalent (CO2e). The qualification of ‘equivalent’ allows for different GHG’s to be compared on a like for like basis but how do you go about measuring your footprint?

Select your method of calculation as there are a few. Two such methods are Greenhouse Gas Protocol or ISO 14064.
Define what parts of the organisation should be included in your calculation.
Collate the data such as meter readings or fuel type if looking at vehicles.
Convert usage into CO2e by using credible conversion tables.
Have your data and calculations verified using a recognised organisation such as The Carbon Trust Standard.
Be transparent when reporting your carbon footprint.

Should you want more information on this subject then please feel free to call us on 0800 865 44 50.

December e Newsletter

2010-12-17T14:00:00.000Z

Editorial
This is our final e newsletter of 2010 and it brings to an end our 12 Q&A’s which highlighted some of the events found in the life of a commercial lease. Rest assured we will continue with this feature and focus on other areas that people may find of use.

It seems that 2011 will be as much a challenge as 2010 with the possible introduction of new accounting rules, certain changes to the uniform business rates and the beginning of ‘Localism’. We take a quick look at all of these in this issue. We also look at the Snow Code and a quick look at a recent survey of business sentiment. Many of the smaller firms are in better shape as a result of the recession which can’t be bad.

Finally, from all of us at TAP we would like to wish you all a very Merry Christmas and Happy New Year.

1. Lease Accounting; leases to face radical new approach

The International Accounting Standards Board (IASB) has recently published its ‘’Exposure Draft’’ (ED), something it has been working on since 2006, in an attempt to harmonise accounting practices.

If the proposals are adopted there are likely to be profound implications for lessee’s financial statements in the manner in which leases are accounted for on a Company’s Balance Sheet, plus additional burdens in regard to data collection, controls and processes. A further knock-on effect is likely to be in key company performance metrics, i.e. asset turnover ratios, return on capital and debt to equity ratios.

At high level, and for certain companies, it may even result in assessing the merits of owning real estate rather than leasing it, and even if leasing were continued, the likelihood is that shorter leases are favoured, as the accounting impact reduces in line with shorter lease terms.

So, what are the major changes that the IASB are proposing?

Fundamentally, all leases are to be accounted for on the balance sheet, showing that the ‘’right of use’’ creates an asset and the obligation to pay rent creates a liability. Current procedure has it that neither assets nor liabilities are recorded on the balance sheet, that Rent is an expense in the Profit and Loss Statement and that minimum future lease payments are disclosed. Rent and its escalation, will have to be accurately profiled throughout the lease term which may lead to increased reference to recognised indices (i.e. RPI) or by adopting fixed stepped increases, rather than open market rent reviews, in order to negate the need for forecasting, thus avoiding accounting variances.

Initially, there will be onerous data collection requirements, especially for businesses with multiple leased assets, which may well require external advisors to assist. Whilst timings of implementation may not take effect until January 2013, there will be a need to re-state prior year figures in which case prudent businesses would need to introduce preparation systems during the course of 2011, to cater for opening balances for accounting periods starting on or after 1st January 2012.

TAP is not qualified to advise on the intricate details of the proposals although, as a lessee, you are encouraged to contact your Accountant about the scope of the changes, but suffice to say that, if implemented, they are radical enough to effect business behaviour and will add, initially, a further layer of administration, and potential cost, to businesses operating under property leases.

2. Lease terms favour the landlord despite business sentiment being low

New evidence indicatesthat whilst SME's business confidence is still low, the length of newly agreed lease terms seems to be growing. During 2009 lease lengths and incentives reached a low point but since then lease lengths are beginning to rise.

The figures of the recent survey were presented by Malcolm Fordsham, Director of Research at IPD. It was stated that new leases are now longest in the retail sector, averaging 14.8 years (excluding break clauses), followed by industrials on 12.2 years and offices at 8.8 years. At the same time incentives seem to be reducing, which is not surprising. Mr Fordsham commented “The average rent free period for offices is now about 15 months, but City offices averaged 27 months for the first half of 2010”. The size of fall can only be realised when compared to the length of rent free periods in Q2 & Q3 in 2009 where in some cases, there were rent free periods amounting to 46 months.

Lease renewals have also strengthened over the last 2 years with strong growth in the retail and office markets. However, the outlook may not be so rosy when you consider the recent SME survey conducted by QBE where it’s suggested 74% of UK SME’s expect it to be 2 years before they see a full economic recovery. Half of the SME’s questioned felt the 2.5% increase in vat will have a negative impact on their business and SME’s are unlikely to come to the aid of the unemployed public sector workers with only 17% expected to recruit during 2011.

Overall, although the business sentiment may be low, 54% felt their business was in better shape and more resilient as a result of the recession, so confidence maybe returning.

3. The rising cost of small vacant space........

The ability to benefit from a business rates relief in small vacant properties is likely to expire at the start of April 2011. The Rateable Value threshold was increased from £2,600 to £18,000 for the year 2010 – 2011 to help small occupiers overcome the financial burden of holding their space vacant.

With the threshold at £18,000 any vacant properties with a rateable value below this have been exempt from paying business rates. However, the Government now believes that returning the threshold back down to £2,600 will save them approximately £400 million per annum.

Liz Peace, Chief Executive of the British Property Federation said “If the government is pinning its hopes on a private sector led economic recovery then this is a damaging and retrograde step.

“Empty rates is a tax on hardship at the worst possible time. The majority of the properties affected by this announcement will be in areas that are already economically disadvantaged, and so this will be a further blow.”

The reinstatement of the £2,600 threshold will place a greater financial burden on those companies who currently benefit from the higher threshold relief however we understand there may be some active lobbying against this move which may lead the Government to water down the proposals. It will be interesting to see what may come of these changes especially as the Government has always stated the significance of an SME driven boost in the UK’s economic recovery.

4. Snow – Do we really need telling?

The unexpected snow fall this side of Christmas has caught many of us off guard but now it’s here, and with more predicted, do any of us know of the ‘Code’? The Government has issued a ‘Code’ which gives guidance on how to clear pavements and paths.

The Code can be found on http://www.direct.gov.uk/ although the home page isn’t that helpful and you may be better entering ‘Snow Code’ into a search engine, such as Google or Bing. This will take you straight to the right page.

The main elements the Government suggest that a considerate occupier should do are: -

Clear the snow early in the morning as this prevents it from becoming too compacted.
Use salt or sand and not water to melt the snow.
Be careful where the snow is moved to.

This website does not just contain information about how to clear your path; it also facilitates access to your local authority which enables you to review their policy on pavement and road gritting/clearing. So in the City of London, for example the roads and paths are cleared by the Cleansing Department!

On the face of it the information borders on common sense but as a portal to understand how your local authority approaches this problem, then it may be useful.

5. Localism – What does it mean?

The Government has this week issued its Essential Guide to the Localism Bill and describes how it proposes to make the shift of power from a centralised state to local communities.

More than half of all government spending in our cities, towns and counties is ring-fenced, which means that while it is spent locally, what it is spent on is dictated centrally. The sums of money spent in this way are huge, for example the total annual spend in Birmingham is £7.5 billion, in Kent it’s approximately £9 billion and in Greater Manchester and Warrington it’s £22 billion. Much of the money earmarked for expenditure in this way is spent on social security, health and education. This localism approach strongly suggests the money can be better spent under local control and so the Government has outlined 6 essential actions that will assist in delivering this change in direction: -

1. Lift the burden of bureaucracy

2. Empower communities to do things their way

3. Increase local control of public finances

4. Diversify the supply of public services by ending public sector monopolies

5. Open up Government to public scrutiny

6. Strengthen accountability to local people

For property, this will result in more local benefits arising from large developments, for example, changes to the "community infrastructure levy"( charges that local councils impose on developers). Now developers will be required to make contributions towards local infrastructure. With regard to the granting of planning permission more autonomy will be given to the local community who can, where the support is greater than 50%, push through planning proposals that may otherwise have been resisted in the past.

This Localism Bill is a complete change to Government’s existing approach and, as with substantial pieces of legislation, the devil will be in the detail but for the time being if it delivers savings by streamlining bureaucracy then it can only be beneficial to the country. Let’s wait and see.

Q and A – Relax; your lease has expired, or can you...?

So your lease is coming to an end and you’re moving on to new premises. What do you need to agree with your landlord? You certainly do not have to agree when your liability to pay rent, service charge, business rates and utility liabilities ends as these will be determined by your lease. Assuming you are not ‘holding over’ then your lease will expire in accordance with its express terms.

That leaves just one remaining element, Reinstatement and a potential dilapidations claim. To follow the prescribed route will be complicated as it will rely on a thorough knowledge of the various references to legislation and case law, such as the Landlord and Tenant Act 1927, in particular s18 (1), and if you are prepared to defend your position, and on occasions this is the right thing to do, then you will need to engage a competent surveyor to act on your behalf. A surveyor specialising in dilapidations will approach the situation by looking at the lease (tenant’s repairing covenant), consider the licences to alter and maybe Schedules of Condition, agent’s original particulars, rent deposit deeds and possibly any deeds of variation. This will help him build up knowledge of a tenant’s responsibilities to maintain and repair the premises that they have been using.

As a tenant you may not want to become embroiled with a discussion on all these and would much prefer to avoid a long and protracted negotiation. If that is the case many tenants opt for negotiating a settlement based on a priced schedule. This is by far the easiest way but you will need a priced schedule so you may have to wait for this to be formally served on you by your landlord. Timing may be an issue as the landlord can serve this on you in the last week of your term so you may wish to request the document earlier.

It is normal for this Schedule to include costs for the rent and service charge for the duration of the works as any remedial repairs will undoubtedly be undertaken after the lease has expired. Once received then you may wish to open up discussions on a settlement.

However, should you wish to undertake your own works then a tenant would be prudent to have these carried out during the period of the lease but remember this will involve liaising with the building’s management to obtain the right permissions and permits to work. Think about what impact this may have on your fellow occupants if you’re in a multi-occupied property as this may increase the works programme.

There are one or two aspects which are important to note about dilapidations; the future use of the property and do you, as a tenant, have an ability to undertake the works after the lease has concluded. The first aspect relates to whether the property is likely to be the subject of a substantial redevelopment and this may make the dilapidation claim void.

Landlords won’t always be able to secure a successful dilapidation claim if it can be shown the property is going to be the subject of a substantial refurbishment or development. Secondly, a tenant isn’t permitted (unless it’s agreed with their landlord) to carry out the works after the lease expiry.

For an occupier it can seem unwieldy when a lease expires and you receive a detailed Terminal Schedule of Dilapidations; so be prepared for when it arrives. Remember this can arrive at any time before the lease expires so it may be prudent to request this Schedule at least 6 months before expiry.

November e newsletter

2010-11-26T07:00:00.014Z

Introduction

As the year draws to a close we take a look at how the Carbon Reduction Commitment Energy Efficiency Scheme has been modified from an incentivised ‘cap and trade’ scheme into something resembling a green tax. We highlight the reduction in service from the Essex Fire Brigade following the Coalition Government’s comprehensive spending review and also look at how the Better Building Partnership (BBP) is looking to collaborate with occupiers to deliver more sustainable buildings.

Are you ready for the festive shut down? If you approach it sensibly it could save you money and give you peace of mind. We also take a quick look at the January increase in VAT, and finally we look at why we believe you should work with your landlord, in our Q&A.

''For a current update film on CRC and necessary behavioural change,from leading UK influencers, go to... Property Week [PW.cffnbzelmoqwzqmecoz@propertyweek.ubm-info.com]''

Major adjustments to CRC by Coalition’s CSR

The Government’s Comprehensive Spending Review (CSR) has introduced fundamental changes to the way the Carbon Reduction Commitment Energy Efficiency Scheme (CRC) is administered, which will have cashflow and timing implications for both Landlords and Tenants.

In its simplest form, the impact on business will be postponed, as the 2011 allowance sale (for 2011-2012 emissions) will now not take place until 2012.

