September e newsletter

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

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

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?

1. 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.
2. Look at reducing the areas that rodents could access. 
3. 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.
4. 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.