Tuesday, June 2nd, 2009 in Service Charge
It has been reported in Property Week and Retail Week that Westfield Shopping Centre has dropped its service charges for tenants.
The top weighted rate for 2009 of £12.98/sq ft – compared to the original budget projection of £13.94/sq ft that was given to retailers around Christmas 2008.
Driven by ‘unhappy retailers’ who campaigned for a reduction in overheads, it seems this has been achieved by a mixture of cost cutting and streamlining services.
Tags: service charge, shopping centre service charge, Westfield shopping
Thursday, April 16th, 2009 in Commercial, News, Service Charge
The majority of commercial service charge leases are drafted on the basis that the service charge is paid in advance. There are thus large sums of money lying in service charge bank accounts, on which interest accrues throughout the year.
(more…)
Tags: service charges
Wednesday, April 15th, 2009 in Landlord
When we started specialising in service charge audits they were frequently undertaken as part of the property owner’s general annual audit. This was not a satisfactory situation because specialist knowledge is needed for accurate service charge accounting assessment. (more…)
Tags: audit, property, service charges
Monday, April 6th, 2009 in Residential, Service Charge
Property Week Law Report summarises a recent case between the Peabody Trust and Paddington Walk Management. It clarifies the steps that managing agents have to undertake and the associated timeframes in order to recovery service charges.
The case highlights two points: first, the hurdles landlords and management companies face in recovering service charges and, second, why there are so many disputes in this respect.
Summing up: Paddington Walk Management v Governors of Peabody Trust
The trust disputed a claim of £160,000 for service charges by Paddington Walk because of late claims and a lack of consultation.
The county court held for the trust on the points of lateness and lack of consultation.
It said managing companies needed to comply strictly with the Landlord and Tenant Act 1985.
Tags: service charge law
Monday, April 6th, 2009 in Landlord, Service Charge
An ongoing discussion between large retailers and the UK’s biggest landlords (members of the British Property Federation) has surfaced because retailers object to paying rents quarterly in advance saying this causes them cash flow issues. Responding, the BPF landlords ran a pilot scheme in four shopping centres to reduce overheads through service charges by delaying maintenance projects and ”and by mutually identifying changes to service requirements.”
This is very interesting because it’s been historically the landlord who sets out the level of ‘services’ that tenants receive in a shared occupancy building.
What if the tenants were able to choose the level of service they wanted in future – for example, weekly cleaning rather than daily or increased security cameras / guards near their stores. A menu-driven approach would mean that the days of one-size-fits-all may end and a more flexible service could be delivered enabling retailers to pick and choose from a range of services to suit their particular needs.
the areas where the cost review is focusing its attention include:
- Engagement with retailers
Hours of operation
Cleaning and environment
Waste management
Security
Administration, procurement and purchasing of services
Plant and fabric maintenance
Utilities and energy management
Customer service
Marketing
The BPF press release
Tags: British Property Federation, retail service charge
Sunday, April 5th, 2009 in News
Leading global real estate investment manager PRUPIM is to allow the majority of its UK retail tenants to pay rent on a monthly basis for a temporary period in the response to the economic conditions faced by the retail sector.
PRUPIM estimates that up to 1,500 tenancies will be eligible for the 12-month scheme which takes effect from March. Retail tenants will have to commit to electronic payments, which may necessitate up to 12,000 additional collections.
“This is a quick and simple means of delivering immediate relief to the retail sector which is facing tremendous pressure on cash flows,” said PRUPIM Head of UK Asset Management, Peter Best.
“The UK is now officially in recession and months of deteriorating trading conditions on the High Street and beyond have necessitated new thinking. PRUPIM considers it has an obligation to identify ways of providing support to the retail sector,” he said.
“While this initiative requires significant additional administration, it will allow retailers more flexibility in terms of helping to manage cash flow during extraordinary economic times. It also helps PRUPIM maintain its strategy of preserving long term, sustainable returns from property investment. This approach is not a permanent move and we will review its effectiveness as appropriate,” he added.
PRUPIM has also today announced a revised Small Retail Business Policy which allows the payment of monthly rents on a permanent basis for smaller retail businesses. These will include the majority of companies, partnerships or individuals with up to three tenancies with PRUPIM, where the rents do not exceed £50,000 per annum per unit.
“Retailers have been telling us that these initiatives will assist them in the current environment and we have been listening and responding. PRUPIM puts good customer partnerships at the heart of our business strategy and this initiative is intended to deliver just that. Although there will be some exceptions to our approach, we hope this initiative will provide relief to most retailers in a difficult climate,” said John Duxbury, Director of Retail Asset Management.