The second fundamental change is that the revenue generated from such sale will now not be recycled to participants but will be retained by the Exchequer, thereby effectively switching the scheme into a Green Tax. The original legislative net which was used as a driver towards less energy consumption contained an opportunity for reward for lower usage plus positive PR benefits but no longer…the Scheme’s simpler format now just looks like additional cost to participants. The League table,however does remain so this still offers a reputational incentive for businesses.

And this cost looks like arriving during 2012 and may appear as a ‘double-whammy’ as participants will have to buy their 2011-12 allowances plus those for anticipated usage during 2012-13.

Uncertainty still remains as to a Landlord’s ability to pass on certain CRC costs to Tenants and as before, much remains enshrined in the wording of existing leases, plus the ability of parties to agree suitable wording in new leases. Now that CRC more closely resembles a tax, it seems that in those buildings where the landlord procures power and recharges the tenants, he may be able to obtain CRC cost repayments too as part of a Tenant’s covenant to pay all outgoings(including taxes). Tenants will no doubt try to argue against this being seen as a Tax, and indeed if a Landlord requires additional allowances he will be forced into the secondary market to buy more, which, in itself does not resemble a tax.

If the balance of power is now drifting towards Landlords, we wonder what implications there are for new leases where a Tenant may be shortlisting very similar buildings but due to the difference in ownership structures between landlords, one may be looking to the tenant to pay CRC costs, whereas another may not be even falling within the range of the CRC regime at all. The impact could, therefore be felt by small as well as large occupiers, and noteably, if a non- CRC Landlord sells to a CRC one, the impact for the occupants could be very real.

The Government has now called for a period of Consultation on the subject until December 17th 2010.

Fire brigade no longer responding to business alarms

Fire fighters in Essex have confirmed that they will no longer respond to automatic alarms from business premises or from calls from telephone kiosks that are abandoned.

They say that this is because some 97% prove to be false alarms and they want to ensure that their operational resources are deployed more effectively.

Essex’s Chief fire officer said that taxpayers should no longer bear the cost of businesses failing to maintain their alarm systems and that there exists a greater need to have teams ready to respond to real emergencies.

This clearly illustrates the need for landlords, property managers and occupiers to undertake the necessary and regular checks on the systems that their manufacturers require.

Outside of Essex therefore, parties responsible for the building’s system, should also check with their local fire authority to understand upon what basis a fire crew will attend an alarm call out.

Better Building Partnership Forum 2010

On November 10th, TAP attended the BBP Forum 2010 which was entitled ‘Owner Occupier Partnerships-Panacea or Impossibility?’

The BBP is a collaborative organisation made up of some of the largest commercial and public property owners in London, and, as their mission statement sets out..’’All members are working together to improve the sustainability of London’s existing commercial building stock and accelerate the reduction in CO2 emissions from those buildings’’.

The Forum addressed 3 topics which were attended by all participants in rotating groups; they were

1. Sustainable Retrofit, energy performance contracting in multi-occupied buildings

2. Transactional and Letting Agents; a key role to play in promoting sustainability to both owners and occupiers?

3. Owner Occupier partnerships; what can realistically be achieved?

In brief, the messages from each were as follows:

1. This follows a model in contracting with ESCOs (Energy Servicing Companies) and participants should view them as an ongoing service rather than just a cost item; they need simplification and to become an industry standard with a recognised seal of approval; but at a primary level there still needs to be co-operation between Landlord and Tenant, as a Landlord cannot simply compel a Tenant to make building or spacial improvements. The Forum concluded that there would always be an issue when talking about ESCOs in buildings with short lease terms remaining.

2. Agents knowledge was deemed to be poor and lacking in detail of issues facing both Landlords and tenants. Few, if any firms were educating agents sufficiently, enabling them to guide clients in matters of sustainability with most agents still focusing on the 3 Heads of Cost (i.e. Rent, Rates and Service Charge). There were regional differences noted with London tending to fare better. The BBP saw fit to provide Tool Kits and a Charter for their agent members to adhere to.

3. There were barriers to overcome, namely Who pays, who benefits, Trust, Interests not being aligned, lack of common language, education, how to treat existing lease agreements, is the financial prize worth the effort and the supply chain .i.e. is the property manager meant to be undertaking much of this work?

As a general summary of the event, it seems that many sustainability issues are still out of sight and out of mind and the BBP will continue to see itself as one champion in the mission to better broadcast these important messages. They conclude that they need more Forums, to engage with more occupiers, to produce more Tool Kits, to highlight more case studies and to make more interactive use of their website.

There is clearly still a long way to go to affect behavioural change in this area.

Festive shut down – How prepared are you?

For many us we look forward to the festive period with delight after a long and often challenging year, and that can mean we shut and lock the door on Christmas eve and hope nothing happens while we’re all enjoying the annual celebrations. However, as a company, what contingency is in place should something happen? Does the property manager or your landlord have your contact details? Where is your business insurance policy? Have you turned off all non-essential equipment?

Many of these questions you may think are common sense but you would be surprised how many businesses are not prepared for this eventuality. It is also important to appreciate that in the winter with much colder weather, the chances of potential accidents relating to burst water pipes or electrical faults can be higher than other times of the year.

In many multi-occupied properties the landlord or property manager will have in place some form of security cover and this may involve a red care security alarm with a telephone link to a monitoring station, periodic patrols by a security firm or constant 24hour security presence. In each situation should an incident occur it may result in the need to have up to date contact details. Not only is it important for an occupier to pass on their key holding information but it will also be important for an occupier to know how they can contact their landlord or property manager.

However, an occupier may want to use the services of a key holding company who, as the title suggests, can hold a set of keys on behalf of the occupier and it is they who will be called first in the event of a problem. Costs for such a service would range between £350 - £750 per year and would depend on where your office is located.

VAT – When does it increase?

Following the Coalition Government’s Comprehensive Spending Review, VAT is set to increase early 2011; any invoices raised on or after the 4th January 2011 will attract the new level of VAT. This is the third time in as many years that changes have been made to the level of VAT with the rate reducing in 2009, returning to its original level in 2010 and, now at the start of next year, increasing to 20%.

The rules surrounding when and how much VAT to charge are complex at the best of times and so when there is a change in rate or circumstances then interpretation can prove even more difficult. However, in simple terms if you’re a retailer and you sell an item on or after January 4th then the new 20% rate would apply, however, should a customer take delivery of an item before this date and an invoice is raised after January 4th then the supplier can apply the lower rate of VAT.

This is only a simple example that shows it is not straight forward and so we have found the easiest place to look, should you not have access to an accountant, is HM Customs & Excise (www.hmrc.gov.uk/vat and then search under ‘rate increase’). This will provide you with simple details on how to interpret the rate changes.

Q&A As a business,how important is it to work with my landlord?

Traditionally the relationship hasn’t always been co-operative between the landlord and the tenant despite the obvious benefits that can flow from having such a good understanding of one another’s needs. Trust is at the heart of the relationship and is not always regarded highly enough. Over the years both tenants and landlords have gone to extreme lengths to hide aspects from one another about what each party wants from a property but of late this is changing.

Combining the downturn in the economy, the general decline in lease term lengths and the common desire to see a more sustainable environment is, in our opinion, bringing landlords and tenants together. It is important to note that it is the landlord who has the opportunity to enhance the services on offer to a building, albeit with the co-operation of the occupiers. In answer to the shorter leases being offered and demanded , the opportunity for landlords and tenants to work together is becoming more relevant and this is happening.

Furthermore, with external factors such as increases in fuel prices and the emergence of green taxes, the need to enhance a property’s efficiency is no longer a luxury and more a necessity. Value for money can be demonstrated more easily now as financial benefits can be identified given the increase in technology versus cost of energy. The growing cost of supplying energy to a property is forcing more innovation and the need to form a better working relationship with your landlord is now essential.

Throughout the life of a lease an occupier will need to make changes to their demise, may even require to assign or sub let space or install equipment outside their demise and this will require co operation from the landlord. This co operation is based on honesty and trust and underpins a strong working relationship. It is now a requirement of both the landlord, tenant and property manager to be more accessible and open with each other and we would promote the need for an occupier,where appropriate to support this working ethos as it will benefit them in the long term.

October E-Newsletter

2010-10-25T21:05:00.056+01:00

As we go to print people are still digesting the effects of the Coalition's spending review. It's almost certain evryone will have to tighten their belts accordingly. But spending isn't the only issue that needs to be considered and this month we look at how the annual business rates increase is calculated, whether you need to inspect your air conditioning before the end of the year and review the findings of Lord Young's recent report on using common sense when dealing with Health and Safety. Furthermore it pays to have the right waste disposal strategy as we take a look at the first prosecution under the WEEE Regulations.

Finally we look at break options in our Q&A as it's not as easy as just serving a notice!

Retailers lead the charge towards a revised Business Rates calculation

The British Retail Consortium (BRC) has been at the forefront of lobbying the Government over the methodology used in establishing the new multiplier base. Traditionally, the system uses September’s RPI to form the basis of calculation for the following April’s increases and, coupled with last April’s Revaluation, the BRC says that this could see some retailers facing uplifts of 22%.

Whilst the BRC have appeared most vocal, the RPI figure will have implications for all commercial Rates payers and may come as an unexpected shock for business planning. Hence industry bodies are urging Ministers to consider other methods that are not so random. Stephen Robertson, Director General of the BRC says .....’’ Basing a whole year’s rates bills on one, almost random, month’s RPI makes no sense. The Government must switch to another way for next April and beyond.

Using the Consumer Price Index (CPI), as it does for pensions is one option. Or using the 12 month average RPI rate from October 2009 to September 2010, which would iron out inflation rate volatility.’’

The Rate that has been chosen is 4.6% (down from 4.7 in August) and is still considered to be too high for comfort, with commentators expressing concern that the speed of reduction from early year highs has been ‘’stubbornly ‘’ slow.

The coalition Government has its hands full with its Spending Review, and therefore a fine balance exists between spending cuts and tax adjustments to keep companies/retailers competitive, but if the RPI remains high and is the primary link benchmark in this annual recalculation, you can expect bodies like the BRC to increase the volume. For this next Rates year, however it looks too late.

Stop gassing around and take note?

ATTENTION... to those companies that install, maintain or service stationary refrigeration, airconditioning or heat-pump (RAC) equipment that contains or is designed to contain ‘’F gas’’ refrigerants …you have a legal obligation to hold either an interim or full Company Certificate. Should you want to review the list of F Gases (ie HFC's) visit the defra website (www.defra.gov.uk/fgas).

It is an offence not to hold an interim Certificate NOW and a Full one by July 2011 and enforcement will be pursued by your Local Authority and The Environment Agency, both of whom will have a range of options at their disposal to protect the environment. This reflects the fact that these refrigerants have a very high global warming potential, which can be up to 3000 times higher than CO2.

To clarify who is affected: Any organisation that directly employs engineers to install, maintain or service RAC equipment that contains or is designed to contain F Gas refrigerants. This includes RAC maintenance contractors and installers, including sole traders and RAC end users and facility managers employing their own qualified staff to carry out these activities.

Air Conditioning Inspections - Have you thought about this?

Air conditioning systems can account for 50% of the energy used in a building, and having it inspected by an Energy Assessor can improve efficiency, reduce operating costs which inturn lowers carbon emissions. Already the Energy Performance of Building Regulations (EPBD) are in place to impose an obligation on the operator to carry out an inspection on larger systems, and the an inspection on larger systems, and the obligation on the operator to carry out an inspection on larger systems, and the smaller (12kW) systems will need to have been inspected by the 4th January 2011. Do you need to undertake this inspection?

Where you have to undertake such an assessment an assessor will be looking to: -

Provide details of the system
Highlight where it is possible to improveperformance and reduce carbon emissions, which may involve replacing the equipment

As with all regulations it is important to understand how an air conditioning system is defined. It is defined as: -

“a combination of all the components required to provide a form of air treatment in which the temperature is controlled or can be lowered, and includes systems which combine such air treatment with the control of ventilation, humidity and air cleanliness”.

