So here is a summary of how RPS Ltd management their clients estates;

1. Employ quality staff who have knowledge of property, investment and understand what both their clients and occupiers expectations are.

2 Its’ about the numbers; rent roll, service charges, recoverable and non-recoverable costs, insurance premiums, business rates, professional fees, void rates. It will always be about the numbers……

3 Pay your staff and suppliers on time, keep them informed and motivated. Say thanks for  a good job done. What they do reflects on what you do….they represent your service.

4 Plan and regularly review the estates plans for minimising voids, marketing, service charges, repairs and refurbishments. Be profitable and reduce costs.

5 Be clear in your understanding of your clients objectives and demonstrate how you are delivering them.

6 Have good finacial support and access to expertise on tax planning, IHT, SDLT and VAT. You need to be able to speak their language.

7 Can you deal with the bigger picture and projects? Think development opportunities, energy saving schemes and capital expenditure projects.

8 Prepare a structured 5 year plan on how the property will be managed. Review this annually with the client.

9 Keep records and keep accurate records. Being a good adminstator is essential.

10 Communication; Absolutely essential. Be aware of the key issues in your chosen field. What is important to your tenants, occupiers and clients now, where are the threats and where are the opportunities? And don’t be frightened to express an opinion (but make sure you can back it up!).

Let RPS manage your property investments and we’ll show you sound advice, support and management.

Get it wrong and you can forfeit the ability to exercise the option, a very expensive mistake. So here are our notes and guidelines to help minimise those mistakes.

1 Read your lease. Then……..re-read your lease.                                                This is the arbiter if there is a dispute. So keep to the rules of the lease even if they seem not to follow common sense. It is easier for the other party to dispute your actions if you fail to meet the strict lease requirements.

2 Don’t leave it to the last minute. Plan your moves well in advance and in conjunction with your business plans and get your estates working for the business and not your business working around your lease(s).

3 Who are you issuing the notice to? The landlord, the tenant, the agent or A.N. Other? Again check the lease requirement. If you want to send it to the legal team as well then ok, but check and re-check what the agreement, contract or lease requires, as an absolute minimum.

4 Check and re-check what is to be done and when.

5 Keep a diary of events.

If you are unsure what is to be done, or even if you have a lease break option then contact the team at RPS Lt and let us manage your options for you.

If you think retailing may be for you, perhaps you have a product you want to trial, or just want to make the most  of an opportunity during a special period such as Xmas, Easter or event in your town, then a short term letting could be for you.

These short term occupancies, sometimes known as ‘Meanwhile Leases’ can bring life back to a property or be used for a community benefit and rejuvenate surrounding areas. So, if you think it’s for you and you’ve seen an opportunity here’s some RPS comments for both the landlord & tenant to take note of to protect yourselves;

• A 42 day letting can trigger a further business rates relief period for landlords. So consider this when looking at business rates mitigation plans. Don’t leave this just to your retail units. Look for similar opportunities in your office & industrial properties.
• Tenants, as the landlord is likely to gain from your occupation, push for very low nominal rental.
• Ensure the occupancy does not attract Security of Tenure and falls outside of the LTA 954 Pt 2
• Consider a licence instead of lease
• Make sure you cover issues such as service charge, dilapidations professional fees and insurance premium contributions. We suggest a tenant seeks to confirm all charges are included within the rental charges. See our previous blogs regarding occupancy costs.
• Planning may be an issue so ensure you cover this in your negotiations. Can you use the property for the purpose you want!
• A landlord letting a property is less likely to see the property suffer from vandalism or squatters and is likely to see a reduction in void property costs.
• Landlords, consider promoting and marketing your properties to attract short term occupancy. Make it easier for you to benefit from your property being used whilst we wait for the economy to pick up.

At RPS we see these short term lettings as win – win situation but only if planned and drafted correctly. They have sound business foundations and a shrewd business operator and landlord will see quick benefits from such an occupation.

By using the phrase ‘Without Prejudice’ at the top of all such communication will prevent the use of communications in evidence until a contract is in place to settle the dispute. The documents / communication will be privileged from being produced if legal proceedings are required. But once agreed terms are in place they will be bound, even if headed ‘without prejudice’ unless also headed ‘subject to contract’ (or it is clear that some other type of formalities is also required.

The courts have held, however, that the principle of “Privilege” can protect subsequent and even previous letters in the same chain of correspondence. Strictly speaking, therefore, it is not necessary that every letter be marked “Without Prejudice” if it is clear that the communication is intended to be part of the settlement negotiations. But to be sure it is recommended that you add such headings.

 “Without Prejudice” correspondence remains “Privileged” even after a compromise has been reached and is generally inadmissible in any subsequent litigation on the same subject matter whether between the same or different parties. However, where the negotiations are successful and the “Without Prejudice” correspondence constitutes a binding contract the correspondence may be produced to prove that such a contract has been entered into (if, say, one party does not comply with the terms of the settlement, and the other wishes to enforce it).

Note; Consider using ‘Without Prejudice’ on all communications, this includes emails and text message as well as formal letters and documents.

What can a landlord include in a dilapidations claim?

Repairs
The cost of repairing the demised premises may include putting the premises into repair that meets the standards found at the beginning of the lease. You may also find that the obligations may be outlined by a Schedule of Condition recording the standards required.

