capita symonds real estate five-in-5 presentation
TRANSCRIPT
Welcome to the ‘Five in 5’ breakfast seminar
Tenants fighting hard: s18 defence to cap dilapidation liability
Paul Watling - Section 18 of the L&T Act 1927
— What is a S.18 Valuation?
— Who instigates it?
— What are the time scales?
— What properties?
The basics
Paul Watling - Section 18 of the L&T Act 1927
Key principles
— Diminution in value of Landlord’s reversion
— The ‘two limbs’ proviso
— Cost
— Supersession
— Repairs / Reinstatement / Redecoration
— Loss of rent
— Extended voids
— Professional fees
What are the items of claim
Paul Watling - Section 18 of the L&T Act 1927
Value in repair Value in existing stateDiminution in the value of the Landlord’s reversion
Valuation objective
Paul Watling - Section 18 of the L&T Act 1927
Dilaps Claim£3m
Dilaps Claim£3m
Value in Repair£10m
Value in Repair£10m
Value in Disrepair£8m
Value in Disrepair£5m
Diminution£2m
Diminution£3m
=–
— Supersession
— Landlord’s intention
What can the tenant do?
Paul Watling - Section 18 of the L&T Act 1927
Influencing factors
Paul Watling - Section 18 of the L&T Act 1927
Supply and Demand in the sector
Attitude of prospective tenants
Attitude of prospective purchasers
Will repairs enhance lettability?
— Falling rents
— Adverse evidence
— Vacant space
— Occupier uncertainty
— ‘Desperate’ Landlords
— Interim rent favours tenants
— Statutory renewal process slow and costly?
The Challenges
Paget Lloyd - Lease renewals in a difficult market
The need for
Paget Lloyd - Lease renewals in a difficult market
— Early Section 25 notice
— ‘Front Load’ proceedings
— Issue lease with Section 25 notice
— Deal with disclosure as soon as possible
— Gather valuation evidence early and exchange
— Early and sensible CalderBank / part 36 offers
— Solicitor Selection
— Principal to principal contact
— PACT
— The cost!
Paget Lloyd - Lease renewals in a difficult market
Always remember...
Solicitors: Dealing with proceedings / directions £20,000
Surveyor: Expert’s report £12,500
Solicitors: Pre-trial work and liasing with Counsel £12,500
Counsel: Trial brief fee £8,500
Surveyor: Expert’s court fee £7,000
Disbursements: Court fees, notices & expenses £5,000
VAT: £13,000
TOTAL: £78,000
The ‘bill’ please
Paget Lloyd - Lease renewals in a difficult market
A T e n a n t E s q .
Welcome to the ‘Five in 5’ breakfast seminar
Scheme or scam? Eliminating business rates on empty space
— Minimising rates cost is legal
— Evading payment of rates is not!
Empty rates: scheme or scam?
Chris Grose - Scheme or scam?
— Occupation by a charity
— Squatters
How to manage empty rates avoidance
Chris Grose - Scheme or scam?
How to manage empty rates avoidance
Chris Grose - Scheme or scam?
Squatters
— RV £379,000
— Squatters took illegal occupation
— Saving once evicted £205,000
— Occupation by a charity
— Squatters
— 6 week occupation / 3 month vacation
— Unoccupiable by law property
How to manage empty rates avoidance
Chris Grose - Scheme or scam?
— Property has to be unoccupied by law
— We all know when occupation would be prohibited by law
— BUT case law states that a Prohibition Notice has to be issued
— Some local authority insist on seeing such prohibition notice
— How do you occupy illegally a building to get a prohibition notice?
How to manage empty rates avoidance
Chris Grose - Scheme or scam?
— Occupation by a charity
— Squatters
— 6 week occupation / 3 month vacation
— Unoccupiable property
— Unfinished property
How to manage empty rates avoidance
Chris Grose - Scheme or scam?
— Completion Notice
— Effective Date on Empty Units changed from Nov 2011 to Sept 2012
— Saving £149,000
Keep clear of empty rates evasion
Chris Grose - Scheme or scam?
— Bogus occupation
— Claiming charitable use
Keep clear of empty rates evasion
Chris Grose - Scheme or scam?