The cooling capacity of an air conditioning ‘system’is further defined as “the sum of all individual cooling units under the control of one building owner or operator”, and so the criteria of 12kW may result from having multiple split units.

The need to inspect the larger air conditioning systems is already established and as such many of the property managers have access to the right people, qualified to assist you in understanding your requirements to have your air conditioning system checked. Alternatively speak to the Chartered Institute of Building Services Engineers who will be able to put you in touch with an approved assessor.

Will common sense prevail?

Is common sense finally going to prevail in the world we live in? If Lord Young and the Coalition government get their way then this will certainly be the case. According to Lord Young's recent report entitled 'Common Sense Common Safety', he would like to move away from the current compensation culture and endorse a culture of using common sense when reviewing non hazardous occupations.

The aim of the Report is to ' ...... free businesses from unnecessary bureaucratic burdens and the fear of having to pay out unjustified damages claims and legal fees. Above all it means applying common sense not just to compensation but to everyday decisions once again.’ His recommendations, should they be adopted, are only directed at non hazardous occupations and Lord Young freely recognises that the current system with tight procedures and processes has resulted in the lowest number of non-fatal accidents and the second lowest number of fatal accidents at work in Europe.

Lord Young identifies that this overall compensation culture has resulted in companies operating their health and safety policies in a climate of fear. The no win, no fee approach to making a claim against an employer and the role of the press in highlighting the absurd health and safety rules has identified the role Health and Safety Executive (HSE) and Local Authorities have to play in promoting common sense. The Report proposes: -

The HSE develop downloadable checklists to reassure organisations operating in low hazard environments that they are meeting their legal obligations and managing risk as so far is reasonably practicable.
Introduce qualification standards for health and safety consultants as currently this is not a requirement.
Where local authorities are overzealous towards health and safety, the public should be allowed an appeal process and appropriate recompense.
The insurance sector also pays a part where the requirement of meeting obligations can be too much of a burden for small businesses or voluntary organisations. Lord Young has asked the insurance sector to look at this point.

There are other aspects of the Report which touch on the voluntary, home working and educational sectors which we won’t touch on but it seems that the willingness to promote a common sense approach is there, it’s now finding the will and way to achieve what many of us have wanted for a long time.

Waste Electrical and Electrical Equipment Directive (WEEE).... First prosecution

A hairdressing supplies wholesaler has become the first producer to be prosecuted for failing to comply with the WEEE Directive. The Birmingham based company was prosecuted for non-compliance with packaging waste regulations and also for failing to register as a producer of electrical and electronic waste. The company was found guilty of 31 charges in total (at £650 each) amounting to £20,150 plus compensation of £7,135 for loss of registration fees and costs of £3,605.

Electrical and electronic waste is the UK’s fastest growing waste stream and the aim of the regulations is to reduce the amounts going to landfill and improve recovery and recycling rates. Since the original packaging regulations came into force back in 1997, they have helped in doubling the amount being recycled annually and the Environment Agency estimates that this amounts to some 6.6m tonnes being diverted from landfill to recycling each year. In general terms, the regulations demand that companies who handle packaging as manufacturers, pack fillers, sellers, importers or leasing companies are registered each year and provide evidence that they have and will continue to recycle packaging.

Break Options - Are they easy to exercise?

Incorporating break options in a lease is customary, especially in these austere times, as it provides the flexibility a tenant or landlord may require when occupying or owning a property. For a tenant is offers the chance to increase or decrease the space they occupy and for a landlord it affords the opportunity to redefine a building’s configuration to take advantage of changing occupier requirements. But if you have the chance to break a lease it is essential to exercise it in accordance with the prescribed dates and covenants of the lease. This is both for the landlord and tenant. Think about these steps before a notice is served.

Think about your strategy. Once a notice is served it cannot be unilaterally withdrawn. Should you wish to serve a notice and then decide you wish to stay you will need the agreement of the other party.

Is the break option personal? If this is the case it stays with the party that it was first attached to. If the lease has been assigned since this point it is unlikely the break option will be valid.

Make sure you comply with the specific terms of the lease. Compliance is important if the serving of any notice depends on certain covenants being complied with. A prime example would be to have no arrears but it may be other elements such as keeping the property in good repair.

Make sure you serve the notice on the right people. In the case The Hotgroup Ltd vs The Royal Bank of Scotland (as trustees of Schroder Exempt Property Unit Trust) 2010 the notice was not served on the property manager but merely the landlord. The Courts held that as this was a stipulation in the lease the notice had not been served properly. Make sure the notice is served on the right parties and if the lease is registered your solicitor should be able to establish who the registered parties are from the Land Registry.

The need to ensure compliance with the specific terms of the lease are noted and complied with cannot be underestimated if you wish the break to be valid. The principals apply to both the landlord and tenant, albeit most of the terms, which need complying with, seem to fall on the tenant more than the landlord.

September E Newsletter

2010-09-28T07:00:00.001+01:00

This month we consider public sector action and the potential implications for business following rallying calls from the recent TUC Conference;we draw further attention to the CRC debate and highlight the 30th September deadline;we then highlight the shrinking length of the average UK commercial lease and see who this news is good for before introducing a HSE website which shows how better management in this area can benefit the small business.

Our Q and A this month deals with Assigning a commercial lease and touches on some of the legalities and commercial aspects associated with such a disposal method.

Brace Yourself for Disruption

The Unions and Government have opposing views on how to resolve the country’s financial deficit and this may lead to severe disruption in the coming months. As a business, it is important to plan for all eventualities and this situation is no exception. We are thankful that we have been given plenty of warning and this should give you enough time to plan ahead.

With the prospect of widespread strikes looming, many of those services we take for granted are likely to be interrupted leaving many of us severely inconvenienced. Whilst we can only guess what services are likely to be affected, we nevertheless would do well to try and plan how our businesses will cope faced with the prospect of having to do without, for example, a reliable postal service. How will we receive payment of our services, how will we pay our rent or service charge, will our staff be able to reach their place of work, will we have to have more of our staff working from home if the transport network isn’t working? People and businesses will need to carry on and it is now that businesses may wish to dust off their contingency plans and review how they will continue performing the services for their clients.

Managing Agents and Property Owners may also struggle to maintain and service their buildings. Difficulty in sourcing parts, manning the security desks, attending to breakdowns and so on, all impact on the operation of a building. It is clear that people will use their best endeavours to ensure services continue to be provided but it is also worthwhile reviewing your own plans for such circumstances. Communication will be key to ensuring people are aware of what is happening to the building or where businesses struggle to meet their commitments. This is the case for both the property manager and occupier.

Sometime ago The Government, through their website www.direct.gov.uk issued a Business Continuity Management Toolkit which outlines how a business reviews their operation. By applying these principles a plan can be drafted to deliver a strategy that will improve resilience against any potential disruption. We have a link to the Toolkit on our site so please feel free to contact us if you are not a subscriber and would like a copy e mailed.

Service Charges - The Question of Repair or Improvement

One of the most contentious subjects in the property management profession surrounds the thought that the Landlord gradually improves his property, at the expense of the Tenant, by replacing elements of the building with better items, thus improving his property. When it comes to spending the service charge, the actions of the Property Manager will always be questioned; certainly in these austere times.

But how do we know what items of expenditure are right and appropriate? Within a building, the service charge expenditure is governed by the contents of the lease contract between the Landlord and Tenant. However, examples of appropriateness is shaped by case law and a recent case centres on whether it is right to replace single glazed windows with double glazed units. Although it is a case that relates to residential leases the principal will apply to commercial practice.

The case of Craighead v Homes for Islington Ltd & Anor [2010] involved a block of 21 flats where the windows had come to the end of their useful life and required replacement. The Landlord replaced the windows and by installing double glazed units increased the costs by 13%. The tenants challenged saying that the Leases only allowed for the recovery of service charge expenses for the renewal and not improvement of the properties. However, as this was a residential case the dispute was heard by the Lands Tribunal and their Upper Chamber decided it was appropriate for these problem units to be replaced and did not deem it as an improvement.

On many occasions it is appropriate to consider whether the increase in efficiency of an item warrants any additional costs and in many instances it does.

CRC - What's the next stage?

Landlords across the country are trying to ensure, where it is necessary, that they have registered for the Government’s Carbon Reduction Commitment (CRC) Energy Efficiency Scheme. The deadline for registration is the 30th September. But whilst they are heading towards the Registration deadline day, what will happen next? This is just the first stage, the next stage is to reflect on annual energy usage and develop a policy of using power more efficiently.

The scheme measures success in 3 ways; using an absolute matrix, where companies are judged by how much they have reduced their energy consumption, a growth matrix where consideration is given to how companies have grown and an early action matrix where consideration is given where an effort has been made before the start of the scheme. The outcome of this combination leads to the results being published in a league table and rightly some companies will take their league position very seriously.

Property Managers have begun looking at ways of improving energy management. Consideration, up and down the country, will be given to new energy efficient ways of managing property but even then the Property Manager can only really influence how the common parts perform. Examples are already being identified such as the RPS Group plc where they are testing a new retrofitted lighting control system in their London office. It is suggested that this will help to reduce the electricity costs of lighting by up to 70%. Each occupier will be encouraged to be aware of their energy use and through such management tools as the ISO 16001 will be reminded of the need to alter behavioural change.

There is already enough published material available which identifies areas where office occupiers can look to reduce their energy consumption such as upgrading switches in meeting rooms to reduce consumption when not in use, or network more people to less printers to reduce printers standing idol. The Carbon Trust estimate that through simple office management, occupiers could reduce their annual energy consumption by up to 20%. At these levels it is worth thinking about.

This is a huge and topical issue; we have the documents on our system and if you would like copies e mailed then please contact us.

Shorter Leases: for whose benefit is this?

In its Annual Lease Review, the British Property Federation (BPF) and the Investment Property Database (IPD) have recently reported that since 1999 average lease lengths have almost halved from 14.3 to 8.6 years.

The study takes in details of some 91,000 tenancies representing a rental value of £6.3bn and the recent result shows the 8.6 year figure to be the lowest ever recorded. Furthermore the study also saw an increase in the percentage of leases of 5 years or less, rising from 66% to 72%.Now only 10% of leases are set for terms of 10 years or more.

The retail sector saw the largest % fall from 6.5 years to 5.4 on average, followed by offices(5.4 to 4.7 years) and then industrials(4.6 to 4.0 years) but this was also set against a backdrop of increasing incentive packages as Lessors have had to further induce tenants into vacant space.

Not great news for the Landlord/Lessor and generally good news for the tenant community, but as a response to the downturn this is predictable and is evidence that deals are being done and that fewer small businesses are being adversely affected by property constraints in the downturn.

But do tenants really get up and move on when their short lease expires or are they actually using the opportunity to renew with their existing Landlord on the same or better terms? More often than not, if the space still works for them the Tenant stays and renews rather than face the disruption of moving for the sake of modest and debatable savings. Some of the larger Landlords such as MEPC publically state their retention rates (MEPC claim 91%, and are looking to further improve on this) and much of this is down to active management and integration with their Tenants (customers).

So whilst the overall picture is of lease term reductions, many transactions occur between the same leasing parties.

But whilst a Landlord is keen to retain occupancy of his space, the impact of shorter leases is harder felt by an Investor/Developer Landlord who requires longer leases to attract development funding and/or show long term income commitments to valuers. The UK Investment market was the envy of the world for decades by boasting 25 year leases with 5 yearly upward only rent reviews an an Industrynorm, but now, as this Report shows, a Landlord would be fortunate to secure a new lease term even containing a rent review. He may circumvent this issue by negotiating stepped or fixed uplifts and incentive packages to dissuade tenants from exercising break clauses, but the overall message illustrates a potentially more mobile working community with whom Landlords need to engage in order to secure their longer overall retention within a specific building or Estate.

Does Health & Safety benefit your business?

