January e newsletter

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?

1. Select your method of calculation as there are a few. Two such methods are Greenhouse Gas Protocol or ISO 14064.
2. Define what parts of the organisation should be included in your calculation.
3. Collate the data such as meter readings or fuel type if looking at vehicles.
4. Convert usage into CO2e by using credible conversion tables.
5. Have your data and calculations verified using a recognised organisation such as The Carbon Trust Standard.
6. 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

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: -

1. Clear the snow early in the morning as this prevents it from becoming too compacted.
2. Use salt or sand and not water to melt the snow.
3. 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

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.