July e Newsletter

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

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

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.