We at TAP are always looking for ways to help organisations and have identified a website operated by the Health & Safety Executive dedicated to explaining how cost effective managing your health & safety is to a small business.

The website is titled ‘Better Business’and the site has been designed to offer general guidance across a number of areas that may have an impact on the working environment of a small business. Each page has a link through to a useful site that provides more information around the subject and,together with their manned Helpline 0845 345 0055,it is a useful number for any business.

Don’t worry if you feel your organisation is too large;the HSE also have a website for larger companies.

If you have any questions regarding Health & Safety and would like to speak to a consultant who specialises in a particular field then please feel free to telephone us on 0800 865 44 50 and we will be happy to refer to one of our Partners.

Question & Answer

Lease Assignment - What is it and how do I go about it?

Assume that your business no longer requires the premises it operates from and is looking to dispose of the lease. You have been unable to surrender the lease and have restrictions on subletting and the only remaining option is to assign (or transfer it) to another company. Selling or transferring a lease is known as ‘Assigning’ and effectively means that you transfer all the current liabilities to another company. It does require your Landlord’s consent and will be conditional on finding a company who is acceptable, in all ways, to the Landlord. However, assigning the lease does not fully remove you from all residual liabilities.

Similar to applying for consent to sub-let a premises,the Landlord will need to be supplied with sufficient information about the new prospective assignee that will support their financial credentials, which will include sight of accounts, various references from accountants, bank and current Landlord. Furthermore they will require comfort in knowing the occupier will not be using the premises for any immoral use or conduct any business that may be seen as a nuisance to other occupiers in the building. It is therefore important to cover these aspects in detail when applying for consent. Depending on when the Lease was granted you may also be required to commit to an Authorised Guarantee Agreement (AGA). This means your business agrees to ‘guarantee’the future obligations of the new tenant.

Once consent has been given and the Licence to Assign, and AGA (if necessary) has been signed by all parties then whilst that tenant occupies the property and meets their financial and leasehold obligations you are effectively released from your leasehold obligations. However, depending on when your lease was granted (Pre or post the Landlord and Tenant (Covenants) Act 1995) then your responsibility may continue and in a circumstance where the new occupier cannot afford or fails to comply with their obligations you will be called upon to ‘step in’and remedy the situation.If Assigning a Lease which was granted before 1995 then your responsibility will continue until the Lease has expired, although should the tenant fail to meet their reinstatement obligations then you may have to meet that obligation. However, if the original Lease was granted after 1995 then there is a possibility that should the company, (who you assigned the Lease to) assign it again, then your future responsibilities may fall away as the Act limits on-going liability. Following a recent case,this release also applies to Sureties who now cannot be obliged to guarantee the performance of the original lease.

Assignment is therefore the effective sale of your lease to another acceptable party and the price(‘consideration’) of that sale is often referred to as a Premium…or reverse premium…dependant upon the level of current rent passing compared to the prevailing market rent at time of assignment;therefore you,as an assignor may actually have to pay to sell your lease if your ‘passing ‘ rent is above prevailing market levels. For further details, call us on 0800 865 44 50.

AUGUST E NEWSLETTER

2010-08-26T11:38:00.051+01:00

Editorial

In this edition we look at 2 issues in the Sustainability arena: the British Property Federation’s findings with regard to CRC costs allocation and how your business might benefit from addressing procurement and purchasing in a ‘greener ‘way. We also cover 2 issues of Insurance;one affecting cost via taxation,the other being a worrying report on the actual understanding what cover businesses actually need.On a brighter note we report on a reduction in Red Tape and conclude with a Q and A on Landlord approvals in the event of you wishing to sublet.

Enjoy the Summer!

No one is sure how to share the cost of Carbon Allowances...

A working party at the British Property Federation has published the results of their consultation on the introduction of the Carbon Reduction Energy Efficiency Scheme. In summary the conclusion supports the view that the ability to recover the costs associated with this scheme very much depends on the wording of the lease; with the acceptance that if both real estate investors and occupiers work together then everyone can benefit from the improved energy efficiency of a property. In this respect Landlord’s are looking to introduce Memorandums of Understanding (MOUs) to set out how to achieve a successful partnership.

The Working Party was made up of a number of people from a cross section of the property profession and reviewed a number of questions surrounding this topical subject. Many of the questions considered how the costs and potential benefits from the recycled payments, the scheme may generate, would/could be distributed; was it right for tenants to receive some of the benefits arising from the recycled payments if they didn’t contribute? Should they contribute in the first instance? What is the difference between the costs associated with administering the scheme with those for buying the allowances? Should the costs for the common parts be separated from those for the tenanted areas where the Landlord supplies the energy but the Tenant decides how it should be used?

There is no real consensus to these questions but overall it is evident the profession needs to work together to reduce the amount of energy we all use. Over the next 3 years those property owners who are captured by this scheme will have to buy allowances at a value of £12 per tonne of carbon emitted. After this initial 3 years term the cost of carbon will be subject to market forces and people are already suggesting it will increase thus forcing energy prices to rise. During this ‘settling in’ period Companies may wish to turn their attention to looking at ways of conserving power and according to the Carbon Trust companies can save up to 20% of their annual usage by improving their approach to using power.

We at TAP believe the future will see every organisation having an energy plan (drafted in compliance with BS 16001), more energy conscious clauses incorporated into commercial leases, energy managers responsible for overseeing consumption across a portfolio and a better working partnership between the Landlord and Tenant where both parties appreciate the benefits of investing in new plant where a reasonable pay back on the money can be seen. These suggestions are all reasonable but before we get there we need to repair the fundamental fault in a Landlord and Tenant relationship that the occupier doesn’t always trust a Landlord’s motive for doing something.

Would your business benefit from Sustainable purchasing?

TAP has been in the fortunate position of meeting many people since we started and often the question of sustainability is raised. Many organisations tend to be ambivalent about the subject seeing the ability to trade in a sustainable way to be more expensive and until changes are made companies will focus on other aspects of their business where it is cheaper to achieve results.

But what are the benefits in using sustainable methods in your daily business life? NetRegs has a useful website which explains the benefits but here is a brief overview.

• SAVE YOU MONEY: Landfill tax is increasing, so why pay more than you have to.

• UTILITY EFFICIENT: With more efficient products on the market you can look to drive down operational costs

• DIFFERENTIATION: Make your offering different to you competitors. Many larger businesses are looking for this attitude from their suppliers.

• INDUSTRY REPUTATION: among staff, customers and the public

• MITIGATE RISK: New products have been manufactured in line with the latest environmental standards.

• TAX EFFICIENT: Especially with energy efficient equipment, there is a possibility of benefitting from

Enhanced Capital Allowance (ECA) scheme or loans for energy saving measures from the Carbon Trust

Larger companies are looking at ways of working with organisations who can demonstrate support for their

Corporate Social Responsibilities and so pressure is being brought to bear on smaller companies to work in a more responsible way. Companies who change their policies to incorporate sustainable policies in both procurement and operation will stand them in good stead for winning business from many larger organisations. If you buy goods and services in the public sector you should see the Office of Government Commerce (OGC) guidance on sustainable public procurement, Centre of Expertise in Sustainable Procurement.

Be prepared for higher insurance premiums

As part of the recent budget many people may have missed the fact the Chancellor has increased the Insurance Premium Tax (IPT) by 20% from 5% to 6%, and the higher rate from 17.5% to 20% with effect from 4th January 2011. Not much you may feel but nevertheless an indication that occupational costs continue to rise.

As with most charges, in these times, where there is a need to have an insurance policy it is rare for the annual premium to be lower year on year but if you are an occupier with a good claims history it may be sensible to remind your Landlord of how good you are at managing your property matters. Good housekeeping by making sure you’re up to date with your various responsibilities such as Fire Risk Assessments, Portable Appliance Testing or general risk assessments will help to demonstrate a systematic approach to managing risk. This will help in seeking the reward of lower premiums. The counter argument is that with many Landlords they have a block policy that has many factors which influence the premium but if all tenants could work together in a collective manner then insurance brokers and underwriters would have to listen.

TAP can help you with managing your risk and reviewing how you maintain your records. Just call us on 0800 865 44 50.

Cutting through the red tape!!

You may not believe it but you have probably received the benefit of having to comply with less red tape! According to the latest Government Report, Simplification Plans 2005 – 2010 businesses have received the benefit of less red tape which has an estimated saving of £3.50bn. In these austere times the Government has introduced a number of simplification measures which may take the form of fewer changes to legislation, publication of guidance or the creation of web-based tools and all these to assist the business community.

It seems all these measures have been validated through an independent validation panel which comprised individuals from a number of organisations such as the TUC, CBI, Federation of Small Businesses and Confederation of British Industry. So have you benefitted from the introduction of some of the measures?

HSE Example risk assessments – Easy to use examples of risk assessments for 34 lower risk activities. As at May 2010 estimated savings were £235m.

Ladbrokes are an example of this where Bill Bennett, Health & Safety Manager stated “We complete all our assessments in-house but because we have so many (2,400) betting shops and the assessments themselves are so diverse – there are 26 generic risks to a typical small betting office – the paperwork volume was very high”. By having a simplified approach they can now produce the documents much quicker and simpler, saving time and money.

Abolishing the requirement to display Employers’ Liability certificates at all business premises which estimates savings of £58m.

By way of an example Adrian Rendell, Risk Consultant for BT mentioned that “The requirement to display an Employers’ Liability certificate at each of our premises was an enormous burden on BT, and probably many other large Corporates, because of the number of premises. Most employees would probably look for it on the intranet where it is freely available.” The change allowed businesses with suitable IT systems to display certificates electronically so long as staff had reasonable access to it in that format.

Introduction of Netregs an on line Environmental Agency service which it is estimated saves businesses approximately £32m per annum. An example is John Patch, Director, Roger Bullivant who commented

“We cannot be environmentally responsible without understanding the wider issues governing sustainable business. NetRegs.gov.uk is a great tool for helping businesses reach this goal and I would certainly recommend it.”

You may not appreciate some of the changes that have happened over the last 5 years but it is certain from the examples listed that changes are afoot to help small medium enterprises (SME’s) and the micro businesses. Many people do not realise that SME’s make up 99% of all businesses in the UK and micro companies, who employ less than 10 people, make up 96% of businesses in the UK employing 7 million people. Both the costs and the time required to comply with regulations are proportionately greater for smaller businesses and can take resource away from their core business. That is why the Government consider it vital that these burdens are minimised to allow these enterprises to thrive and, in so doing, strengthen the UK economy.

They therefore have a policy to ‘Think Small First’ which is an approach they take when drafting primary and, now secondary, legislation.

Do you understand your business insurance policies?

Apparently 70% of Small businesses believe they understand their insurance policies but research by Premierline Direct feel this isn’t the reality. Are you the same?

For example 42% of small companies weren’t sure if temporary employees or work experience personnel were covered by the firm’s Employer Liability Insurance Policy, despite Employers Liability Insurance being compulsory for any company that hires personnel, regardless of the terms they are employed on. Furthermore, more than 30% were unclear if health & safety legislation applied to every company even if they employed less than 5 people. Also 53% of companies did not realise how often they should review their risk assessments in order to comply with their business insurance policies.

Other interesting points which came out of this research were that companies didn’t realise they could insure for legal costs associated with a dispute nor that their policy may cover seasonal increases in value of their stock.

What is more important is that many businesses did not inform their insurers of a change in circumstances, particularly where the change on circumstances may affect their insurance cover. For example 73% of businesses didn’t inform of an increase in stock levels, 62% to changes in the security arrangements (Managing Agents may have an input into this element of service), and 69% about employing more

staff.

Chris Little, managing director of Premierline Direct commented, "It’s vital that business owners are honest with their insurance provider as their answers help to establish the level of risk the company is at and ensure they receive adequate protection."

"To ensure that a business is fully covered by its policy, it is essential that the insurance provider is advised of any amendments to the business. This may include expansion through selling new products, moving premises, changes to the company structure altering its legal entity and an increase in turnover or staff," stressed Little.

