Research from the BDRC Landlords Panel has revealed that landlords are not taking out suitable insurance on their rental properties and thus experiencing losses from uninsured void periods. Mark Long, director at BDRC Continental, spoke about the issue.

Mr Long explained that if a renter falls into arrears or ends a tenancy there would be a void period for the landlord. The BDRC research indicated that 37% of landlords experienced such a period in the third quarter of 2012, and that 47% of those properties then remained empty for over 40 days, leading to a significant loss of income for the landlords.

Furthermore, 47% of landlords encountered arrears in the same period, and the average amount owed was £2,366. Mr Long added, “Our research shows that only five per cent of landlords hold void period cover, meaning that almost a third of landlords are experiencing voids and have no means of protecting themselves against it.”

Reacting to the research, David Hudson, Director of leading Manchester commercial insurance brokers Buckland Harvester, said: “Times are good for landlords rights now. Rental rates are high, along with the demand, while property prices are relatively low at the moment. However that doesn’t lessen the need to be insured against all of the potential negative elements and costly incidents that could occur at any time.”

“Direct Line for Business conducted research that showed nearly 20% of UK landlords were uninsured, and the costs of repairs and labour on their properties was double the cost of an average landlord insurance policy. It just makes sense to be fully prepared.”

David concluded: “Landlords need to check they have the right type of insurance policy for their property, as rental properties are a completely different entity to standard homes. Also, if it’s right for them, they should consider a suitable landlord insurance policy, as it covers for the unexpected such as an unexpected loss of income.”

If you are concerned about insurance on a rental property or you landlord insurance policy please contact Buckland Harvester directly via Buckland Harvester at www.bucklandharvester.co.uk

Commercial property owners across the UK are being warned to be on the look-out for potential squatters in their empty or infrequently used premises, following a change in the law, according to Peter Knight, director of Manchester-based commercial property managers Knight Site Solutions.

Over the last month squatting in a residential property has become a criminal act and this has already seen some squatters target other types of property such as vacant business space for a place to call ‘home’.

Peter Knight, director of Manchester-based commercial property managers Knight Site Solutions said: “The advice being given by groups which support squatting now indicates that they are looking to actively target commercial property and their removals from it remains primarily a civil matter and therefore the responsibility of the property owner, who will need to take legal action to recover the property.

“This is both time consuming and costly to do and whilst the intention behind the new law was to protect home owners, it has pushed the problem towards the business community and there is in many areas a lot of empty commercial property around for squatters to choose from.”

Peter cited a potential scenario of an empty retail unit or public house with a flat above it. Squatters could legally claim not to be living in the residential part of the property and the Police would be completely powerless to intervene.

The Ministry of Justice has insisted it will seek to improve the current civil remedies of such cases as well as the enforcement of existing criminal offences made by squatters. As yet, no timescale has been placed on this and landlords are therefore urged to remain vigilant in the coming months.

Peter Knight can be contacted via www.knightss.co.uk

Commercial service charges remain a complex and highly topical issue in commercial property. There is a series of problems frequently observed in property management relating to how service charges are managed.

Some of the issues, such as poor compliance with the RICS Code, have recently been addressed at the British Council for Shopping Centres Conference (BCSC). And, further raising the profile of the issues a Service Charge Summit is expected to be staged by the RICS in November this year to address some of the areas of conflict pertinent to service charges.

Peter Knight, director of Manchester-based commercial property managers Knight Site Solutions highlights the issues that are frequently observed in practice relating to the following areas.

Accounting practices. Confusion can be avoided if the service charge reconciliation statement for the year is prepared on an accruals basis. Unfortunately, practice (as well as our research into the subject) suggests that a lot of companies use the cash basis for recording service charge monies. Given the level of spending at some locations, as well as, the nature of accruals accounting, a proper balance sheet must be put together as well. This becomes even more important in the event of sinking fund or utilities deposit collection.

Procurement. Services contracts are often centrally procured by the landlord or the managing agent, which may lead to inappropriate levels of services at a particular building. Furthermore, the costs incurred by the occupiers may be non-recoverable under the terms of the contract, which can result in overcharging.

Management fee. Not all management contracts provide a detailed description of the activities carried out by the management team, which creates ambiguity. Even less often, management contracts specify time required to perform the tasks and respective hourly rates. Hence, a lack of transparency and a ground for a dispute. On the positive side, the industry is shifting from percentage fees to fixed fees, which represents a much more sensible approach to pricing.

Lack of dialogue. As in any sector, insufficient amount of communication creates problems. Hardly ever an appropriate forum is convened to agree on the level of services, KPIs and the budget for the property. We believe that such dialogues between the landlord, and tenants, and the managing agent are paramount to achieve high operation qualities of the property as well as satisfied customers.