— Bogus occupation
— Claiming charitable use
— Tenant an off shore company
— Tenant arranged in liquidation/receivership
Keep clear of empty rates evasion
Chris Grose - Scheme or scam?
— Entry in 2010 List for Fenced area is Shop & Premises RV £1
— Danger - When redeveloped Completion Notice not required
— Danger - No empty rate exemption on completion
Taking out of rating
Chris Grose - Scheme or scam?
— ie an ongoing case. RV reduced from £297,500 to £1 during works.
— Reinstated on practical completion of developers fit to RV £342,500
— Still requires occupiers fitout
— Take as long as possible to refurbish - leave evidence of contractors onsite.
Taking out of rating
Chris Grose - Scheme or scam?
Empty Rates Review — Public Sector paying over £50million in empty rates
— Review announced
— 6 MPs on panel
Localism — Local authorities keeping additional rates generated
— Base year 2011/12
— Comes in April 2013 – potentially more aggressive on schemes and scams, and uncompleted buildings
What’s coming?
Shifting work patterns...
Alan Dornford - Spaceless growth
(Johnson Controls 2010)
Mobile
2002
5550
3035 36
45
20
20
3020 18
20
25 3040 45 46
35
2003 2005 2006 2007 2010
Home
Office
?
But Space utilisation is out of sync...
Alan Dornford - Spaceless growth
BCO 2009 - up to 50% under utilised
Public Sector – it’s not sustainable...
Alan Dornford - Spaceless growth
£7bn+ targeted savings
83% of high-end designer handbags are fake
£25bn p.a. running costs
30% less efficient than best practice
Who’s leading the way?
Alan Dornford - Spaceless growth
Early adopters
Late adopters... Big precedent setter
So what?
Alan Dornford - Spaceless growth
Flexibility — Leases — Demises
“Landlords that provide us with huge flexibility will be the ones that we turn to”
IBM 2012
Performance — Building services — Infrastructure
“Maximising utilisation means that building designers will need to take into account the implications for the capacity of the building in terms of air handling, toilets, kitchens, reception areas etc”
IPD2012
Awareness — Up to date Occupier Trends
Welcome to the ‘Five in 5’ breakfast seminar
Cutting to the chase: practical implications of EPC Ratings
— Present situation
— Practical considerations
— Why it really matters
Enlightening Presentation Content
James Dunne - Cutting to the chase: practical implications of EPC Ratings
— 80% reduction in CO2 emissions by 2050 (from 1990)
— Property is a key target for reduction
— Unlawful to let poor scoring properties by 2018 (2015 in Scotland)
— EPC is a pre-requirement for marketing a building
— EPC is for the property not the occupier, the fabric not the operation
— EPC last for 10 years
— c. 20% of buildings at ‘F’ or ‘G’ level*
Energy Performance Certificates
James Dunne - Cutting to the chase: practical implications of EPC Ratings
* Source British Property Federation
— Minimum letting standard not yet set
— Assessments have got more stringent – a continuing trend
— Will the Green Deal be real and relevant?
— Industry lobbying for clarity and a ‘Carrot & Stick’ approach
— Future tax implications?
Eternally Pursuing Clarity
James Dunne - Cutting to the chase: practical implications of EPC Ratings
— Actual costs of works
— Payback period
— Knowing the future costs
— Timing of refurbishment and improvements
— Service Charge recovery?
— Easy wins
— VAV vs VRV
— Know your system
— Lights and Lamps
— Auto sensors
— The sum of the parts…
Economic Practical Changes
James Dunne - Cutting to the chase: practical implications of EPC Ratings
Emerging Pricing Consideration
James Dunne - Cutting to the chase: practical implications of EPC Ratings
— Direct value impact
— Factored into cash flows
— This is not just a tertiary problem
— Portfolios being benchmarked
— Occupier awareness
— Consider implications before marketing and purchase
— Reduce obsolescence
— Increase liquidity
— From unwelcome cost to performance boost?
— EPC are here to stay
— They are becoming more relevant and more stringent
— Plan now to protect value
— Analyse possible works and consider future implications
Expert Pithy Conclusion
James Dunne - Cutting to the chase: practical implications of EPC Ratings
This is now a real investment consideration