20/03/2017

Are you holding anything in reserve?

POSTED IN General

Indeed, landlord’s and managing agents are required to ensure they only employ contractors who comply with Health and Safety Regulations. This can make even routine maintenance or even for that matter inspections more complicated and more expensive where Working at Height Regulations dis-allow the use of ladders. The need to use scaffolding to access roofs can cost more to have erected than the actual repairs carried out. Much talked about drones can be used to identify repairs required for some buildings but their use is very restricted in town centres and, at present at least, they cannot do repairs!

This can act as a disincentive to fully complying with repairing obligations. Routine maintenance like gutter clearance and minor roof repairs can simply be overlooked or ignored. Even the best fitted out shops with the smartest shop fronts can suffer blocked gutters and buddleia growing in roof valleys!

Tenants want to reduce their outgoings and fear costly repairs and dilapidations claims. Leases have also become shorter, and, particularly at times of weaker tenant demand, landlords have often completed leases with limited tenant repairing obligations. Fewer properties today are let on full repairing terms or have a full service charge recovery.

What can be done?…………who is going to pay? Here are some things to consider which can help reduce the risk of a landlord incurring non-recoverable expenditure when keeping their buildings in repair:

  • Draw up a planned preventative maintenance programme to make full use of scaffolding when undertaking cyclical repairs. This helps keep costs down in the medium to long term. Where tenants are responsible they can be encouraged to adopt this approach.
  • Seek to agree, and where possible under the terms of the lease, how the repairing/service charge obligations are to be arranged over the lease term and indeed budgeted for.
  • If a new tenant seeks to avoid open ended commitments to reimbursing landlord repair costs /or the landlord is compelled to accept restricted tenant repairing obligations, a new lease can provide for fixed contributions to provide the landlord with the means to meet future costs of external repairs. Where there is an on-account service charge, a lease can allow a landlord to provide for and retain an element of year end service charge balances to create a reserve fund for future repair costs. This also allows the tenant to budget for contributions.

Wadham and Isherwood would be pleased to hear from you if you would like to discuss further how we can help with letting, selling or managing your commercial properties.