These are of course only some areas which require stakeholders’ attention. However, we believe that if the above aspects of property management are sorted out at a higher level, a lot of technical issues can be resolved much easier.

Lack of legislation and separation between the customer and the consumer (for many properties, the managing agent provides its services to the landlords, while the tenants represent the end user or consumer) reduce the incentive to comply with best practice and continuously improve their services for many providers. We believe that a ‘best practice’ approach to service charge management will not only help to avoid disputes (and quite often unnecessary legal costs), but also improve property performance.

Peter Knight can be contacted via www.knightss.co.uk

Landlord and Letting Show organisers are expecting a boom in visitors attending their forthcoming London event. The show organisers, AEP Media Ltd, report a 45 per cent increase in visitors booking free tickets to attend their September show based in the Barbican in the City of London.

The show has undergone a major revamp including new speakers and revised seminar schedule boasting a wider range of topics. Improvements also include a new website and extended 16 page show guide. The show guide will also be distributed to readers of Landlord and Buy to Let Magazine as a supplement, promoting the event to an extra 17,000 subscribers.

Oliver Romain, Managing Director of AEP Media, commented; “Visitors and exhibitors already love the Landlord and Letting Show, however, we wanted to make it even better and have been working with the main landlord associations and other industry experts, such as LandlordZone, to ensure to the show offers an unrivalled experience.

We are the longest established independent landlord exhibition, this is our 23rd event, and we want this show to be the best yet. We can now boast the largest landlord exhibition since 2008 and the largest expected attendance of landlords and letting professionals for some years”.

Visitors attend the show to gain advice on all aspects of letting through a comprehensive seminar programme and wide variety of expertise and product knowledge available in the event’s exhibition. This year’s event will include over 60 exhibitors and 35 free to attend seminars located in four seminar theatres at one of London’s iconic venues.

The Barbican is one of London’s most famous entertainment and event settings. Located in the heart of the City of London, it offers unrivalled access via public transport and road.

The Landlord and Letting Show is open from 4th-5th September 2012, tickets are free when booked in advance or £10 on the door.

To find out more or book free tickets visit www.landlordshow.info Limited exhibition space is available contact 01625 511151.

Rent reviews are often regarded as one of the pitfalls of commercial property tenancy but they needn’t be cause for fear or anxiety if you seek specialist advice.

If you’ve never approached a commercial property management company previously to deal with site acquisition or lease advice, now might be a good time to ensure you have a highly experienced property consultant to fight your corner with your landlord.

The frequency at which rent reviews take place will already be agreed within the original lease and their purpose is basically to alter the rental rate according to the current market level.

Most rent reviews take place every five years but businesses are advised to seek professional guidance before the event (at least 12 months prior to the review date) so you can plan any response. It’s also useful to monitor the rental market for comparable properties to get an idea of what is realistic and acceptable to your business. Rent reviews are usually upward-only and it’s therefore wise to prepare for this eventuality, so that you’re in the best position to negotiate a better rate.

Landlords usually provide written notice that a review is to be activated and a figure will be given for the new rent. If you disagree with the sum quoted, you must appeal immediately in writing or ask your commercial property management company to oversee the objection on your behalf. The terms of your lease may detail a deadline for any appeal against rent reviews and if you fail to meet it you could be paying over the odds until the end of your lease or the next rent review.

Peter Knight, managing director of Manchester-based commercial property management company and construction consultants Knight Site Solutions Ltd, said: “Businesses should remember that a rent review is by no means a done deal, and that bargaining or negotiation is an accepted part of this process.

“It is entirely possible that a landlord will arrive at their rental figure from looking at the highest rents in a particular area and the best premises, in other words not comparing like for like. A variety of factors affect rental value in addition to size and location of premises including the conditions of a lease and whether there is maintenance or repair liability and this information should be an influencing factor to any value changes.

“Seeking the advice of a property management specialist is the best way of negotiating your position and securing a favourable rent but make sure you act early to give them time to prepare your case.”

Energy performance is an ever-growing consideration for property management companies when tasked with site acquisition. This is partly due to today’s soaring energy prices but also because of a collective concern among businesses about the impact of Co2 emissions and the importance of being seen as an environmentally-conscious organisation.

Sourcing commercial premises which satisfy budget and lease requirements is simply not enough in today’s commercial property market and many businesses place energy efficiency as a top priority when looking for new premises.

Commercial property management companies can achieve significant annual savings for businesses by seeking out premises which are already energy efficient as well as clarifying the exact responsibilities of the tenant in maintaining internal energy systems. If your looking to build your own premises, they can also project manage every area of the design and construction to meet modern energy efficiency needs.

