Archive for the ‘Dilapidations’ Category

Advice on gutter replacement

Tuesday, March 26th, 2013

Inappropriate brackets caused this new plastic gutter to sag before the building was complete

Water is the enemy of buildings; it will saturate walls allowing frost to shatter the masonry and mold to grow internally; it will accelerate the deterioration of paintwork and cause joinery to rot.

Most water comes in the form of rainfall, falling on roofs then being carried away in gutters and downpipes eventually discharging into main drains or soakaways.

The weakest link in the chain is the gutters. They collect all the water that falls on the roof to carry it away from the building. Sadly, all too often, ignorance, short cuts and penny-pinching results in lack of maintenance or inappropriate replacements.

Have you ever been out in the rain to look around your property? Try it sometime; any gutter leaks will be obvious. Even on a dry day a trained eye will spot sagging, twisted and misaligned gutters, some leaking joints and the tell-tale signs of gutter leaks and damp-affected walls.

A common failing is the replacement of old cast iron gutters with cheap plastic.

Plastic gutters are fine as long as they are properly supported and the proprietary brackets are used.

The grooves and tabs on this proprietary bracket grip and stiffen the plastic gutter

When used as replacements for cast iron the plastic gutters are often laid in the old metal rise-and-fall brackets resulting in premature failure for two main reasons:

1. the brackets are spaced too widely. Iron gutters are rigid and self-supporting but plastic is flexible and needs more frequent supports. The lack of adequate support allows the gutters to twist and sag resulting in overflowing and also causing joints to fail.

2. the old brackets that acted as ‘cradles’ for the heavy iron gutters do not ‘grip’ the plastic gutters, as do the proprietary gutter brackets, resulting in the plastic gutters sagging, twisting and overflowing due to their flexibility. Proprietary plastic brackets ‘grip’ the gutters acting as stiffening ribs, making the gutter rigid and secure.

Drafting commercial leases? A surveyor’s view

Wednesday, February 13th, 2013

Timely maintenance would have avoided this but who pays and when?If you’re drafting a lease for a commercial Landlord there are a few things to think about that go beyond the ‘standard’ template or precedent documents.

External redecoration – It’s better to paint in the summer than the winter so rather require painting ‘in the final year’ or ‘in the last three months of the term’ why not say, for example ‘between May and September’ preceding the Termination Date? This would require the redecoration to be done during the better weather?
Might it be also be possible to make an express requirement to the effect that if the Tenant defaults the LL can do the work and charge it as a debt?

Internal redecoration – The Landlord always wants the building freshly decorated at the end of the lease so why do leases allow Tenants to redecorate in the ‘final year of the term’, for example. What is wrong with ‘during the last month of the term’?

Retail units are always a source of dispute for surveyors. The sales area is often let as a ‘shell’ and a new Tenant will want to decorate and fit it out to suit his business so what is the point in redecorating and repairing minor defects? Claims for such could well be disputed on a Sn 18 basis anyway. In most cases redecoration of all parts excluding the sales area would be appropriate.

Painted and plastic coated metal cladding doesn’t last for ever without maintenance. Manufacturers give a time to first maintenance of between 20 and 30 years depending on aspect, colour, environment etc. Older coatings will be less durable requiring maintenance sooner.
In practice cladding receives no maintenance until the coating starts peeling and the cladding starts rusting. It does seem unfair to make the Tenant on, say, a three year lease of a 25 year-old unit pay for a maintenance treatment. Has anyone any ideas how the Landlord could be protected?

Leases often call for maintenance and reinstatement of the Landlord’s fittings. Without a schedule at the start who can tell what was there? I’ve had debates over whether ceilings and lighting were installed by the LL or by the Tenant; neither could prove one way or the other.

Lease plans – Often lease plans and the description of the demise are so poor that interpreting the scope of any alterations made by the tenant impossible. It follows that seeking reinstatement is equally difficult. Why not consider having layout plans attached to the lease; they need only be sketches.

Why a surveyor should appraise your draft lease

Wednesday, June 1st, 2011

A property lawyer challenged me recently to explain how a surveyor could add to his legal advice for a tenant taking a new lease.

