Archive for the ‘Quantity Surveying’ Category

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.

Do you know a good builder who can fix my problems?

Tuesday, February 12th, 2013

Would a couple of vent grilles get rid of this black mould?

Cracks in the wall, damp, black mould – all common building problems.

But how to get them fixed? I know, let’s call a builder for a free quotation.

But a builder will treat the symptoms without fully understanding the cause; you could waste £000’s on a ‘fix’ that’s not needed or might fail.

But don’t blame the builder; it’s not his fault; anyone can call himself a builder or a specialist in ‘this’ or ‘that’. He might be a trained bricklayer or joiner but he’s not trained to understand how buildings work and why they fail; that is what surveyors do.

A surveyor will investigate the underlying cause and tell the builder what to do to put it right.

For example, a friend recently asked me to look at a black mould problem in a small 1960s terraced house. He had two quotations from ‘specialist’ damp contractors. Both were offering their own different ventilation solutions at hugely different prices. Which one should he use?

I checked the place out and, as expected, found the house full of warm moist air from showering, cooking, laundry etc. Yes, ventilation was required, but that was not all.

The contractors’ solutions were only the starting point. Their venting proposals were inadequate alone and wouldn’t cure the problem.

They made no mention of the need to insulate the cold spots, fix the leaking rainwater pipe nor suggested ways to reduce the build-up of moist air in the house.

The same goes for cracks in walls and rising damp.

Most cracks are insignificant, the result of thermal movement or minor settlement, and require little or no remedial work. But a bullder will fix it for you!

And true rising damp, as a result of failed damp-proof courses, is very rare too; there is nearly always an underlying cause. I’ve seen leaking gutters, a running overflow and a split dishwasher hose all identified as ‘rising damp’. And until someone can explain to me how injecting chemicals into solid, hard, impervious clay bricks can create a damp-proof course I shall remain ever sceptical.

A builder’s advice might come for ‘free’ but what is the cost if he gets it wrong or the work is unnecessary? And he’s hardly impartial.

A surveyor will charge but he is knowledgeable, impartial and more likely to get things right….. and if it goes wrong you can sue him.

Extensions and alterations can be costly excursions

Tuesday, April 10th, 2012

Even small extensions can benefit from expert supervision and cost control

Two sad cases have recently highlighted the need for tight cost control and expert supervision of even straightforward building projects.

Both cases were similar in that they were extensions and alterations to existing houses, but they were different too.

One client had done everything right; he engaged a professional to design and supervise the project but had been badly let down. The other had gone it alone and, armed with only some drawings, had obtained quotes and appointed a builder.

Both jobs went wildly over budget resulting in serious financial problems and months of stress and heartache.

What had started as a dream had turned into a nightmare!

Both projects had three things in common:
i) poor cost control
ii) poor supervision, and
iii) inability to control the contractor

Cost control starts at the pre-tender stage. To get a meaningful quote the design, specification and scope of the project need to be determined in detail. If there are gaps in these there will be gaps in the price.
And without a fixed starting price you have no hope of knowing what the final cost will be.

Drawings alone rarely tell the full story; designers skirt round the difficult bits with phrases like ‘to be agreed’ or ‘to be approved’. Seldom are things like doors, door handles, tiling, kitchens and bathrooms ever selected. A QS will fill these gaps and provide a Schedule of Work setting-out everything the contractor should price.

Building is not an exact science. There will always be unknowns and changes of mind, especially in alteration schemes where preliminary investigations are limited; all the more reason for tight cost control.

Without tight control the contractor can proceed unchecked; he can take short cuts, vary the specification and costs can escalate.

When it comes to paying him:
– How much and when should you pay?
– Could you value the work done?
– Do you pay what he asks when he asks?
– What does the contract say?
– Have you even got a contract?

Even small construction projects can be a minefield for the unwary.

An experienced QS will:
• Help fix a budget for your scheme
• Help you choose a contractor
• Ensure watertight tenders
• Help you keep costs within your budget
• Ensure compliance with specification
• Protect your position

Before you get in your mess call us on 01332 603000.