"In addition, if SMEs fully understand a business insurance policy, then they can have the confidence to go direct to a provider, which can lead to cost savings," he concluded.

Sub-letting – Why won’t my Landlord give me consent to sublet my premises now I’ve found a company?

One downside of a commercial business lease can be its lack of flexibility; especially when you no longer require the space. How do you mitigate the cost of having vacant space? One such way would be to sub let part or the whole of a property but this will depend on the wording contained in your lease. As a Tenant looking to sub let space do you understand what a Landlord is looking for when considering an application?

In all situations a Tenant looking to sub let either the whole or part of their space will have to refer to the terms of the lease. The lease identifies whether such an arrangement can be made and if so what conditions are attached to any such application. There are a few principles any company applying for consent should be aware of before they apply for consent.

1. Lease or a Licence? Be careful, many Landlords will not grant consent for a Licence to Occupy.

2. Length of Lease remaining vs length of lease being granted. In all cases a sub lease will have to be shorter than the remaining time left on the current lease (usually by a few days).

3. Passing rent or Market rent? The ‘headlease’ will state whether the rent which can be agreed in the sub lease should be the passing rent (ie the rent being paid in the current lease) or the Market rent,ie that which can be found in the prevailing market place. Why is this important? Well it’s because the Landlord will want to ensure that the value of the property remains high and he will be looking to secure the highest possible rent.Market rents vary and if they are below the passing rent then a letting at that level will become market evidence which can reflected in a lower valuation of his asset.

4. The terms of the sub lease match the terms of the superior lease. A subtle point but one which may ‘muddy the waters’ in any negotiation. In short, most sub leases will need to match the principle terms of the superior interest, such as the timing of a rent review or the recoverability of the service charge.

These are the principle issues that will need to be considered along with an understanding of the financial strength of the proposed sub-tenant. Timing on any application is important and where a Landlord does not agree to the sub letting then he should inform the applicant as soon as possible, stating clearly the reasons why he does not agree. In any event an initial decision should not take longer than 14 working days although the full documentation may take longer.

Once this has been agreed the Landlord’s solicitors will issue a Licence to Sub let. This document is evidence of the approval.

There may be other points to consider such as insuring new fit-out works or changes to the service charge apportionments if changes to the premises increase the floor space which we haven’t covered and if these are relevant to you then please call TAP on 0800 865 44 50 and we can guide you through any concerns you may have.

July e Newsletter

2010-07-22T11:07:00.000+01:00

Editorial
Is your lease coming to an end? Are you aware if you leave anything behind the Landlord can charge you for its removal? We look at one case where this happened. We also look at the belief that the Government targets for zero rated carbon buildings are unattainable; can this be achieved?

Looking forward to the next 6 months London businesses are optimistic about their prospects so says the latest survey from the CBI/KPMG, but will Crossrail be a victim of the Government cuts? We look at both these aspects.

The St John’s Ambulance have issued a survey that identifies many organisation are ill prepared and do not have sufficient first aiders. Look at our story to understand the facts and follow their link to judge your own organisation’s readiness.

Finally, our Q and A looks at applying for consent to alter your premises. Do you understand all the aspects?

Tenants; be careful what you leave behind as it may cost you

If, as a Tenant you vacate your premises at the end of the lease term (however that occurs) your Landlord may dispose of any of your belongings which are left behind.

Generally speaking, if the Landlord deems them to be of any value he may look to sell them and recover his costs from the proceeds. The resulting sale proceeds should be accounted back to you, the Tenant and he should have contacted you to let you know this is his intention. The reality is that he is likely to have tried to contact you anyway to effect removal and should then notify you as best he can, that he intends to sell them or otherwise dispose of them.

Hopefully, all of this should be set out in your lease; however if the lease is silent on the point then there are statutory rights allowing him to make a sale, and recover costs. The Landlord must be reasonably satisfied that you, the Tenant, actually own the items and that a sale is the most appropriate method of disposal. In many instances, Tenants leave items behind out of laziness because they are broken, making disposal problematic and therefore the statutory right to sale for the Landlord is of no real use.

The Landlord must make reasonable efforts to notify you of his intentions, hopefully following lease terms, but he should also assess their value; the less valuable they appear the more likely they are to have been abandoned (for example, part of the set for a TV series called Robot Wars was deemed abandoned and subsequently scrapped after 5 weeks of attempts by the landlord to contact the former tenant). In that case, there had been attempts to communicate their value to the Landlord via a Managing Agent, but none of this had reached him, and hence it was deemed reasonable that he could scrap the items.

The case does not however give carte blanche to Landlords to sell or dispose, but (former) Tenants need to be aware of either the lease terms or the Landlord’s statutory rights.

If in any doubt over what action you should take then call us first to discuss the matter.

Crossrail; a victim of Government cutbacks?

Construction work is well underway for one of Europe’s largest civil engineering projects, all of which is having a significant impact on London’s business community and property market, including compulsory purchase orders, Business Rates Supplement (BRS) for properties with Rateable Values in excess of £55,000,disturbance claims, settlement worries and similar aspects, all of which is set against the background of the scheme’s primary intention which is to improve transport through the Capital and its east/west satellite communities.

But its funding is always a popular talking point, with constant debate over proportionality between, and within, the public and private sectors, relative to the benefits that result, and with the announced Government cut backs, fresh questions have inevitably emerged about what can be shaved off the bill to safeguard the project. In a letter to Sadiq Khan, Shadow Transport Minister, the Coalition’s Transport Secretary Philip Hammond, commented last week that the Government was looking at ways to make savings as well as a “range of contingency options’’ much of which might become clear when the fate of capital projects is decided in the comprehensive spending review in the Autumn.

Mr Khan said, ’’The Government needs to be a lot more open with London’s business community and travelling public about their plans. If they are considering big changes to the scheme, such as fewer stations, reduced capacity, or major delays in delivering key parts of the network, then we deserve to know about it so we can consider fully the impact these cuts will have on the economy and on jobs, and on the overall value of the project.’’ With the Department of Transport being only responsible for a minority of the funding it is thought that the chances of the project losing out… and London..... are slim; although it is hard to imagine modifications not being made in some shape or form bearing in mind last week’s announcements over school building projects.

New Report says Government’s Zero Carbon Building targets are unattainable

In the largest survey of its kind, 7,000 individuals were questioned about the development industry’s sentiment and preparedness for sustainability and carbon reduction.

The report was prepared by the British Property Federation, Law firm Taylor Wessing and communications firm Spada and found that the Government’s zero carbon targets for property were not realistic and that, in order to meet the UK National reduction targets by 2010,more regulation is needed to drive things forward; this means greater collaboration between Industry and Government.
Despite this however, it reported that the recession appeared not to have dampened enthusiasm towards sustainability and found that there was strong evidence of a move towards Green Agreements, especially the non-binding versions.

In summary, the key observations were:
• 73% of respondents felt that plans to make all new Commercial buildings zero carbon by 2019 are unrealistic.

• The ‘stick’ of regulation is the most likely way to move the agenda forward.

• 68% said that sustainability was either ‘very’ or ‘highly’ important to them.

• Despite over 70% saying that they had sustainability measures in place, only half said they set internal targets and only one third related to business dealings.

• Over 80% said that they involved Senior Management in the area, although around only 35% employ dedicated staff or consultants to address it day to day.

• 60% said they had direct experience in using green leases or MoUs, dramatically up from 46% when a similar survey was undertaken last year.

• Of the 40% who had not become involved in Green leases/MoUs, half of those said they would consider this in the future.

• Internal communication to staff and customers is not high, with comfortably below 50% of respondents failing to do this either ‘’quite well’’ or’’ very well’’.

• 72% of respondents do report on sustainability, but they observe that there is a plethora of benchmarking tools available with little consistency.

• Retrofitting existing space would be considered on grounds of operational efficiency and improved flexibility in use; there appeared limited concern about energy security.

• One third of respondents requested data on environmental performance during transactions; a tentative move towards the industry trying to measure green value.

TAP has prepared a brief Guidance Note on Energy Management, viewable on the TAP BLOG at www.tap-in.co.uk which introduces the procedural steps to consider when implementing a sustainability strategy.

London businesses optimistic about the next 6 months

More than 50% of London businesses are more optimistic above prospects for the next 6 months than they were 6 months ago although the recession is still having an impact according to the latest London Business Survey conducted by the CBI and KPMG. 58% of the firms surveyed plan to expand their business with 32% of them looking to expand in London. 80% of firms senior executives still believe London is a good place to do business but there are a few concerns raised.

Firms still see a number of concerns that may influence future decisions on whether to conduct business in the capital. 57% of business leaders surveyed thought the 50 pence tax rate will impact a company’s decision to stay in London in the short term, and in the longer term whether to stay in the UK. The conclusion from those surveyed is that 78% believe the cost of doing business in the capital is high and that 48% are concerned by the capital’s transport system. However 97% felt that the current transport projects such as Cross Rail and modernisation of the tube should be completed to increase the facilities and capacity of transport on offer.

Of those surveyed firms were looking to invest more over the next 6 months in recruitment, IT, equipment, plant and machinery and product innovation. The only area they didn’t expect to increase costs was in land and buildings. The authors of the report have summarised the situation; Nigel Bourne, Director of CBI London, said:

"There is a growing sense of optimism among London’s businesses, with firms more upbeat about the coming six months. Even though most companies rate the capital as a good or very good place to do business, the cost of operating a business in London, the level of taxation and the transport system are all seen as denting its ability to compete on the world stage.

After a second year in office, businesses think the Mayor is making a positive impact on people’s perception of the city, and on its transport network. But neither he nor the government should be complacent. We must continue investing in London’s vital infrastructure and ensure it can compete with other cities globally. Nurturing home-grown talent is also going to be important during the recovery."

Richard Reid, London Chairman of KPMG, said: "With over half of the capital’s businesses planning to expand and increase spending in the second half of this year it is clear that London will continue to be the driver of economic growth in the UK. The Government needs to continue to work with the private sector to ensure that much-needed investment projects such as Crossrail happen and that we don't slip behind other global centres.

London is now in competition with the fast-growing economies of the Far East, which devote more of their GDP to infrastructure investment than any other region in the world. How we approach the problems of an ageing transport network in London will determine our future attractiveness and competitiveness."

Does your organisation have sufficient first aiders?

The St John’s Ambulance provided first aide training to approximately 800,000 people last year. But does your organisation have sufficient first aiders to cover your workplace? For as little as £15 you can purchase a basic ‘Workplace’ first aid kit from the St John Ambulance but do you have sufficient trained staff who know how to use it?

On October 1st 2009 the Health & Safety Executive brought in new workplace regulations for workplace cover. It is a legal requirement to have sufficient first aiders in the workplace and following a recent survey carried out by St John’s Ambulance, 60% of people surveyed wouldn’t know what to do in an emergency.

As with many regulations there isn’t a simple answer to the question ‘How many first aiders do I need for my business?’ However, the helpful people at St John’s Ambulance have put a simple interactive guide on their website (www.sja.org.uk). This guide walks you through the requirement by asking you 3 straightforward questions about your environment, the company and you. From here the guide then identifies the number of first aiders your organisation requires; so for an office employing 5-25 people under the responsibility of someone who is familiar with health and safety and holds a recognised qualification such as IOSH or NEEBOSH would need to have 1 qualified first aider. However with this being a legal requirement and with each company being different we would recommend you undertake your own review of how many first aiders your company needs.

Alterations – How do we make an application to our Landlord?

There isn’t a business in the UK who hasn’t at some point wanted to alter their premises to either accommodate changes to their staffing arrangements or incorporate changes to update their brand. In many cases the Landlord will need to approve the plans and give consent to the proposed alterations. Is it difficult to obtain this consent and what else should a tenant be aware of?

As a Tenant you should always seek the guidance of the Lease which will stipulate the guiding principles on where consent is required for alterations.

1. The Lease will define the demise (ie the physical extent of your rented floor space). It is important to understand this point as the Landlord rarely allows you to alter anything OUTSIDE the demised area.