 I explained that it’s not until you try to apply some of the clauses to practical situations that you realise just how unreasonable, unworkable and inadequate some lease are.  It’s the experience of using them that a surveyor can bring to the pre-lease negotiations.

All too often leases are drafted and negotiated between lawyers with little regard for the intentions of the parties.  And inexperienced tenants expect their lawyer (if they have one) to protect them and the lease to include the promises made by the letting agent when he was closing the deal.

But all too frequently historic precedent documents or ‘standard leases’ are regurgitated regardless of the nature, age, location and condition of the building or the lease term.  I believe it’s not enough to insert the ‘agreed’ Heads of Terms and leave it at that.  They need to be put in context of both parties’ intentions, the whole lease and the particular building.

Dilapidation claims relate mainly to: Standard of repair, cleaning and redecoration, reinstatement of alterations, landlord’s fixtures and fittings and loss of rent.

I’ve seen covenants fit for a property in Mayfair applied to a run-down tin shed

Repairing covenants vary greatly.  I’ve seen covenants fit for a property in Mayfair applied to a run-down tin shed on an industrial estate.

I’ve heard it said “The rent is low to reflect its condition” and then torrentially worded repairing clauses applied far exceeding the reasonable intentions of the parties.

A short lease on a nearly new office building required the Tenant to clean all the brickwork and concrete at the end of the term.  How can that be reasonable? How often are building facades normally cleaned?  What would be the loss if it wasn’t?  A specific requirement to remove any graffiti, paint, oil or grease, or such like would have been more appropriate.

On the other hand cladding manufacturers specify cleaning and repainting regimes for maintenance of their cladding.  This should be covered specifically, but never is.

Decoration clauses are frequently inappropriate.  I’ve yet to see the wallpaper, graining and French polishing referred-to in the lease for an engineering workshop.

I’m not just suggesting ways to protect the tenant.

How can the Landlord’s surveyor know whether the Tenant has made alterations or removed Fixtures and Fittings without a record attached to the lease.

And why would a landlord want to relieve his tenant from the obligation to redecorate internally at the end of his lease because he’s done it in 12 months previously?  The Landlord is going to expect the place clean and freshly painted.

An experienced surveyor understands the financial implications to both parties of these ‘throw-away’ clauses included in leases and can bring some common sense to the drafting

Business Advice for the Third Sector – ProHelp

Sunday, May 1st, 2011

Last year community groups in the East Midlands benefitted by £338,000 worth of top quality professional advice in support of their organisations.

Derbyshire groups alone received over £60,000.

The Landlord was prompted to refurbish all three floors for Derbyshire Carers

The services are provided free by local professionals through ProHelp, an organisation under the Business in the Community banner, and are available to any Community Group or Charity with a qualifying requirement.

Applying is dead simple.  An initial phone call, a meeting to chat about your organisation and a short application form is usually all it takes.  There’s no mountain of paperwork to wade through, no deadlines to meet, and a decision is usually made within days rather than months.

Property advice is always in demand.  From surveys and lease advice at one end of the spectrum to feasibility studies for construction projects and lottery bids at the other; Surveyors, Architects and Engineers are always kept busy.

Not only that, Derby ProHelp has recently recruited an Environmental specialist.

Lawyers and Accountants advise on the likes of Charitable Status, Incorporation, Employment and Business Plans, indeed almost anything, except disputes.

As the cuts bite and charities become pressed for funds, more are becoming ‘business savvy’; they’re into Marketing and everything that goes with it.

Derby ProHelp members can provide Marketing and PR advice as well as Graphic Designers, IT Consultants and Web experts.

Not only does ProHelp provide charities with a valuable resource ProHelp also provides the professionals with a valuable networking environment in which they can demonstrate their skills and expertise to their peers and build relationships that transfer to their business life.

The commitment is not great; you decide how much time you can afford.  Meetings are quarterly and are short and to the point.  Projects vary and are rewarding and are worth far more to the organisations than the cost in time to the professionals.

So if you work with an organisation that could use some free advice or if you would like to find out more about joining as a professional checkout the ProHelp web site at www.prohelp.org.uk or Facebook East Midlands ProHelp.