Decorations
As standard, most leases require that the premises be decorated internally every five years and externally every three years. There will usually be a clause requiring that the entire premises be decorated in the last year of occupation.

Reinstatement
It is usual for the tenant to be required to reinstate the premises to the configuration / layout in which the premises were originally found. For example, this is likely to include the stripping out of any partitioning or plant.

Professional fees for Contract Administration
The fees for preparing the specifications, obtaining tenders and administrating works on site.

Professional fees for preparation of the Dilapidations Schedule
This may also include the fees for any specialist testing.

Loss of Rent
The market rent for the period it would take to undertake the works plus possibly the period for preparing specifications and obtaining tenders. Although in a poor renting market the landlords ability to demonstrate this loss will become harder.

Loss of Service Charge
Only If applicable where the building is in multiple occupancy and a service charge account applies.

Value Added Tax
On the cost of the works where not recoverable by the landlord.

When will you receive a Dilapidation schedule?
There are two stages where dilapidations might affect a tenant; during the term if the landlord is concerned that the tenant is failing to keep the premises in good repair; or more commonly at the end of the lease when a landlord usually alleges that a tenant has not complied with his repairing obligations.

During the Term of the Lease – The landlord may serve an “Interim” schedule when a tenant has over three years remaining on the lease. The tenant’s obligation to repair in such circumstances is governed by his repairing obligations, lease term and statutory limitation. An interim schedule is difficult to enforce formally due to the dangers of inviting forfeiture of the lease if entry is gained to the property without specific cause.

At Lease End – the landlord may serve a “Terminal” dilapidation schedule when there is three years or less left on the lease, or up to six years after the lease has expired. The landlord is either in a position where he is seeking damages when the tenant has vacated and not undertaken work, or he is trying to ensure that when the tenant leaves the premises, the property is in good repair.
The end of the lease may come by natural expiry, or may be as the result of the enactment of a break option or forfeiture of the lease. In many cases a break option may require strict compliance with regards to repairing obligations for the break to be effective.
Landlords and tenants have diametrically opposed objectives in dilapidations – the landlord wants the highest possible damages whilst the tenant wants to minimise his costs. Historically this has resulted in over-exaggerated claims in both scope and cost
to leave a margin for the tenants agent to negotiate.

1The key to successful resolution of dilapidations for tenants is based on forward planning. We often advise tenants to seek the advice of a professional well in advance of the lease expiry in order that the dilapidations liability can be assessed and a strategy established. They can then work on behalf of the tenant to negotiate an acceptable settlement and can project manage any required works.

2 In the case of an Interim Schedule, the tenant can seek relief under the Leasehold Property (Repairs) Act 1938 (as amended by the Landlord and Tenant Act 1954) if the lease has more than three years to run (and the lease term is over seven years). This will normally be successful provided that the repairs are not required to put the building in repair under a specific lease covenant or to avoid substantial damage to the value of the reversion of the landlord.

3 In respect of the terminal schedule, the tenant has a number of options as the end of the lease approaches:
• The tenant can attempt to comply with all his repairing obligations either by his own interpretation of the lease or by reference to the landlord’s schedule.
• The tenant can do nothing, wait until the lease expires and then seek to negotiate a financial settlement.
• He can carry out limited works and seek to negotiate a settlement in respect of the work he is not undertaking.

4If the tenant has discharged all his liabilities then the matter should be concluded swiftly. This option is not always viable, as the premises are usually required until immediately prior to the lease expiry. There is also the risk that the landlord may have plans for the building which would over-ride the requirements to carry out some works (ie substantial refurbishment) or they may have a new tenant wishing to retain some of the facilities for which there is a requirement for reinstatement. There is also the danger that the works carried out by the tenants may not be of a satisfactory standard resulting in a full claim from the landlord in any event.

5 we recommend you maintain all data relating to maintenance work done to the premises and its mechanical or electrical installations during your period of occupancy. This can be used to prove that a system remains in working order, consequently, in repair despite any shortcomings in its life expectancy or even original fitness for purposes.

The RPS approach;

As professional adviser’s our role will include the following to ensure that you minimise your financial liability;

1 Assess the repairing, decoration, alteration and yield up covenants within the lease and any other supporting documentation.

2 Advise you as to whether it is best to undertake certain works prior to the expiration of the lease in order to reduce/remove the dilapidation liability or to seek to negotiate a financial settlement with the landlord.

3Prepare report assessing the dilapidations liability, which will provide a realistic breakdown of the potential claim in relation to building works, loss of rent, service charge and insurance.

4 When project managing works, we will ensure that the scheduled works and costs do not exceed the specific liabilities and will not be superseded by essential works required to market the premises.

5 we will be persistent in negotiating a settlement in order to minimise the client’s uncertainty over liabilities or the potential monies available to undertake repairs.

Dilapidations Strategy, The Role of RPS;

Dilapidations are often ignored until the end of the lease. The obligations on both the tenant and the landlord are clearly set out in the lease and by careful management they can be minimised for tenants. A well advised tenant is able to ensure that their buildings do not fall into costly disrepair for the want of a well planned maintenance scheme and a strategy for compliance with the repairing and decoration clauses in the lease in time for the expiry of the term. A proactive approach by all parties will ensure that the long delays associated with dilapidations issues are minimised and tenants can move on without substantial and unnecessary loss.
A clear strategy in dealing with either the repairs or a financial settlement well in advance of lease expiry will afford the flexibility to obtain the best outcome.