How much to rebuild your building?

Friday, September 30th, 2011

Catastrophe can strike at any time

If your premises burnt down or were flooded where would your business be? 

Could you move out and continue elsewhere as if nothing had happened?

Would you have to stay and put it right?

If you own the premises could you afford to fix them or would your business be destroyed?  Even worse, would you still have to pay-off a loan on them?

Whether we like it or not, buildings insurance is a necessary evil.  We cough-up each year for something that might never happen.

It’s tempting to skimp on the premium to save a few pounds but to under insure could be a nightmare.  When disaster strikes the Loss Adjuster (note the word ‘Adjuster’) will be out to limit the insurer’s liability.  If you’re 20% under insured they will pay out 20% less than you need; then where do you fund the shortfall from?

If you’re over insured you will be paying too much.  That’s safer than being under insured but you’ll be paying too much year-on-year.

Who knows what the right sum to insure for is anyway?  Don’t trust your broker to get it right.  What does he know about rebuild costs anyway?

Don’t be misled by the price you paid for the property.  Commercial value is measured by the use to which it can be put, its location and possibly the condition it’s in. And the price will include the land.

The cost to re-build is completely different.  That will depend on the size, design and materials used.  The rebuild cost is often hugely disproportional to the market value, a common problem where historic or iconic buildings are used for normal commercial uses.

Chartered Quantity Surveyors are experts in building costs.  They can help you get it right so you don’t pay too much or too little.  And, when the Loss Adjuster comes trying to reduce the pay-out, a QS is well placed to fight your corner to make sure you don’t lose out.

PV, or not PV, that is the question

Wednesday, July 13th, 2011

The door-bell rang.  I opened the door to a cowering salesman “I’m not selling anything” he whimpered “I just want to save you some money on your electricity bill”. 

This guy wasn’t from Scottish Energy or any of the other Gannets trying to woo me away from my current provider.  He was offering to install photovoltaic panels (PV) on my roof – for free!

The contract was for 25 years.  The deal was that I use the energy they create to save on my bills and they collect the feed-in tariff.  After 25 years the PV panels were mine, at no extra cost.

He took-out his I-phone, tapped his way to the compass app and checked my roof orientation (I know it faces East/West) and confirmed that my roof was ideal.  His colleague would be visiting a neighbour tomorrow, could he call in to talk it through?

PV can look neat when it's designed-in

I know South-facing is the optimum direction.  And, not being one for ‘appendages’ on the outside of my house (I won’t even have a TV aerial or upvc windows) I said I would think about it.  And I did.

So, I use the energy they create.  But we’re out all day and, as PV doesn’t work in the dark most of the energy will be fed back into the grid; they gain from that, not me.  Wonderful!

I looked on the ‘net’ for alternatives; there are loads out there.  I could buy the PV  and collect the feed-in tariff myself .  But the pay-back is estimated at 10 years, and that’s for optimum orientation. So it would be longer for me.

I’m nearly 60 and looking to down-size in the next few years.  So considering the options:

If I take their offer I might save a few pounds in the short term, but the house would be lumbered with ‘their deal’ when we moved.  New owners would be prevented from installing their own system and collecting the feed-in tariff.   PV panels don’t look pretty.  How do I repair my roof if I need to?  The technology will go out-of-date.  And the house owner will have to pay to remove them after 25 years when they break down. What affect would this have on the value of my house? 

If I installed my own I’ll have moved before they’re paid for.  The technology will be ageing.  They could devalue the house.  And who can rely on any government’s promise to last 25 years? 

Retro-fitting anything is never as good as designing it to fit in the first place.  A development in Derby has incorporated PV within the construction and, I have to admit, it looks neat.

So, I don’t think PV’s for me, but it might be for you.  There is much to think about.  And don’t be swayed by the door-step salesman.  Do your homework.

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

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.

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