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Capita Symonds Real Estate Five-in-5 Presentation
- 2. Welcome to the ‘Five in 5’ breakfast seminar Tenants fighting hard: s18 defence to cap dilapidation liability
- 3. Paul Watling - Section 18 of the L&T Act 1927 The basics —— What is a S.18 Valuation? —— Who instigates it? —— What are the time scales? —— What properties?
- 4. 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
- 5. Paul Watling - Section 18 of the L&T Act 1927 What are the items of claim —— Repairs / Reinstatement / Redecoration —— Loss of rent —— Extended voids —— Professional fees
- 6. Paul Watling - Section 18 of the L&T Act 1927 Valuation objective Diminution in the value Value in repair – Value in existing state = of the Landlord’s reversion Dilaps Claim Value in Repair Value in Disrepair Diminution £3m £10m £8m £2m Dilaps Claim Value in Repair Value in Disrepair Diminution £3m £10m £5m £3m
- 7. Paul Watling - Section 18 of the L&T Act 1927 What can the tenant do? —— Supersession —— Landlord’s intention
- 8. Paul Watling - Section 18 of the L&T Act 1927 Influencing factors Supply and Demand in the sector Attitude of prospective tenants Attitude of prospective purchasers Will repairs enhance lettability?
- 9. Paul Watling - Section 18 of the L&T Act 1927 Resolution Negotiation Mediation Court
- 10. Welcome to the ‘Five in 5’ breakfast seminar Lease renewals in a difficult market
- 11. Paget Lloyd - Lease renewals in a difficult market Timing is everything!
- 12. Paget Lloyd - Lease renewals in a difficult market The Challenges —— Falling rents —— Adverse evidence —— Vacant space —— Occupier uncertainty —— ‘Desperate’ Landlords —— Interim rent favours tenants —— Statutory renewal process slow and costly?
- 13. Paget Lloyd - Lease renewals in a difficult market The need for —— 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
- 14. Paget Lloyd - Lease renewals in a difficult market Always remember... —— Solicitor Selection —— Principal to principal contact —— PACT —— The cost!
- 15. Paget Lloyd - Lease renewals in a difficult market The ‘bill’ please A Te n a n t E s q . 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
- 16. Welcome to the ‘Five in 5’ breakfast seminar Scheme or scam? Eliminating business rates on empty space
- 17. Chris Grose - Scheme or scam? Empty rates: scheme or scam? —— Minimising rates cost is legal —— Evading payment of rates is not!
- 18. Chris Grose - Scheme or scam? How to manage empty rates avoidance —— Occupation by a charity —— Squatters
- 19. Chris Grose - Scheme or scam? How to manage empty rates avoidance Squatters —— RV £379,000 —— Squatters took illegal occupation —— Saving once evicted £205,000
- 20. Chris Grose - Scheme or scam? How to manage empty rates avoidance —— Occupation by a charity —— Squatters —— 6 week occupation / 3 month vacation —— Unoccupiable by law property
- 21. Chris Grose - Scheme or scam? How to manage empty rates avoidance —— Property has to be unoccupied —— Some local authority insist on by law seeing such prohibition notice —— We all know when occupation —— How do you occupy illegally a would be prohibited by law building to get a prohibition notice? —— BUT case law states that a Prohibition Notice has to be issued
- 22. Chris Grose - Scheme or scam? How to manage empty rates avoidance —— Occupation by a charity —— Squatters —— 6 week occupation / 3 month vacation —— Unoccupiable property —— Unfinished property
- 23. Chris Grose - Scheme or scam? Keep clear of empty rates evasion —— Completion Notice —— Effective Date on Empty Units changed from Nov 2011 to Sept 2012 —— Saving £149,000
- 24. Chris Grose - Scheme or scam? Keep clear of empty rates evasion —— Bogus occupation
- 25. Chris Grose - Scheme or scam?
