In FM World it was reported that 80 per cent of respondents to the latest FM 100 Poll believe facilities managers should be involved in negotiating service charges paid by their organisation to the landlord. Many FMs have said they are not involved, but would like to be.
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An article on the Rentman website notes that the largest ever leaseholder tribunal case between managing agent Peverel – owned by the family trust of property tycoon Vincent Tchenguiz – and London’s St George Wharf Residents’ Association has been settled out of court for an undisclosed seven-figure sum.
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Andy Stern in the Property Owners Directory points out that the Lands Chamber of the Upper Tribunal has ruled against a freehold owner that claimed legal fees in its bid to recover unpaid service charges. The London Rent Assessment Committee had initially determined that a lessee of Castelnau Mansions in southwest London should pay £11,258.02 in unpaid service charges for his flat. An amount of £4,663 for legal fees was included as an item in the service charge accounts.
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A report in Inside Housing states that Westminster Council has said it wants to reward those actively seeking work while at the same time discouraging a ‘benefits culture’. Currently residents are given priority according to need including factors such as homelessness, medical needs and young children. Now the council has decided to give priority to households where the main applicant has been working under a written contract for at least two years.
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Brian Milligan of the BBC has highlighted the fact that flat-owners’ complaints about service charges have risen by 46% in two years to 7,600, figures show. They queried the amount they were being asked to pay for maintenance and repairs, the Leasehold Advisory Service for England and Wales said. In some cases flat-owners have been asked for payments of tens of thousands of pounds by those who manage the blocks they live in. But an agents’ association said actual numbers of complaints remained low.
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Patrick Cannon in Property Week notes that the Solicitors Regulation Authority (SRA) has recently published its “Draft supervision and enforcement strategy for conveyancing”, which it plans to finalise in October this year. This paper explains how the SRA will deal with – or as the paper puts it, “engage with” – solicitors whose conveyancing work is in breach of the new SRA Handbook which is effective from 6 October.
The new handbook is intended to move away from prescriptive rules and introduce more flexibility. To that end, there will be 10 mandatory principles, fleshed out by the code of conduct with lists of “outcomes” and “indicative behaviours”.
The rate of shopping centre construction activity has fallen to similar levels seen during the early 1900s recession, limiting opportunities for retailers to expand, according to the latest research from CB Richard Ellis, reported in Shopping Centre.
Shopping Centre development has fallen to less than 25 percent of levels recorded in the first half of 2007, immediately before the onset of the credit crisis, and continues to contract in Great Britain with new completions set to provide less than 3m sq ft of space in 2011. More than half the total of new shopping centre space completed this year is accounted for by Westfield Stratford.
However, unlike the early 1990s recession when new scheme proposals and consent levels declined sharply, the overall development pipeline has remained relatively stable. The decline continues to be more to do with nominal delays that schemes being scrapped altogether, albeit “distressed” schemes – those where developers are in administration or cannot progress schemes for financing reasons – have inevitably grown in number.
Due to the length of time it takes to get planning consents and the cost of holding land for development, it is clear that some shopping centre schemes will inevitably be cancelled resulting in further pipeline contraction. CBRE expect the current pipeline total of around 60m sq ft to fall to about 40m sq ft over the next three years.
According to a report by Property Week, the Occupier Satisfaction Survey 2011 questionnaire based on the Code for Leasing Business Premises, shows that commercial property tenants in the UK are slightly more satisfied with the service they receive from landlords than last year, although service charge arrangements remain a particular area of discontent. The survey was commissioned by the Property Industry Alliance in conjunction with the UK chapter of CoreNet Global.
In an article in Property Week, Michael Kilner of Maples Teesdale looks at some practical considerations for landlords and tenants, when leases near expiry. Landlords and tenants begin to focus on the condition of the premises and the likely cost of complying with the tenant repair covenants. Those costs can have even more impact on the parties during an economic downturn.
• Give your tenant lots of notice and consider serving a schedule of dilapidations between 12 months and six months before expiry or immediately following service of a break notice. This will encourage early settlement and make a tenant reconsider leaving because of the potential costs involved.
• Ensure all deeds are sent to the surveyor instructed, including any agreements for lease or licences for alterations and subletting. Licences to sublet sometimes include alteration provisions.
• If a schedule is being served well before lease expiry, consider whether the lease permits you to inspect the property, carry out the repair works
• and recover the cost from the tenant as a debt during the lease term.
• Give notice requiring reinstatement of alterations (if required) well before lease expiry. Failure to do so may result in such claims being lost.
• Consider whether any subtenants may also owe direct obligations to you and whether or not to serve schedules or notice to reinstate them.
• Before lease expiry, avoid creating evidence of an intention to redevelop the premises or make structural alterations because this could adversely affect a dilapidations claim.
• If a tenant is in administration, consider serving a schedule of dilapidations immediately to increase your chances of being successful in any dilapidations claim against the tenant.
• Re-inspect the premises immediately following lease expiry and ensure you have a good photographic record of any disrepair.
• To help substantiate a claim, ensure any contractor you instruct to carry out the repair works bases their tender for works on the schedule of dilapidations and that they produce appropriately itemised invoices, even if other works are also required.
• When you decide to vacate a premises, instruct a surveyor to carry out an assessment of your potential dilapidations liability.
• Consider instructing a solicitor to obtain such a report for you to ensure the document benefits from privilege and does not have to be disclosed at a later date.
• Try to find out the landlord’s plans for the building. Check to see if any planning applications have been made. If it becomes clear the landlord is going to redevelop the premises or make structural alterations, you may be able to defeat the landlord’s dilapidation claims.
• If the landlord has not made any plans, consider actually carrying out necessary works before your lease expires to minimise any loss of rent claim.
• Ensure your surveyor inspects the premises immediately before lease expiry and accurately records the condition by reference to photographs.
• Consider obtaining a valuation report from a specialist valuation surveyor to see if the value of the premises is likely to be affected by any disrepair.
• Check whether or not the landlord has complied with any notice provisions in the lease or any licences in relation to reinstatement.
• Make a provision in your accounts for dilapidations because the landlord usually has 12 years from lease expiry to bring a claim.
The RealService Best Practice Group (RSBPG) has published its second benchmarking Index, which shows the extent to which some of the UK’s leading owners and managers are complying with the requirements of the RICS Service Charge Codes for commercial and residential properties. The results show that property owners and managers are still finding it challenging to demonstrate compliance with the requirements set out by the RICS.
Read the full report here