Dilapidation Claims – A Tenant’s Nightmare and How to Reduce Them

Wednesday, April 6th, 2011

Tenants of commercial property are in for huge unexpected bills when their lease ends.

Recent figures published by The Royal Institution of Chartered Surveyors’ Building Cost Information Service showed lease-end Dilapidation Claims of more than a year’s rent are common.

The BCIS survey revealed average settlement figures of £9.54/ft2  for Offices, £7.27/ft2 for Industrial Units and £21.54/ft2 for Retail premises.

That equates to £19k on a 2,000ft2 Office building, £36k on a 5,000ft2 Industrial Unit and £16k on a 750ft2 Retail Shop.  And those are settlement figures!

Worryingly, initial claims were, on average, 100% higher than the settlement figures!

Dilapidation Claims are, in effect, Damages Claims against the Tenant for not complying with the repairing obligations in the lease.

Dilapidations is a complex and contentious subject

But it doesn’t stop there.  Claims can include the cost of cleaning and redecoration, stripping-out alterations, reinstatement works and the rent lost whilst the work is being done. 

To add insult to injury, the Landlord can usually claim his surveyors fees and lawyer’s fees in making the claim too.

If the claims were fair and the money was spent on the buildings there could be little complaint.  But Landlords frequently pocket the money and leave the mess for the next Tenant to sort out.  Make sure that next Tenant isn’t you.

Dilapidations is a complex and contentious subject.  The RICS has published a lengthy Dilapidations Guidance Note for surveyors and the Property Litigation Association has produced a Dilapidation Protocol for managing disputes.  They both aim to engender an atmosphere of ‘fairness’, ‘professionalism’ and ‘cooperation’ in the preparation and management of claims.

Sadly, Landlords’ claims continue to be massively overstated.  Recently we negotiated a £42,000 claim down to £15,000.  The ‘tin shed’ unit was only 3,000ft2 on a three-year term; it had hardly been used and had been left decorated, clean and tidy.

So how can you avoid such claims?

Ideally take action before you sign-up.  Use a lawyer, but not without an experienced dilapidations surveyor too.

The surveyor will check out the building and the proposed lease terms to make sure you’re not walking in to a claim at ‘Day One’.

The premises should be in the condition the lease says you should leave it.  If it’s not there are ways round that.

If it’s an old industrial unit on a 3-year term avoid a lease that would suit a 50-year term on a retail store in Knightsbridge.

The terms should be appropriate.  Don’t be fobbed-off by ‘this is our Standard lease’.  There is no such thing.  Just like there’s no such thing as a ‘Standard Building’ or a ‘Standard Landlord’ or a ‘Standard Tenant’.  Everything is negotiable.

If all that’s too late, your lease is at an end and you have a claim, use a specialist dilapidations surveyor.  They’re usually Chartered Quantity Surveyors or Building Surveyors with additional training and experience in dilapidations.  They will save you £OOOs.

Get Pre-Lease advice to avoid the Dilapidations Trap

Tuesday, March 8th, 2011

Having been caught-out by a dilapidations claim on a previous short let a client turned to me for Pre-Lease Advice on his latest property deal.

A rather run-down unit was the subject of his attention; the previous tenant had ‘gone bust’ leaving it full of junk and in right state.

Though not in the best part of town, the location suited him.

Before surveying the unit I read the proposed lease.  It was clear that the terms on offer were inappropriate; they would have suited a long lease on a property in Mayfair or Knightsbridge.

This was a one year lease on ‘Full Repairing’ terms.  On that basis the dilapidations claim at the end of the year could amount to £20k or more; nearly three times the rent!

When the Landlord showed me the unit he agreed that the terms were unreasonable for such a poor property.  He said his lawyer had advised him to go with it and try and catch the other side out.

It just goes to show, it doesn’t matter what you might agree with the Landlord it’s so important to check the draft lease before you agree to anything.   Everything you agree needs to be written down and be part of the lease.

We got terms changed, of course, but it just goes to show that you can’t trust anyone!

So get advice from a surveyor who knows the rules of the game to avoid being caught in the dilapidations trap.

