Justin Bennett of LBB Chartered Surveyors writes about the importance of getting the right advice and refers to one of the earliest cases under the Leasehold Reform Housing and Urban Development Act 1993 of Willingale V Globalgrange. In this case the landlord failed to respond to a tenants Notice to enfranchise and had not only to accept the substantially reduced price offered but also the terms of the transaction, which meant that the hotel lost its fire escape right over the enfranchised building. The case reached the Court of Appeal. The moral behind this story is that getting the right advice is crucial. Please click here for the full article.
Archive for the ‘ News ’ Category
Enfranchisement – Getting the right advice.
Tuesday, May 18th, 2010Working Property Income
Friday, May 7th, 2010John Byers will be speaking at the Christian Resources Exhibition on the 11th May 2010 as a guest of Make It Happen who are hosting a workshop entitled “Innovative Income Generation”. John will be speaking at their morning workshop on the subject of “Working Property Income” and amongst other things will be talking through some of the most common pitfalls encountered dealing with Charitable Trust Properties. More details on CRE.
Selwyn Langley of Chartered Surveyors, Langley Byers Bennett delves into the taxing problem of Capital Gains.
Friday, March 19th, 2010 |
Making sensible provisions for tax is an essential part of managing any property investment, large or small. Capital Gains Tax (CGT) can have a dramatic effect on your returns, often with substantial payments of tax having to be paid, so it makes sense to consider the matter seriously and take expert valuation advice to mitigate your liability. Refer to our Specialist Valuation Page for more information. |
NEW OFFICES NEW FUTURE
Thursday, March 11th, 2010LBB are moving from 42 Store Street after 9 years and relocating on 12th March 2010 to:
St Bartholomew House
90-94 Fleet Street,
London
EC4Y 1DG
Tel: 0207 822 8850
Fax:0207 822 8851
Managing Your Property Expenses in an Economic Downturn
Tuesday, March 9th, 2010
 John Byers BSc MRICS |
Langley Byers Bennett Director John Byers, offers some practical tips in controlling a business tenant’s property costs.
His article can also be read at http://issuu.com/businessindependent/docs/march |
Exercise any break clause
Many leases have break clauses that allow a lease to be ended early. In a downturn business rents can be more economic, and by exercising a break clause you may be able to take advantage of current market conditions and renegotiate terms with your Landlord.
Re-negotiate lease terms
Landlords are keen to retain tenants. As your lease comes to an end you may consider renegotiating your lease, maybe surrendering the unexpired term and taking on a new lease on better terms for the future.
Look carefully at your service charge
Whilst the Landlord has an obligation to
ensure service charges are reasonable they
do not always make them as low as possible. Pressure from Tenants within a building can help keep the running costs as low as possible.
Ask for the building insurance to be re-quoted
The cost of building insurance often rises every year on the basis of an inflation provision. Whilst not a bad thing, sometimes this can mean that the cost of the insurance premium rises beyond the replacement value of the building itself.
Avoid duplicating expenditure
Check to see what the service charge for your building covers and make sure you are not paying for the same things yourself. Look carefully at the Landlord’s building insurance to see if it covers you for things that you are separately insuring or if you are paying for other items such as the cleaning of the common parts, or electricity bills that the Landlord may also paying for.
Make the most of your space
During difficult times many businesses need less space. Think carefully about your space requirements and try to release unused space that back to the Landlord. You may be able to sub-let the space to another occupier; or share it with an associated business. Surrender or sub-let unused car parking or storage space.
Look for Potential Expansion Opportunities
When times are hard, business space can be relatively economic and Landlords will offer better incentives to new Tenants. It can be a good time to negotiate lower rents and get more generous incentives, such as rent free periods and capped service charges. If you think you may have a requirement for business space in the near future, it can be a good time to secure space at a lower cost and on better terms than you may be able to get later.
And don’t forget dilapidations
At the end of most business leases the Landlord expects the Tenant to pay the cost of repairing, reinstating and redecorating the property. This can lead to expensive claims, including compensation for loss of rent, service charge and rates. It is important to make provision for it. You should also consider carrying out works during the course of the lease so that repairs do not accumulate. You may seek to reach an agreement with your Landlord as your lease comes towards end so that you do not receive any unexpected demands.
Have you been tested?
Friday, March 5th, 2010Case Study For Managing Agents by John Byers.