2. Some alterations will be allowed without consent. It can be the case that installation of demountable partitioning is allowed, or the placing of signage on a front door or in the lift lobby is permitted.

3. Refer to the ‘Guidelines for alterations’ or the ‘Occupier Guide’ policies. Many Landlord’s or property managers draft guidelines on how to approach applying for consent for alterations and these documents outline the measures a tenant needs to consider as part of their application such as out of hours working, ‘permits to work’ and so on.

The Landlord will want to see the practical issues covered, such as statutory approvals, planning permission and building regulations. Also have regard to housekeeping management, such as consideration to neighbouring properties, tenants or businesses, information to enable the issuing of permits, whether they are hot work permits or permits or permissions to work, or the need to comply with any sustainability or environmental policies that may be present.

Once this has been agreed the Landlord’s solicitors will issue a Licence to Alter. This document records the alterations and helps to identify what elements may form part of any dilapidations claim when the lease expires. (If the works are deemed to be improvements, they are likely to be disregarded at Rent Review.) Once this document has been agreed and signed by both parties then the works can proceed.

There may be other points to consider such as insuring the works or changes to the service charge apportionments should changes to the premises increase the floor space which we haven’t covered and if these are relevant to you then please call TAP on 0800 865 44 50 and we can guide you through any concerns you may have.

Energy Management

2010-07-05T15:30:00.000+01:00

An organisation's energy bills are, more often than not, its largest variable cost and with forecasters predicting bills are set to rise 60% by 2016, it's worth considering a structured approach to controlling this major outgoing.

A primary driver here is for an organisation to save money; the secondary driver is to contribute to the UK's initiative to cut Carbon emmisions following the Kyoto Agreement, The Climate Change Act, The CRC Energy Efficiency Scheme etc and the third driver is to show, stakeholders, supply chain, staff, industry competitors and other connected companies that their Corporate and Social Responsibility (CSR) policy is being followed. For branding and public relation purposes, this is a very important Board level initiative.

Energy use is measurable and manageable but to begin to control these costs and promote the company's CSR objectives requires senior management buy-in and cultural change. Nothing will happen without high level Champions driving home the message and publically broadcasting the progress that has been made; if not, bad habits will easily re-emerge.

So,at TAP we believe there exists a need for all organisations to adopt a structured approach to managing their energy consumption in a clear and manageable manner such that targets are set and reported upon and we see 5 clear steps to getting this underway, namely:

1. Get commitment
This is vital at both levels of the operational spectrum and involves Board room buy-in, communication and cultural change from staff.
2. Understand the issues
This involves an understanding of your own management process, energy usage, the drivers behind the need to change, and knowledge of barriers within, plus familiarity with measurement matrices.
3. Plan and organise
This will involve developing an energy strategy with an MD sign-off,setting SMART objectives and KPIs,an Action plan with key roles and responsibilities and a procurement policy.
4.Implement
This will involve starting on the Action plan and gaining some 'easy wins/low hanging fruit' so that stakeholders can witness progress;initiate training programmes and communicate to top and bottom.
5.Monitor ongoing performance
This will involve aseessing performance against KPIs and a plan for contiuous improvement plus a de-brief on lessons learned.Ideally the organisation should be striving towards independent standards such as ISO 14001(Environmental Management Systems) and 16001(Energy Management Systems).

The over-riding aim of all measures should be to save money by reducing consumption,which is likely to involve checking for waste,leaks and insulation and initiating a maintenance regime that does not rely on reactive response,but rather preventative measures.

TAP is well placed to guide companies through the principals of Energy Management and can direct more detailed requests to experts in the field.

Its not all easy,but its becoming increasingly necessary...bills will rise and Govenrment will legislate to achieve emissions reduction goals.

JUNE E NEWSLETTER

2010-06-26T16:15:00.001+01:00

It’s mid summer and tenants will turn to keeping themselves cool, and so this month we look at the some common air conditioning complaints and the Regulations surrounding annual air conditioning checks – are you caught up in these Regulations? Also, Tenant opinion of Landlords remains disappointingly low.

We take a look at a few comments from the British Property Federation Conference, and also look at a recent update on how Green Leases are fairing in the current climate. What do you think about the way the Government is tackling the deficit? Many small companies would like to see the deficit lowered but is it the majority? We look at a recent survey from the Forum of Private Business.

Finally our Q and A considers some aspects of service charges and how they work.

Air Conditioning Problems - What are the main complaints?

The summer is nearing its peak with the solstice upon us. The sun is high and the rising daily temperatures will, yet again, put a strain on keeping buildings cool. Managing Agents will field a lot of calls regarding air conditioning systems over the next few weeks but what are the common problems occupiers’ experience?

"I’m sitting under a draft" – Often people feel a draft when sitting beneath or, close to, an air vent, and subsequently ask for the temperature to be raised, as they feel cold. The size of a vent has been designed to supply enough air to cool an area of the building, and we have seen occupiers plug these vents which does suffocate the air supply. It is hard to avoid a draft but the Property Manager may be able to adjust the vents to push the air across the ceiling or you may have to adjust the desk layout. Other than turning down the fan speed, or system temperature, which may have knock on effects for the rest of the office, there maybe little else to correct the issue.

"The air conditioning is noisy"– In the summer the fan will need to be turned up to supply more cool air. This can increase the level of noise and can be difficult to cure.

"Pockets of warm or cold air" – This is a common complaint that can highlight an issue with the original office fit out, or equipment failure. It’s usually an issue where either the sensors, which record the air temperature, are faulty or the system serving the floor has not been set up, commissioned or balanced properly.

"No cool air coming from the vents" – Possibly this could be due to a problem with the main chiller because of excessive demand or a refrigerant leak. Report the problem as early as possible.

"There are hot temperatures close to the windows" – Glass will magnify the air temperature close to a window. Where possible seek to install and operate window blinds.

"I’ve opened the window because the air conditioning doesn’t work" – Usually open windows will adversely affect the operation of the air conditioning. It is important to have the windows closed as this will give the air conditioning a chance to operate as it was designed to do.

"Drips over the desk" – With cold pipes running through warm air, condensation can build up and should run away. Sometimes the drains can get block and unfortunately the engineers will need to investigate.

Whilst a faulty air conditioning system is not always due to poor maintenance a Tenant would be wise to have a contingency plan at hand that can assist when the office environment becomes unbearably hot.

For Health and Safety remember there isn’t an upper temperature limit for working in an office but the Health and Safety Executive talk about having an environment which has a reasonable temperature to work in.

Furthermore, in the summer repairs to an air conditioning system can take longer to address. An occupier could help the situation by having a contingency plan that caters for the unexpected and if nothing else have the telephone number for temporary cooling equipment should it be required.

We can help by putting you in touch with the right company for air conditioning problems so please call us on 0800 865 44 50.

Occupiers look for a better deal over Landlord and Tenant relationship at BPF Conference.

Some of the country's largest Occupiers, JD Sports, Deutsche Bank and the BBC, voiced concerns over the archaic structures still pervading within the L+T relationship. There was talk of a lack of flexibility in
leases and an incessant flow of upward only rent reviews from JD Sports Chairman, Peter Cowgill; a call for an audacious and radically different relationship between Landlords and Tenants from Deutsche Bank's Head of Corporate Real Estate David Prout, who also felt that despite swings in market favour over time between each party, there was ''still fundamentally the same framework from over 50 years ago''. This thought was echoed by Chris Kane, head of workspace at the BBC who viewed the outside perception of our property industry as '' a cosy club where nothing much has changed in decades, if not centuries'”.

So, what to do about it?

TAP believes in better communication between L+T, which can be achieved by direct contact and understanding the day to day issues that tenants have to deal with not just in their real estate but as businesses.

Indeed, in a statement reinforcing TAP's stance, Landlord Rick de Blaby, CEO of MEPC said that, particularly in a recession….''building owners have got every possible incentive to ensure that they put their revenue-producing customers at the very top of their priorities. Landlords would do well to learn the art of customer care during the course of the lease, not five minutes before its up for break clause or expiry''

Air Conditioning Inspections…. THEY HAVE TO BE UNDERTAKEN.YOU HAVE BEEN WARNED

As air conditioning systems can account for 50% of a building’s energy consumption, they are, understandably, the target for EU regulation and as such they fall under the Energy Performance of Buildings Directive (EPBD);the same Directive that brought us EPCs and DECs.

To avoid any conflict of interest with maintenance contractors, Inspections have to be undertaken by independent inspectors and should be to a Chartered Institute of Building Services Engineers (CIBSE) standard, known as TM44. The responsibility for arranging the inspection lies with the party who operates the system or has responsibility for the technical functioning of it, which could be either a Landlord or the Tenant depending on the circumstances. Either way, the Regulations are very clear as to the timing of these inspections and so far, in many cases, these HAVE YET TO BE UNDERTAKEN.

For smaller properties, operating systems over 12Kw (ie a system serving a 2,000sqft office or retail unit) YOU HAVE 6 MONTHS LEFT as the deadline is 4th January 2011. For larger systems which is above 250Kw (ie a system serving a 25,000sqft building), these should have been inspected by JANUARY 2009 and sanctions for non-compliance are identical to those for EPC non-compliance, i.e. a series of fines and named disclosure. Thus it is in both the Landlords’ and Tenants’ interests to address the issue immediately.

CIBSE has launched a campaign to address the current lack of compliance (it estimates this to be only 5% so far) and has even suggested that the current enforcer, Trading Standards be replaced by a body more able to act, and more interested.

TAP’s message is that this EU Regulation will result in fines and potentially costly exposure for non compliers but also that the recommendations on energy savings that emerge from the Reports can very quickly cover the cost of inspection. According to Martin Gibbons, Director of Vital Energy, the UK’s specialist provider of EPCs and environmental inspections, he has witnessed an upswing in activity particularly as the timeframe for compliance shortens towards January 2011 for the smaller systems, and goes on to add… "Alongside our increased workload, particularly from Tenants, we are finding that we are getting very positive feedback from customers about energy saving initiatives, confirming that Companies are beginning to see a link between energy savings, cost savings and environmental impact; and with a typical inspection costing around £850, they are able to see a return on this cost in savings, very quickly."

For more information contact us and we will be able to put you in touch with one of our Suppliers and secure you a 10% discount as a TAP recommendation.

Better Building Partnership(BBP) still believe that Green Leases are possible, if only the message could be correctly sold

5 members of the BBP, Keith Budgen (programme director of the BBP, a director of RPI Consult Ltd and a consultant to Hermes), Miles Keeping (Head of Sustainability at GVA Grimley), David Short (Counsel, sustainability and environmental affairs at GE Capital Real Estate-Europe), Siobhan Cross(Partner in property litigation at Pinsent Masons) and Becky Clissman (solicitor and editor at PLC Environment) have had a recent interview published where they reveal their frustrations and difficulties in getting their Green Lease Toolkit to a wider and more accepting audience.

Communicating messages is at the heart of what TAP seeks to do within the Landlord and Tenant relationship, and some of the statements that the panelists’ made reflect this view: Commenting that there have been difficulties, Keith Budgen said….''The driver for Green Leases, and particularly the toolkit, is to raise awareness and to provide a building block for engagement between owners and occupiers.

We still need to overcome significant barriers, such as breaking down the adversarial relationship between owners and occupiers”. Siobhan Cross noted that ''Tenant take up is greater among Public Sector tenants who have tended to sign up to a Memorandum of Understanding (MOU) rather than a Green Lease. Due to economic conditions we are finding it difficult to persuade tenants and non BBP landlords, where deals are time-critical, this isn't a top priority. Hopefully, with market changes and the CRC in force, the incentive will be greater''.

David Short said ''We want to work with our tenants, especially during the downturn, so as to retain those we have and retain others. Tenants need to understand that by together running the building more efficiently, we will both save money. It’s an issue of timing, complexity and lack of understanding.''

