Industry comment, updates and news from the Websters team.

Retail landlords fail to comply with RICS code

Wednesday, December 12th, 2012 in Commercial, Landlord, Managing Agent, News, Service Charge

In a report by Property Week, the Service Charge Operating Report (SCOR) for Retail 2012,based on the service charge cost data from 100 shopping centres with a total lettable area of circa 50m sq ft and yearly expenditure of just under £300m, shows that only 4% of shopping centre landlords show evidence of how service charge accounts are prepared, despite this being a key recommendation of the RICS code of practice. The report also revealed that only 54% of landlords are having annual reconciliation statements signed off by an accountant or surveyor. Finally, the report showed that shopping centre retail tenants are, on average, paying between £4.34 and £6.68 per square foot of space they rent but the reason for this wide cost gap remains unexplained.

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Court orders £4,000 payment to tenants from hell

Sunday, November 25th, 2012 in Landlord, Managing Agent, News, Residential

In an article in This is Money by Tina Walsh, a spokeswoman for the housing charity Shelter was quoted as saying that changes to the regulations surrounding tenancy deposit schemes mean that, from 6 April 2012 landlords have up to 30 days from the start of a tenancy to put the deposit into one of three official schemes and inform the tenants that they have done so. The penalty for failing to do this will vary from one to three times the value of the deposit. In this article Tina Walsh reports her problems when attempting to evict ‘tenants from hell’ having failed to follow the rules.
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Bad Day for Landlords?

Tuesday, November 6th, 2012 in Commercial, Landlord, Managing Agent, News, Service Charge

Ralph Bullivant of Hill Dickinson notes another instance where landlords will need to be even more vigilant than normal on the quarter day with a view to taking prompt enforcement action against those tenants who have failed to pay their rent, especially if there is a suggestion that they may be in financial difficulties and possibly heading for administration. In The High Court decision, Leisure (Norwich) II Ltd -v- Luminar Lava Ignite Ltd, it was held that, when rent is payable in advance and falls due for payment prior to the commencement of the administration,  it is not payable as an expense of the administration and the landlord must stand in line with all the other creditors.

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How the court will decide the terms of a new lease on a lease renewal

Friday, October 5th, 2012 in Commercial, Landlord, Managing Agent, News, Residential, Service Charge

In Ragge & Co’s Property Update, it is pointed out that, if the parties to a protected lease cannot agree the terms of the renewal, they will be decided by the court and the burden of persuading the court to change the terms of the existing tenancy rests on the party proposing the change. In addition, the High Court has held that a lease with an all-inclusive rent should be renewed on terms which provide for a separate variable service charge.

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Service Charge Payments – Bankruptcy of Managing Agent

Friday, October 5th, 2012 in Landlord, Managing Agent, News, Residential

In an article by Hip-Consultants one particular problem that can occur when the freehold of the block is owned by a management company (particularly one which is not owned by the tenants) is reviewed.  If a significant number of tenants default on their service charge payments this can leave the management company unable to settle its debt and force it into administration or liquidation. This can be a major issue for other tenants in the block as it means that the building and grounds are unmanaged and worse, potentially uninsured. This can render all of the flats in the block unsaleable or at best less valuable.

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VAT on landlord-provided services

Friday, September 14th, 2012 in Commercial, Landlord, Managing Agent, News, Residential, Service Charge

KPMG has reported a case concerning services provided by a landlord and whether such services are subject to value added tax (VAT) In this case the taxpayer rented offices under a lease which provided for three “rents”, for occupying and insuring the building as well as providing certain services. The landlord did not “opt to tax” and thus was not charging VAT on any part of the rents, including the services. The taxpayer sought to reclaim VAT on the services on the basis that the services for which the “service charge” relates were taxable transactions. HM Revenue & Customs rejected this claim on the grounds that the letting of the property and the provision of the services constituted a single exempt supply. The case was referred The Court of Justice for the European Union for resolution.

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British Land is the Only Landlord to Achieve Platinum Standard at PMA Audits

Thursday, August 23rd, 2012 in Commercial, Landlord, Managing Agent, News, Service Charge

4-Traders has reported that British Land has scored extremely highly in this year’s independent Property Managers Association (PMA) retail centre management and accounting standards audit review. The PMA  introduced the quality assurance programme in 2009 to monitor landlord and managing agent compliance with the RICS Service Charge Code.

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Service charge warning as Right to Buy sales pick up speed

Thursday, August 23rd, 2012 in Landlord, Managing Agent, News, Residential, Service Charge

Sales through the revamped Right to Buy scheme, launched in April, are likely to pick up speed, as it offers 2 million council tenants and 500,000 housing association tenants dramatically increased discounts when buying their home. Writing in 24housing magazine, Emma Duke, associate at Anthony Collins Solicitors, said that both councils and housing associations needed to ensure details on service charges were effectively communicated to avoid potential Leasehold Valuation Tribunal.

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