The Spice Lounge Gets it Right

Friday, October 22nd, 2010

Shah had been involved with restaurants for years but he’d never set-up one from scratch. Nor did he know Derby well.

But Derby’s Friar Gate area, with its vibrant night life, was the ideal place for his dream - a top-notch Bangladeshi restaurant to compete with the best Derby had to offer.

Shah knew what made restaurants work – Understanding the expectations of his customers…and exceeding them!

But he knew nothing about property.

A friend suggested Shah should take professional advice and recommended Chris Mills at Barlows. That’s networking for you!

A former Cantonese resturant was identified as a likley candidate.

The place had ‘Potential’.  It needed a full re-fit; an investment of circa £100k.  Shah knew he could make it work; he had a vision, but he’d never looked above the ground floor.

Friar Gate, is a Conservation Area close to the city centre.  By its very nature the buildings are very old.  

A lease on ‘Full Repairing’ terms was on offer; a massive risk on an old dilapidated building like this one.

The roof was on it’s last legs and had leaky old rooflights; definitely not what you want above your newly refurbished restaurant.

Realising a potential tenant could be lost the Landlord re-roofed the building.  This removed the risk of re-roofing from a potential dilapidations claim.

Shah managed the re-fit himself.  It was a steep learning curve and, at times, rather fraught, but I usually knew ‘a man who can’ to come to Shah’s rescue.

Now, some eight months or so since opening, The Spice Lounge is a success.  It was voted Best Indian Restaurant in Derby and I value Shah not just  as a client but as a friend.

Shah’s pre-lease survey saved him the price of a new roof and the potential damage and disruption to his restaurant that could have ensued. It also plugged him into a network of reliable local trades and professions, many of whom are now pleased to be customers too.

http://www.spicelounge-friargate.co.uk/

Due Diligence in Business Buy-outs

Friday, October 15th, 2010

In the frenzy surrounding business buy-outs it’s easy to lose sight of the cost of taking-on the property from which the acquired business trades.

It is a massive step, to step into the boss’s shoes.  But make sure he doesn’t ‘fill his boots’ at your expense.

It is a business decision that requires your ‘Business head’ to be fully engaged.  Sentimentality must be allowed to fly out of the window.

Don’t be afraid to take independent advice from your own accountant and your own solicitor. You should also consider advice on the marketability of your offering and the potential for growth.   If a business stands still it will fall behind the rest; it’s got to move with the times.

As a business owner approaches retirement it’s all too easy to become complacent and sit in the ‘comfort zone’; the business can become stale.  There is no incentive to invest in the business and, as we know from experience, investment in the property usually takes a very back seat.

Fixtures and fittings become ‘tired’ and the the building falls in to disrepair.

When did you last walk around the back of your business premises?  Have you seen that leaking gutter and the weeds in the outlet?  When were the windows last painted?  That one looks rotten!  Why can’t I open this fire escape door?  Oops, it’s dropping to pieces.  Why is water running from that pipe and the brickwork below it perished?

The current owner has allowed all this ‘on his watch’ so why should you pick-up the cost of his years of neglect?

Dilapidation claims on rented property can run into many thousands of pounds.  Two or three times the annual rent is quite common.  And this is a cost that must not be ignored because it’s you who will be paying the bill.

And what does the lease say? Can the rent go up? When does the lease end? Can I renew it? Can I sub-let the spare room? Should the Landlord fix the roof?

Contact Chris Mills for property advice at chris@barlow-associates.co.uk

Lease end? Don’t do nothing

Friday, October 8th, 2010

If you rent your business premises on a commercial lease you need to be ‘on the ball’ when you hit the final year.  Read the lease carefully and take professional advice; its a legal document and can be a mine-field

To do nothing can be  disasterous.

If you want to stay put you could end up ‘out on your ear’ or, if you want to leave, you could end up paying rent for another few years! It’s so important to get the legals sorted out. And in good time too!  Notices may need to be given by certain dates or other actions taken.

The practicalities can be just as important.  It can take months to find a new property, then further months to negotiate a new lease.

The cost of moving and ‘kitting-out’ new premises will cost more than you thought; and don’t forget the Dilapidations bill!

If you want to know more get in touch with Chris Mills at Barlow & Associates