Please find attached the slides from this morning\'s breakfast forum.

1. Property Management Breakfast Forum
Wednesday 8 February 2012

2. Sustainability as a Competitive
Advantage
Moving Beyond Compliance
February 2012

3. What does Sustainability mean to us?
To be sustainable, buildings must be economically viable (occupied),
socially engaging (a comfortable place to live/work/play), accessible,
adaptable and have the lowest possible environmental impact.
Three core measures
• Environmental performance
• Economic and Financial Aspects
• The working Environment

4. Compliance – it will get tougher
2005 - 2010
EPCs DECs
2010 - 2015
CRC FITs
2015 – onwards
Raised Carbon Minimum EPC
Price Rating
3

5. What’s Driving Sustainability
• Supply Chain Demand (e.g. L&G, M&S)
• Increasingly stringent regulation
• Genuine Efficiency opportunities
• Brand & Value Protection / Enhancement
• Market Expectation
First Movers are
gaining a
Competitive
Advantage
4

6. Link to Value and Risk – Our View
Brand Damage
Obsolescence
Underperformance – high costs & carbon
impact
Risk
Low Occupancy / Failure to Attract
Tenants
Non Compliance
Time

7. What the Fund Managers are Saying….
Aviva Investors
“Sustainability plays an integral role in all of Aviva Investors' decision making”.
Henderson Global Investors
“By improving the sustainability profile, Henderson can future-proof its assets,
particularly as it expects a two tier property market to emerge as the market
recovers. Henderson believes that the sustainability performance of a property will
play a vital part in value protection and have an impact on operational costs, asset
values, obsolescence and rental growth as well as occupier satisfaction”.
PruPIM
“The business case for sustainability is well established. Sustainability will be very
important to real estate investment performance over the course of the next five
years, despite the economic challenges faced by all businesses in recent years”.
L&G
“At Legal & General Property, we’re working hard to make sustainability an
integrated part of what we do every day. we’re going beyond the industry norm
seeking to make every single one of the properties that we manage as efficient and
sustainable as possible”.
6

8. A Best Practice Approach
Understand
Risks &
Performance
Benchmark
Develop a
Plan
(A Strategy)
Implement
Monitor
Progress
Review and
Revise

9. Practical Improvements to Deliver Performance
Area Action Cost Saving Payback Carbon Saving
Monitoring & Install sub metering and £15,000 10% energy 2 years – 25,000 kWh per
carbon introduce a metering and reduction per year - based on annum (1.0
management monitoring strategy working in improved tonnes)
conjunction with EMS tracking of
programme consumption
Gas Introduce Boiler £5,550 £9,000 per annum 10 months 15,000 kWh per
Optimisation annum (0.5
tonnes)
Elec. Implement LED Lighting £50,000 £114,000 over five 2.2 years 55,000 kWh per
Improvement programme years annum (2
tonnes)
Elec. Voltage Optimisation (ROI £30,000 £18,000 per annum 1.5 years 25,000kWh per
impacted if LED annum (1 tonne)
implemented)
Training Introduce a training £1,500 Greater awareness n/a n/a
programme for on site staff will deliver improved
working practices &
efficiencies
Compliance Review, and where No cost – Compliance n/a n/a
necessary improve F-Gas contractor requirement
Records and hold on site responsibility
8

10. What can be Achieved
Client Type Delivery Output
Fund Portfolio Sustainability action plans £1.6m per annum
and EMS developed savings (normalised)
(1 year period) 11,000 tonnes carbon
reduction
Shopping Centre Sustainability action plans 13.6% electricity
and EMS developed reduction
(1 year period) 16.7% gas reduction
19.9% water use
reduction
Central London Office Sustainability Audits, 4.7% energy reduction
portfolio (3 offices) Environmental Performance 55% recycling rate
Monitoring, Improvement
(9 month period) Planning and Occupier
Engagement
9