Also commenting that he felt occupiers don't want it,... ''If it became a selling point for attracting tenants into buildings, every landlord would want it''. Noting that the Toolkit can be very useful in multi-tenanted buildings, he went on to say about Tenants... ''They want their Landlords to help them, and it can be very frustrating if they are unable to obtain data from the landlord.” Both Becky Clissman and Miles Keeping went on to add that ''Making the connection between those responsible for CSR policy and those negotiating leases would change the latter's perspective... B.C....and…. ''There's a disjoint between property decision-making and corporate decision making.... there's a willingness but a lack of knowledge on what to do ''M.K........ again, the point being here that organisations are failing to see the connectivity of business related activity and real estate.

On the subject of CRC and Green lease take up David Short's positive message was that... ''It gives Landlords of multi-tenanted buildings, where typically they purchase the energy, an incentive to reduce energy consumption and carbon emissions because those emissions are theirs and will determine their league table position.''

Keith Budgen added that... ''Many organisations don't understand CRC and how it will affect them. It’s an opportunity to use an MoU and agree a non-legally binding document that enables parties to save energy in their building''.

Suspicions, on behalf of Tenants, were raised however by Siobhan Cross as to whether or not Landlords are ''in fact lining up a way of passing down CRC costs to Tenants?'' ...Keith Budgen responded with evidence that BPF sponsored workshops ''showed that a significant number of occupiers agree to cost sharing as long as its fair and reasonable''. But as Becky Clissman stated, no one will know what this means until CRC clauses get tested; an MoU gets round this as the parties are working together in ''a consensual approach''.

So, in conclusion there is a very long way to go to reach agreement as an industry about how to incorporate Sustainability issues into commercial leases; and still at the heart of it all is the need for a change in the adversarial relationship between Landlord and Tenant.

A clear desire to see the Government deficit reduced.

Following The Forum of Private Business quarterly referendum, almost 80% of Small and Medium Businesses (SME’s) in the South East support a rapid deficit reduction. This was echoed throughout the country where similar surveys were conducted. But there was still caution with concern over where the potential public sector cuts may strike.

In comparison to the strong opinion for cutting the deficit only 41% said introducing fairer taxes should be a priority and only 23% thought access to public procurement should be improved. Other areas of interest in the survey were that simplifying the tax regime ranked high on the list of desires as well as stronger regulation for Banks and Utility Companies. The Forum’s Hampshire based Head of Policy, Matthew Goodman said “the figures showed the depth of concern over public debt among business owners in the South East. He also went onto say “Small firms in the South East clearly appreciate the need to tackle the UK’s vast amount of public debt and they appear to be behind the new Government’s effort to do so.

“However, we would hope that crucial small business support services, both in the region and the wider UK, aren’t sacrificed in the Government’s drive to cut costs. Smaller businesses are key drivers of growth and employment and their continuing survival is crucial to Britain’s economic recovery.”

Service Charges – What do they cover and how do they work?

Service charges are the monies the Landlord uses to maintain the common parts of a property, or those services that are provided for the mutual benefit of the occupiers. They are collected in advance from each occupier every quarter but how are they calculated and apportioned?

Each year the Property Manager calculates a budget or forecast of expenditure and broadly this will involve 2 distinct areas; the first will be the regular utility and service contracts and the second will be the capital projects where items have been ear marked for repair or works due to changes in legislative requirements. What can be included in the budget will be governed by the terms of the lease. It is important a tenant understands the costs and if necessary have a meeting with the Landlord or Managing Agent to understand how the budget has been compiled.

How is my element of the budget calculated? There are a number of methods available to apportion the costs such as using the area occupied by the tenant as a percentage of the whole lettable area. In most instances this will be net lettable area as a percentage of the whole net lettable area. It is worth noting that should a tenant occupy a property with vacant space the Landlord will be responsible for the element of service charge relating to the vacant areas. Generally a tenant can not be liable for costs relating to Landlord’s vacant space. Again it is important to understand how their contribution to the service charge is calculated.

What happens at the end of the budget year? At the end of the service charge year the Property Manager will reconcile the expenditure and issue a final account. If there has been an ‘over spend’ then an additional invoice will be raised for each tenant. If there has been an ‘under spend’ then there will be a credit invoice detailing the amount due back to the tenant. The service charge normally takes a few months to reconcile and so there will be an overlap with a new budget being issued and an old reconciliation being prepared, but whoever is compiling these figures should have a good understanding of the closing costs and projected budgetary forecasts.

Are there any industry standards that Property Managers work to? The Royal Institution of Chartered Surveyors, British Property Federation, British Council of Offices and many others have compiled The Code of Practice on Service Charges in Commercial Property which outlines a guide for Best Practice. Many Property Managers do try and work to this code and it would be worthwhile to enquire at the outset whether your Landlord endorses such practices. We have a link to the ‘Code’ on our site which you may wish to consider.

If in any doubt please call TAP on 0800 865 44 50 and we can guide you through any concerns you may have.

May e newsletter

2010-05-25T10:25:00.000+01:00

So the long awaited Election is now behind us and Britain enters some unfamiliar waters, albeit not completely unchartered. What will this Electoral Spring clean mean, then, for Businesses? We take a look at a Company Risk report to see if confidence is returning.

We, again touch on Business Rates to see how both Landlords and Tenants might be able to help each other; we look at potential savings in Water efficiency, Civil sanctions for environmental offenders and also offer up some Telecom/Data help for those looking for an upgrade on Communications.

Finally our Q and A considers some aspects of self –help for Corporate compliance which might be relevant for your business.

Evidence points to business confidence returning….

Britain is now beginning an austere period but even so it seems that, according to recent research, company confidence is returning. As the pound regains some of its strength against the euro, imports are becoming more affordable and coupled with (a degree of) political stability, is leading some to believe that future business prospects are more favourable than they were 18 months ago.

Recent research, conducted by Fidelity Income Risk Monitor Index (FIRM), supports the idea that the number of business failures has, and will, decrease throughout 2010. Even though the general outlook is looking better some sectors still continue to struggle. Do you fall into one of these sectors?

The report commented on the 3 main sectors; Offices, Retail and Industrial and found at the peak (Q2, 2009) there was a failure rate across all these sectors of 3.51%. Not surprisingly the Industrial sector was considered the riskiest, followed by Retail and the Office sector. Currently FIRM have revised their failure rate down to 2.96% due in part to the belief those companies that were weak have now already failed and those that remain are more resilient to economic challenges being experienced.

The RICS identify ‘Property Costs’ as being the second largest outgoing that a firm will budget for, each year. Furthermore, the commitment to a commercial lease will be the longest contractual arrangement a company will make, and often the most inflexible. For a tenant, thoroughly understanding the leasehold obligations is paramount

in ensuring your business remains safe. It will also help to support the relationship an occupier will have with their Landlord because any discussions will be meaningful and an efficient use of time.

Experience tells us that Landlords have a greater appreciation for those tenants who can demonstrate an understanding of their obligations. A company that appreciates those obligations will operate more efficiently and will be better prepared for these challenging times.

TAP can guide you through the daily complexities that flow from signing a commercial lease, simply call us and we can talk you through any issues you may have with your occupation.

Second Rate Occupation?

Are you a Landlord who would like to reduce the rating liability across their portfolio or are you a tenant who may want short term space. Both Landlords and Tenants may want to be looking at ways of making use of vacant premises in order to:

1. reduce Landlord's overheads, and

2. generate a use for a range of occupiers who may need short term flexible accommodation...

The 2 can come together and could well help the Landlord with his Rates liability, by triggering Empty Property Rates Relief.

As we have previously reported, April 2008 saw the introduction of tighter restrictions for Landlords on their ability to claim relief, in an effort to encourage them to re-let premises however this has stimulated a dramatic backlash from those same Landlords who have endured recessionary pressures over the past 18 months leading to a harmful reduction in Tenant demand.

A loophole does exist, however whereby a Landlord can look to secure temporary lets and if this is achieved for periods of 43 days, this time frame allows him to apply for 3 months empty rates relief; at the end of 3 months the Landlord can agree another 43 day 'letting' and continue this process indefinitely. In order for this to work, both the Tenant and Landlord need to be on the same understanding and one key area is in being able to prove ''occupation''. This needs to be physical and not merely being able to prove to the Billing Authority that there is legal possession granted.

Dated photographs should be taken and a recognisable paper trail needs to exist to, at the very least, give evidence of intent.

Landlords, however also need to be vigilant of those looking to exploit the loophole even further and there is growing evidence of rogue traders signing up for temporary lets, having rates bills diverted to them and then walking away after 43 days. If there is insufficient evidence of 'occupation' the Authority may well throw the entire Rates bill at the Landlord. That same Landlord should be wary of the Tenants requesting their share of the Rates saving at the outset of the 3 month period and any such suspicions should ring alarm bells.

Generally, however Authorities are not seeking confrontation but will be on the lookout for evasions and therefore we would urge all parties to be as up front and clear as possible so that the Authority has a chance to inspect and form their view; TAP would however envisage this loophole being closed, as its usage is becoming more widespread.

TAP has access to leading Rating advisors so contact us for further information and clarity.

Water Efficiency....... a potential tax benefit?

Changing weather patterns and population growth are adding pressure to the available water in England & Wales. The Environment Agency predicts that UK groundwater levels will begin to decrease in 15 years and that within 40 years the amount of water available in English and Welsh rivers will be 15% less than current levels. As with Energy, when will the Government begin to increase tax on water consumption?

However, presently companies can receive tax breaks if they invest in water saving technology. Benefits can be obvious in terms of cost savings (a manufacturing company can readily be spending 1% of turnover on water related activity) but more obliquely, companies that are seen to be taking efficiency measures can satisfy the increasingly demanding needs of Stakeholders, who are looking ever closer at CSR matters. This can lead to customer retention and improving prospects for new business.

Water supply to a business is either direct, i.e. taken from a tap or a company's water resource or indirect, i.e. that which is used to produce a product or service and it tends to be the control of the Direct supply that can make the most meaningful difference to a user, and a systemic approach could see consumption reduced by 50%. Methods to consider will include water saving and recovery/re-use devices, leakage detectors/shut-off systems, the use of sprays and jets for cleaning or aeration sprays under lower pressure, metering and monitoring systems which will be used to evidence and benchmark usage and can also be used to compare data with other similar companies.

One major cost saving can come in the form of a Tax break, whereby companies paying UK Corporation Tax can claim 100% of first year capital allowances when purchasing eligible water related products for their business.

Many water efficient technologies are also eligible for tax relief and appear on the Water Technology List, where over 2,000 are listed and you can also visit Business Link (Water Efficiency) to see how to introduce good practice into a wide variety of workplace environments.

TAP has access to industry leaders in Environmental consultancy and we can put in touch with our service partners, so feel free to contact us.

Civil Sanctions for Environmental offences

Upon the understanding that most environmental offences are unintentional, a new and more proportionate Order has recently come into force which allows the environmental regulator to impose Civil Sanctions on an offending business, rather than going straight to prosecution with penalties and/or imprisonment.

The Environmental Civil Sanctions (England) Order 2010 came into force on April 6th and is drafted to try to allow greater flexibility for both the Regulator and business and, whilst currently only effective in England, starts out by looking to cover offences which might cause harm to water and wildlife or create poor drainage and waste management. Sanctions which can be used include:

 Compliance Notice (written notification to seek discontinuance or recurrence)

 Restoration Notice (written notice to restore harm caused by an offence)

 Enforcement Undertaking (a voluntary agreement by a business to take corrective action)

 Fixed Monetary Penalty (low level penalties ranging from £100 for an individual to £300

for a company)

 Variable Monetary Penalty (for more serious offences up to £250,000)

 Stop Notice (written notification to cease causing harm)

There are opportunities for the offender to object or appeal to an independent Tribunal however non-compliance with any of the sanctions can then lead to prosecution or legal action which of course is where the criminal procedures take over.

TAP has teamed up with industry leading Environmental consultants to assist businesses in this field and we would be delighted to direct your enquires to allow your business to plan for perceived or real risks.