We are currently preparing a complex refurbishment scheme for the common parts of a lovely Georgian building in London. Until recently the building had not been managed properly and no records were available for asbestos surveys, electrical test certificates and health and safety risk assessments. This presents a real difficultly when preparing a specification as it is not possible to be sure of the exact extent of work that may be required to the building. Unfortunately such tests often appear an unnecessary waste of resources but they are essential if works are to be specified correctly. In the absence of such information there is no option but to allow large provisional sums in respect of the works that can have the effect of inflating the cost of works unnecessarily, disadvantaging the tenants.
Dilapidations and break clauses
Friday, March 5th, 2010Case Study : For Solicitors / Property Owners / Commercial Tenants
We were approached by clients with a commercial property in Surrey and asked to give them advice in respect of a dilapidation claim made by their Landlord. We carried out an appraisal evaluating the Landlord’s claim (made in the region of £200,000) and advised that a settlement might be achieved at a figure in the region of £135,000. However upon reviewing the lease terms we realised that the Landlord’s claim had arisen because our client (without advising us) had triggered a break clause. The terms of the break clause required full compliance with the lease meaning that if the slightest defect could be found the Landlord may be able to reject their break clause notice. The effect of this would be to force our client to continue the lease for a further five years at the cost of a many hundreds of thousands of pounds.
Working with the Landlord’s solicitor we were ultimately able to negotiate a settlement with the Landlord at around £120,000 including a release from any further claim that may arise. Possibly a lucky escape for our clients!
Is now the time to extend your lease?
Friday, March 5th, 2010For residential Leaseholder by Justin Bennett.
The Land Registry and the major mortgage lending institutions have recently announced the seventh monthly increase in house prices. Fixed price mortgage interest rates have also declined. In contrast, Barclays Bank has suggested that interest rates will rise to 6.5% by 2015. The other banks are seemingly supporting this view, albeit not necessarily to the same level nor with the same pattern to the predicted rises in base rate.
With this in mind it is more necessary for leaseholders to consider the cost of extending their leases (by 90 years) or enfranchising (buying their freeholds) whilst mortgage rates are low and values have not risen excessively. There is the further potential benefit to be gained from a recent Lands Tribunal decision on flats in Kelton Court, Edgbaston [LRA/97/2008]. This decision, in contrast to the then well publicised Sportelli cases in prime central London (2006-2008), offers hope for leaseholders of lower premiums in the future.
Proper professional advice is needed in what is a complex matter and you should speak to either a surveyor or solicitor. Further helpful information can be found at http://www.leaseholdenfranchisement.co.uk/ and http://www.lease-externsion.com.
Why spend more than you have to?
Friday, March 5th, 2010Take professional advice on your building insurance to ensure you get the best value by John Byers.
Everybody is looking for an opportunity to save costs in these difficult times and when considering expensive items such as building insurance you would want to be sure that you are paying for the right amount of cover. Obviously if a property is under insured there are serious repercussions if a claim arises, but nobody wants to pay for insurance cover that is not required.
We frequently carry out building reinstatement valuations (fire insurance valuations) for property owners and find that the sums insured are often incorrect. For example on a recent portfolio valuation for residential clients almost 10% of the properties were over insured by at least 20%. Getting the correct sum insured not only ensures you are properly protected but can also save unnecessary expense.
Who can say where it’s going next?
Friday, March 5th, 2010A comment on funding issues in the residential market by Selwyn Langley.
There has been much press speculation on the state of the Buy To Let Market.
At the height of the market there were many mortgage facilities available
and 85% loan to value was readily available.
Under present conditions there are a small number of providers only for
facilities of this type and the deposit normally required is at least 35%.
New flats are particularly difficult to fund at the present time as lending
sources consider the value of these suspect.
To the seasoned Buy To Let investor there has however been an unusual fillip
as with the drop in mortgage interest rates many Buy To Let investments are
now showing a positive return after payment of interest. These are normally
funded on interest only basis as most operators in this market would wish to
take advantage of capital growth.
Those who were brave enough to purchase in the early part of last year are
now also sitting on substantial capital gains and when sales are made they
can be making anything up to 40%-50% return on capital they have employed as
a deposit.
Some lenders have tried to be innovative when fixed rate deals have ended
and have offered new deals at interest rates probably 1% above standard
variable rate. As press speculation today is that interest rates are
unlikely to increase this year this would make for expensive borrowing.
St Bartholomew House
90-94 Fleet Street
London EC4Y 1DG
90-94 Fleet Street
London EC4Y 1DG
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020 7822 8850f
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