property management

Prepare your property!

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As an energy assessor I get to inspect a large number of properties, most of which are vacant and looking to be sold or let. Consequently it is in the vendors (or Landlords) interest to ‘make the most’ of the property. Historically this has taken the form of ensuring units are cleared out, kept secure and generally ‘tarted up’ where required. If you were selling your house you would follow a similar regime to assist the sale.

There is however now another major factor that vendors and Landlords now need to consider as part of their marketing preparation, the EPC (or energy performance certificate). All commercial properties now need one if they are to be sold or let, so why don’t people take getting the best rating they can seriously?

This week I have prepared an EPC on a period office building (in Derby), nothing unusual there. But, a high proportion of the bulbs were old style tungstens (the type favoured by Daily Mail readers). As part of my report back to the client I highlighted that changing these all to CFL’s (compact fluorescents) would make a massive difference to the rating which as it stood would be an ‘F’.

Before the change
After the change…..

This being most important due to the changes due in 2018 which would make this property unmarketable if it remained as an ‘F’. This is something that all Landlords need to consider as part of their property portfolio reviews moving forwards.

On this property the change was quite remarkable  – for the cost of around 20 CFL’s (£20?) the rating moved from an ‘F’ to a ‘D’! So as far as this client is concerned the bulb change will be done, the EPC updated to a ‘D’ and the properties long term future secured.

So, in a nutshell, before you get your property assessed give some thought to the simple items you can alter like bulbs and fluorescent tubes – it may save you a lot more than just electricity in the long-term!

Another reason to take EPC’s seriously

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20120809-161918.jpgThis is a ‘hobby horse’ of mine, as an energy assessor I am regularly the subject of my colleagues jibes about EPC’s and how they are pointless and just get in the way of doing deals. My response has always been ‘wait, they will become relevant. So get them sorted now’

The changes requiring agents to have an EPC before marketing a commercial property have made them consider them more in the past few months – and strangely has made me busier! However there is another bit of legislation due to take effect from April 2018 which will potentially have a far greater impact and is only just being taken note of by the property world;

• The Energy Act 2011 was given Royal Assent on 18 October last year

• From 18 April 2018, it will be unlawful to let any property that fails to meet a minimum energy rating

What is not clear is exactly what the minimum rating will be, it is being speculated that the minimum will be an ‘E’. This would make all ‘F’ and ‘G’ rated properties unlettable!

As a practice we have been advising our clients to be aware of this for a while, but I have recently experienced its effect for the first time from one of the main lenders – a bank taking a charge over a development of six modern units that were built prior to the requirements for EPC’s on new builds. They had no legal responsibility for getting EPC’s on the units – but it was made a condition of the loan that they were provided.

What should you do / how might it affect you?

  • This could have very significant implications for landlords, and for occupiers who wish to assign or sublet space.
  • ŠŠMarketability of some properties would become impossible unless they were upgraded to meet the minimum standards. It is estimated that approximately 20% of non-domestic properties could be in the F & G rating brackets.
  • ŠŠFurther clarification on the transactional trigger for minimum energy standards is awaited; however the new minimum standards could apply to all lettings and re-lettings, including sub-lettings & assignments.
  • ŠŠValuations of such properties could be affected if their marketability is diminished.
  • ŠŠRent reviews for properties in this situation could also be affected.
  • ŠŠImplications for dilapidations assessments would also exist.

Food for thought, perhaps it is time to get your properties assessed so that you can be sure that they have a long term marketability?

Landlords can help tenants save energy

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The traditional Landlord and tenant relationship is normally seen as a ‘them and us’ style relationship. Often there is little beneficial communication between the two sides, and invariably the only contact is around quarter days when rent is due!

However one of the UK’s largest real estate investment trusts (REIT) British Land have recently been trialling automated meter reading systems in some of their multi tenanted buildings with a view to sharing the findings with the tenants. In tandem with energy-saving initiatives, the REIT has introduced a six monthly energy consumption report for its occupiers. This shows each occupier’s use of energy and compares it to the same period in the previous year together with their performance against others in the same building.

Monitoring and good management are key factors in energy savings and the evidence shows what can be achieved with relatively low levels of capital investment, particularly in additional metering. The key finding has been that active and expert management of the building counts. British Land is in effect funding its own version of the government’s green deal, forward funding green capital investment and recovering the outlay at no additional cost to occupiers through guaranteed savings in energy, which are given by the supplier. This enables the landlord to recoup investment costs through an increased service charge on the back of reduced costs for occupiers.

So by helping tenants see what they are using in energy terms the landlord saves them money, makes them more comfortable and reduces his own costs. While at the same time he makes the building more attractive for potential tenants – simple but highly effective!

Managing property

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When we go on holiday in the summer (and at other times) we invariably stay in self catering apartments or villas. We find the ability to manage our own accommodation much more relaxing. We are not tied to hotel eating times (or restaurants) and are normally located in an area with other locals and not surrounded by tourists – consequently you tend to get a better feel for your chosen countries life style.

We have experienced a wide variety of rented properties; from the very basic (in rural France) to very luxurious (on the Cote-d’azure). Most are privately owned and managed either remotely by the owners (often better), or by a local management company. Our experiences are generally excellent.

This year we have returned to the Oriuolo Apartment in Florence. It is located just behind the Duomo so ideally situated for a ‘city week’. Our experience was good last year so we rebooked happily.

Unfortunately the local management have ‘taken their eye off the ball’ – the apartment is not what it was! The location is still great, but there are a litany of small issues that really would not be an issue if the apartment was being managed properly.

1. There should be broadband connected – it isn’t anymore, but we weren’t told until we arrived (we were offered a Vodaphone pay as you go dongle – not quite the same! And at our cost)

2. Numerous bulbs were not working – we were promised new bulbs would be delivered – 4 days ago, still waiting!

3. The washing machine door handle is broken, only discovered when trying to use it, a phone call to the agent resulted in the message – yes it is, use a spoon to open it! Luckily this works – but come on!

4. There are no large glasses! I like shots as much as the next man, but come on! We need to drink!

5. The toaster is broken!

I know that sometimes I am a grumpy old man, but these small individual items add up to me and make it an issue of bad management.

As a company we have a large and highly successful management department (run by my colleague and fellow blogger Tim Garratt). It is successful because it has an eye to all issues and deals with them (even the difficult tenants like me!).

The managing company here in Florence is run by two sisters who proudly told us on arrival that they had some nice new apartments around the corner which they would love to show us (they have an office there as well) – not perhaps the best message to give to someone in one of their clients other rentals?

Time for a new managing agent for Oriuolo Apartment in Florence?