11. Contact Details
Chris Bennett
Managing Director
07810 631599
cbennett@scs-re.co.uk
Paul Sutcliffe
Operations Director
07557 529104
psutcliffe@scs-re-co.uk
www.scs-re.co.uk
10

12. Property Management Forum – 8 February 2012
Non Resident Property Investors
Adrian Benosiglio ACA CTA
Tax Director
BDO LLP
Dir Tel: +44 (0)20 7983 2479
Mobile: +44 (0)7800 682 719
Email: adrian.benosiglio@bdo.co.uk

13. Non Resident Property Investors
Matters Covered
• Review of UK direct tax on property investors
• Non resident landlords and agents
• Finance
• Capital allowances
• Management and control
• Risk of trading
• Compliance matters

14. Non Resident Property Investors
Review of UK direct tax on property investors
Type of company UK tax rate on UK tax rate on UK tax rate on
rental income trading profits capital gains
UK company 26% 26% 26%
Offshore company 20% 26%/20%/0% Exempt
The standard rate of corporation tax is reducing 1% a year from 26% to 23%
by April 2014

15. Non Resident Property Investors
Non resident landlords and agents
• Net rental payments are subject to 20% income tax.
• The responsibility for withholding this tax is with the agent or tenant
• The tax is paid over to HMRC on a quarterly basis
• Credit is given to the Non Resident Landlord (NRL) in their income tax
return and overpayments repaid to them
• This represents a timing difference to an offshore company
• Registration under the NRL scheme avoids the necessity to withhold tax
• Agents should take care and withhold tax unless HMRC confirm in
writing they can operate NRL scheme
• Two payments are made with a balancing adjustment in the January
following the fiscal year

16. Non Resident Property Investors
Finance
• Finance is normally the largest deduction for a property investor
• Restricted bank finance has led to an increase in mezzanine finance
• Consider debt structures from related parties
• Transfer pricing on both level of debt and rate applied
• Withholding tax risks on interest payments

17. Non Resident Property Investors
Capital allowances
• Capital allowances are available on plant/fixtures but not buildings
• From April 2012 rates will be 18% and 8%(for long life assets and integral
features)
• New rules for fixtures from April 2012 will apply:
- seller and purchaser must jointly set price of fixtures
- seller must provide written statement of amount brought into account
- two year limits for above
• If no agreement then First Tier Tribunal to give independent
determination
• Advice – deal with at time of transaction
• Consider wear and tear allowances
• Correct allocation for repairs

18. Non Resident Property Investors
Management and control
• Company is UK resident if incorporated or managed and controlled in UK
• Management and control:
• Roles of directors
• Location of board meetings and shareholders meetings
• Residence of directors
• Quorum of meetings
• Expertise of board
• Shadow directors
• Board meetings – frequency, agenda and minutes
• Location of company’s books
• UK activities
• Overseas trips by UK key personnel
• Intra-group services

19. Non Resident Property Investors
Risk of trading
• Trading without a permanent establishment is subject to 20% UK income
tax
• Trading with a permanent establishment is subject to 26% UK
corporation tax
• What is trading is determined by the badges of trade:
Profit motive
Length of ownership
Frequency of similar transactions
Supplementary work
Circumstances of sale
Source of finance
• Permanent establishment can be set by fixed place of business or an
agent who is not independent

20. Non Resident Property Investors
Compliance matters
• Quarterly and annual returns (Agent)
• Annual income tax returns (offshore entity)
• Tax payments
• UTR required for filing electronically – but NRLs not covered
• Partnerships require all partners’ UTR to complete return – ensure time
• VAT returns

21. Property Management Forum – 8 February 2012
Non Resident Property Investors
Adrian Benosiglio ACA CTA
Tax Director
BDO LLP
Dir Tel: +44 (0)20 7983 2479
Mobile: +44 (0)7800 682 719
Email: adrian.benosiglio@bdo.co.uk