All commercial property owners are required by law to provide buyers or tenants with an Energy Performance Certificate(EPC) which rates energy efficiency on a scale of A (very efficient) to G (least efficient) as well as recommending improvements. Carrying out suggested improvements can enhance energy efficiency and save you money on energy bills but commercial property management companies will negotiate on your behalf with landlords to decide whose responsibility it will fall under.

Air conditioning units already fitted within commercial premises must be adequately maintained to ensure they continue to be energy efficient and will need to be inspected regularly by an engineer to meet health and safety compliance. Again, commercial property management companies can iron out these details during lease negotiation to protect businesses and clarify their responsibilities.

Another area where massive savings can be achieved in commercial properties is lighting. The Carbon Trust estimates that installing lighting refurbishment and sensor-based controls can lead to annual cost savings of 20%. Lighting accounts for up to 40% of a building’s electricity use and businesses would be wise to invest in LED lighting. With a minimum life of 50,000 hours, LEDs will last five times longer than the average bulb, saving energy and greatly reducing maintenance costs.

Peter Knight, managing director of Manchester-based commercial property management and construction consultantsKnight Site Solutions Ltd, said: “When you’re looking to relocate or expand your business portfolio, energy efficiency should be a factor in the selection process because it offers a real monetary saving, sometimes several thousand pounds depending on the building and its size. Obviously the age of any commercial premises can have a factor on energy efficiency, as new constructions will have been built with higher sustainability in mind however an EPC provides a useful guide as to how the building has been constructed, insulated and serviced and the likely impact this will have on your budget.

“Boiler efficiency plays a key role in the overall energy efficiency of a building and if the heating system is old, it may be wise to make improvements or to seek alternative premises. Here at Knight Site Solutions Ltd, we provide a full building maintenance service to tenants of commercial premises which incorporates energy efficiency to reduce costs and maximise efficiency.

“Businesses should always build energy efficiency into their refurbishments and fit-outs and as property managers we will build sustainability information into our advice to clients. With new buildings, developers should be mindful of the Breeam assessment scheme which will evaluate and rate a building’s design and construction specifications according to sustainability”.

Thanks to Knight Site Services for their contribution to this article.

Negotiating a lease is one of the hardest tasks facing any business seeking to acquire new commercial premises which is one of the reasons many turn to the advice of a profession property manager.

A wrong decision can have significant financial repercussions on the business which can be enough to threaten the business’s survival, especially in the current economic climate, and much care is needed from the outset to determine the implications of the lease.

Thankfully, small businesses will receive additional support in the New Year thanks to The Royal Institute of Chartered Surveyors (RICS), which is set to launch a freely available lease which aims to support small high street retail businesses.

While lack of demand in the commercial property market is bad news for investors and the economy as a whole, businesses looking for new premises are in an ideal bargaining position, according to commercial property managers.

Availability of commercial premises appears to be increasing according to the latest figures which means landlords are prepared to offer greater flexibility to commercial tenants and competitive rental prices to entice them into a deal.

Appointing a property management company to source business premises and negotiate a lease on your behalf can be a shrewd move in such a climate and will help you achieve the best deal for your business. Whether you’re looking for one-off support or for a permanent service to oversee multiple site acquisitions, property management companies can help you save money and ensure your business is protected from unnecessary liabilities including refurbishment.

Peter Knight, managing director of Manchester-based property and construction consultancy Knight Site Solutions Ltd, said: “Landlords are more inclined than ever to offer incentive packages to snap up tenants because of the competition out there and businesses are wise to use these gloomy economic times to their advantage. However, businesses should still be on their guard when agreeing to the terms of a lease to avoid costly exits and hidden expenses.

“Whether you’re looking for start-up premises or for a new base to add to your growing property portfolio using the services of a property management company will safeguard your position and ensure you receive a good return for your investment. With an extensive network of contacts, a good property manager will not only source a good selection of options but will also be able to negotiate a better deal on your behalf and make the process much simpler.”

Recent figures from the Royal Institute of Chartered Surveyors UK Commercial Market Survey show 15% more surveyors reported available space rising in the third quarter of 2011.

Overall tenant demand retreated during this period and fell into negative territory for the first time this year. Surveyors blame the situation on the uncertain outlook for the wider economy which has impacted negatively on demand.

The RICS said the sector saw the largest drop in demand for space while inducements rose over the three-month period as landlords looked to entice tenants into new deals.

Property Aspects Magazine appreciates the contribution to this article from Property sourcing and management specialists Knight Site Solutions in Manchester