- 26. Chris Grose - Scheme or scam? Keep clear of empty rates evasion —— Bogus occupation —— Claiming charitable use
- 27. Chris Grose - Scheme or scam?
- 28. Chris Grose - Scheme or scam? Keep clear of empty rates evasion —— Bogus occupation —— Claiming charitable use —— Tenant an off shore company —— Tenant arranged in liquidation/ receivership
- 29. Chris Grose - Scheme or scam? Taking out of rating Don’t be sure....
- 30. Chris Grose - Scheme or scam? Taking out of rating
- 31. Chris Grose - Scheme or scam? Taking out of rating —— 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
- 32. Chris Grose - Scheme or scam? Taking out of rating —— 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.
- 33. What’s coming? Empty Rates Review Localism —— Public Sector paying over —— Local authorities keeping additional £50million in empty rates rates generated —— Review announced —— Base year 2011/12 —— 6 MPs on panel —— Comes in April 2013 – potentially more aggressive on schemes and scams, and uncompleted buildings
- 34. Welcome to the ‘Five in 5’ breakfast seminar Spaceless growth? The agile agenda
- 35. Alan Dornford - Spaceless growth The ‘physical’ workplace... is just part of the equation.
- 36. Alan Dornford - Spaceless growth Intelligent planning & design...
- 37. Alan Dornford - Spaceless growth Shifting work patterns... ? Office 20 18 Home 30 Mobile 45 50 55 36 35 30 20 20 20 45 46 40 35 25 30 2002 2003 2005 2006 2007 2010 (Johnson Controls 2010)
- 38. Alan Dornford - Spaceless growth But Space utilisation is out of sync... BCO 2009 - up to 50% under utilised
- 39. Alan Dornford - Spaceless growth Public Sector – it’s not sustainable... £25bn p.a. running costs 30% less efficient than best practice £7bn + targeted savings
- 40. Alan Dornford - Spaceless growth Who’s leading the way? Early adopters Late adopters... Big precedent setter
- 41. Alan Dornford - Spaceless growth It’s a culture thing...
- 42. Alan Dornford - Spaceless growth So what? Flexibility “Landlords that provide us with huge flexibility will be the ones that we turn to” —— Leases IBM 2012 —— Demises Performance “Maximising utilisation means that building designers will need to take into account the implications for the capacity —— Building services of the building in terms of air handling, toilets, kitchens, reception areas etc” —— Infrastructure IPD2012 Awareness —— Up to date Occupier Trends
- 43. Welcome to the ‘Five in 5’ breakfast seminar Cutting to the chase: practical implications of EPC Ratings
- 44. James Dunne - Cutting to the chase: practical implications of EPC Ratings Enlightening Presentation Content —— Present situation —— Practical considerations —— Why it really matters
- 45. James Dunne - Cutting to the chase: practical implications of EPC Ratings Energy Performance Certificates —— 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* * Source British Property Federation
- 46. James Dunne - Cutting to the chase: practical implications of EPC Ratings Eternally Pursuing Clarity —— 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?
- 47. James Dunne - Cutting to the chase: practical implications of EPC Ratings Economic Practical Changes —— Actual costs of works —— Easy wins —— Payback period —— VAV vs VRV —— Know your system —— Knowing the future costs —— Lights and Lamps —— Timing of refurbishment —— Auto sensors and improvements —— The sum of the parts… —— Service Charge recovery?
- 48. James Dunne - Cutting to the chase: practical implications of EPC Ratings Emerging Pricing Consideration —— Direct value impact —— Consider implications before marketing and purchase —— Factored into cash flows —— Reduce obsolescence —— This is not just a tertiary problem —— Increase liquidity —— Portfolios being benchmarked —— From unwelcome cost to performance boost? —— Occupier awareness
- 49. James Dunne - Cutting to the chase: practical implications of EPC Ratings Expert Pithy Conclusion —— 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 This is now a real investment consideration
- 50. Questions