Telecoms & Data; Moving doesn’t have to be complicated?

Whether you are forming a new business and are just about to take new premises or are relocating, getting your telecoms configuration right is very important according to STL Communications Limited. Like moving house, maintaining communication links can be very stressful and is very often business-critical. Planning for Telecoms and data is vital and TAP has set out below a few things to be thinking about to assist you in that process.

 Regardless of an old or new system, line installation and number allocation can take anywhere from 2-8 weeks depending upon the quantity required.

 Fast broadband is essential and so it is prudent to check with your ISP the available speed at your new location. The speed is very closely linked to your proximity to a telecoms Exchange.

 For the sake of business continuity you may be looking to keep your existing telephone numbers; however a move to a new Exchange can often remove this possibility, although an expensive call divert is possible. New technology can assist here, so TAP recommends detailed research to see how things have moved on.

 New IP telephony gives you the option to keep existing numbers, reduce lead times, increase flexibility and simplify installation. Voice over IP (VOIP) transmits telephone calls over data cables and also means that you should only need one land line into the building with all other lines working from THE CLOUD.

 You will be hearing a good deal more about THE CLOUD in months and years to come, as this generic term relates to Internet enabled services controlling your Telecoms and Data remotely, whereby systems can be hosted off-site and your infrastructure is accessed via an Icon into the internet.

 This technology can provide a complete communications solution between Office, mobile, home and your entire infrastructure which can save you time/money and aggravation. Its flexibility can make planning for the future a good deal easier, allowing you to 'bolt-on'/remove additional/surplus capacity as and when required.

Because businesses infrequently make a premises move, it’s hard to keep up with how technology has moved on, but this can be a great opportunity to review how systems have evolved. The traditional 'workplace' is being affected by several factors, namely square footage cost, congestion and associated lost hours but also by technology, allowing staff to work more remotely and flexibly.

TAP’s data and Telecoms partners are happy to discuss how your next move or upgrade can be improved; please call us on 0800 865 44 50.

Where can I get help to meet my leasehold obligations?

I understand what my Landlord is responsible for, as part of his obligations, under the terms of lease. I need to think about my covenants and wondered if there was any company that could help me comply with my obligations?

There are many companies that can assist you in understanding your obligations, some better than others. Early on within any decision making process, as a company, you should decide who, within the organisation will be responsible for this part of the business. When you have identified an individual, think about their current role and see how much time they could devote to ensuring that property compliance is achieved. When you have reached this point, then those appointing an external company or consultant will have a better understanding of how much support is required.

There are aspects of occupying a commercial property where there will be a need to maintain, monitor and reflect on property matters on a regular basis. This may include, cleaning windows, maintaining air conditioning units, updating fire risk assessments, reviewing asbestos management reports or portable appliance testing. Having a stringent monitoring and management system is important in order to demonstrate to the regulatory authorities that matters are being kept under control. If a company has no awareness of the elements required to meet compliance, then this would increase any risk exposure should an inspection by a regulatory body, such as the local fire authority, wanting to look at a Fire Risk Assessment be undertaken.

It is important to identify what obligations you are required to carry out and then decide whether you need to appoint a Facilities Management Company, or a team of consultants who can guide you through which sub contractors you will need to have to achieve compliance. ‘House keeping’ cannot be under estimated as it reduces the risk to your company by identifying early on what areas of your business require monitoring or maintaining.

There is no simple answer to your question without first deciding how you want to approach the problem.

If in any doubt please call TAP on 0800 865 44 50 and we can guide you through any concerns you may have.

Real Estate guidance

2009-11-04T14:51:00.001Z

To provide rapid access to all relevant and available Real Estate guidance as required by Commercial Tenants direct to the point of need. To make occupying commercial property easier and avoid the belief that seeking professional assistance needs to be expensive.
Our service will save you time and effort in searching widely for the answer to your problem, providing you with access to experienced consultants by telephone or e mail. Knowing where to turn, who to ask and, understanding the options available does not have to be difficult.
TAP-In to our program where we provide a flexible service and you can choose what you want. The comfort of regular updates to keep you informed with up-to-date industry comment and material relating to your occupation, such as Sustainability issues, Property Law, Health and Safety etc or access to Industry Bodies/Institutions, their websites and Guidance important to you. This information assists you, as a better informed Tenant, in your communications with your Landlord.
TAP In has been designed to...
SAVE YOU MONEY AND GENERATE VALUE TO YOUR BUSINESS BY BECOMING A BETTER INFORMED TENANT.

Business property issues

2009-10-04T12:07:00.001+01:00

Every business occupies property and must deal with the issues which that entails.

Rent reviews, repairs, alterations, environmental compliance, health & safety regulation are just a few of the property-related issues that business faces.

TAP puts expert guidance on all of these just a phone call away. Our service is expert, impartial and cost effective.

Renewing a utility contract; is it becoming harder to secure good terms?

2009-09-01T19:42:00.000+01:00

The downturn in the economy is having an effect on all sectors, not least securing favourable terms for the supply of electricity and gas contracts. This can result in some energy companies offering their customer’s very onerous renewal terms and in one instance a business was asked topayadeposit equivalent to7months usage in advance.

However this isn’t just happening to individual companies.It is also an issue managing agents face when their clients create complex tax structures for property ownership which an energy company cannot understand. As with all commercial businesses,energy companies tend toshyaway from risk and items they do not understand. Therefore having off shore companies with no assets or acceptable accounts will discourage an energy company offering good market terms. Tenants in a multi occupied building may not be exposed to the issues their Landlord’s managing agent is having in reaching good terms but in the current economic climate, with pressures to maintain service charges low it is almost certain they will be using their buying power to secure good terms, but it may not be easy.

Openness and transparency of financial information is helpful and demonstrating a good credit history, with a clear company structure, will assist in securing the best terms possible. Furthermore, using an energy broker may also be helpful, as many will have long and trusted relationships with the larger gas and electricity companies, and may be able to support your requirement for more favourable conditions. If you do not have the comfort of having your energy bought for you through a managing

Resolving a service charge dispute without upsetting the Landlord

2009-08-01T19:29:00.004+01:00

In response to economic pressures, Landlords and Managing Agents are reviewing service charge budgets to reduce running costs. In simple terms where service charge expenditure is a commodity such as electricity or gas, shopping to achieve the cheapest unit price is a prudent initiative. Where Landlords or Managing Agents are looking to reduce costs on service based contracts it may be difficult to achieve this without impinging on the service level offered. How should you challenge this or resolve a situation where you do not agree with a service charge apportionment or an element of expenditure? What ever action a Tenant decides to take, always look to preserve the relationship with the Landlord. Often this can be lost when a Managing Agent or Landlord refuses to discuss the matter.

So, what are the options?

There are several approaches to such a situation; the first would be to appoint a service charge specialist who can review the situation and share in any subsequent savings; the second would be for the tenant to persuade the Landlord or his Managing Agent, the error of their ways and convince them they need to reflect on either the level of service charge or the services on offer, or finally should the lease allow for it or an agreement is reached between the two opposing parties, to refer the matter to the RICS for mediation.

The first and second options often result in either souring the relationship between the Landlord and the Tenant, or a stalemate where neither is prepared to discuss the situation or concede the point. When a long unexpired period remains on the lease, neither of these options would be a good to note that in many instances where a lease contains a tenant break option it will be conditional on all other obligations being met in full. An unresolved dispute may affect thevalidity of any such notice.

Where discussions matters have stalled, consider referring sending the matter to mediation which is a simple and effective method to progress a dispute. So long as the Landlord and Tenant agree to allow this as a method of resolving a service charge disagreement, they must also agree to accept the findings of the expert. Agreeing to move along unresolved difficulties in this way will preserve the strong relationship between the Landlord and Tenant. In the current market this is of paramount importance.

The code for leasing business premises 2007

2009-08-01T19:07:00.008+01:00

When you negotiate a new lease you should ask if the lease is to be “Code compliant”, and if not, you should enquire as to why this is the case as the Code has distinct advantages for tenants. In the present financial climate, many landlords are finding it hard to get good tenants and therefore tenants should be aware that they are in a much better position to negotiate lease terms that are more “tenant friendly”. The Code is advisory and not legally binding and therefore cannot be enforced by law on a landlord. It was, however, launched by the government to achieve a fairer balance between the landlord and tenant and greater flexibility in commercial lease terms.

It is important for a tenant to raise the matter of the Code at the negotiation stage so that any Code compliant terms are included in the Heads of Terms before they reach the lawyers advising on the lease itself. In this way, the actual legal side of the transaction should be cheaper and shorter in time to complete!

The main benefits of the Code for tenants are as follows:-

1. If you have a “break clause” in the lease the Code provides that the conditions attached to the break must be clear and any pre-conditions limited.

2. Rent reviews should be clear and should not contain provisions that are aimed to achieve a headline rent.

3. On transferring the lease the only restriction on such a transfer should be obtaining the landlords consent, which should not be unreasonably withheld or delayed, and with limited preconditions to such consent. 4. It contains recommendations as to service charge information which should be given to tenants at the negotiation stage. 5. It states that the tenants repairing obligations under the lease should be appropriate to the length of the lease and appropriate to the condition of the premises at the start of the lease. 6. It contains recommendations on alterations, change of use and insurance.

Do electricity meters measure enough?

2009-07-01T17:06:00.008+01:00

Industries and professions across the country are firmly focused on reducing electricity usage, especially with the “cap & trade” CRC scheme which comes into effect in April 2010, but how can you meaningfully measure consumption?

It is safe to assume all buildings will have an electricity meter but what information can it provide? Simply, the information is basic providing just a measurement of units consumed. These days measuring usage is not enough as it is essential for companies to analyse their consumption “profile”. That is to say it is important to understand how the electricity is used and by what equipment. Once you understand this aspect you can then look at:

Energy wastage – When all usage has ceased is there any equipment which is still on that may consume electricity but which is not required?
High consumption data – When and what causes it? Is it necessary?
Weather patterns – How do they influence usage?
Benchmarking – Monitor regular usage and maintain a steady usage.

Larger users (where peak demand of electricity is above 100kW) will already have half hourly meters and the supplier company will be able to record usage every 30 minutes. However this data doesn't have any details attached to it so you can not record the consumption of individual items of equipment. As a result more meters will need to be installed to measure the consumption of individual pieces of equipment such as pumps, chillers, lighting circuits and so on. This will aide transparency of usage. The new “smart” meters will give more information to allow proper strategies to be adopted to reduce unnecessary energy consumption, and landlords are now moving towards installing this equipment. Hopefully savings will come from better use of this expensive commodity.

Your next Assessment.. How will you be rated?

2009-07-01T16:36:00.003+01:00

The 30th September 2009 sees the publication of the new Rating List which will identify the Rates Liability of your premises, to be effective as of April 2010. The Rateable Value of your premises is re-valued every 5 years and the Valuation Office Agency use a date (The Antecedant Date) at which rental levels are assessed, and this process takes into consideration the prevailing market conditions at that time; for the forthcoming Re-Valuation. The Antecedant Date is 1st April 2008.

This date is of great significance because in many cases it represents just about the high rental point in the Property cycle and is to be compared to the low rental levels used at the last Revaluation in April 2003, which dictate your current Rating Bill. Consequently your rateable value will probably see significant increases: with the Retail Sector seeing the largest average rises and London's West End Offices seeing the largest specific increases; most other sectors are likely to witness average rateable value increases of between 10-15%.

Space is limited to identify all of the likely Sector ''winners'' and ''losers'' but it remains clear that the 2010 Revaluation comes at a particularly unfortunate time when businesses are looking to reduce outgoings and will be faced with, in some cases, a doubling in their Rates assessments.

The message is to prepare for a likely increase in your Bills and budget accordingly; however as with past Revaluations the Government has introduced a scheme of Transitional Relief to spread the increases over the 5 year period...this has yet to be announced but is anticipated prior to 30 Sept ''.