Articles / News

SUCCESS OF HORSLEY BUSINESS CENTRE

The Horsley Business Centre, which is managed by Stanton Mortimer Property Consultants, has been hailed a success following the letting of nine of the ten units.

The site, which is set in a rural village location close to Hexham but only 11 miles west of Newcastle City Centre, was nominated in the 2005 Journal Landmark Awards. It was developed by County Durham-based Anvil Construction Limited and is owned by Anvil Homes Limited.

The offices are constructed in traditional stone and slate but offer a modern, open-plan working environment. Nine of the ten suites are now let with a diverse range of occupiers including IT design, civil engineers, loss adjustors, financial services and graphic designers.

Stanton Mortimer works with a range of clients, which include major charitable trusts, international property investment funds and private investors, with property assets throughout the UK. The property management service includes rent and service charge collection, service charge reconciliation, accounting, dealing with tenant's requests, service of notices and enforcement of covenants.

Michael Blake, directorat Stanton Mortimer Property Consultants said: “Since the completion of Horsley Business Centre in Autumn 2005 there has been no shortage of interested parties.

“The business centre provides an attractive and peaceful rural working environment but benefits from its close proximity to Newcastle and the main transport links of the A1, A69 and Newcastle International Airport. It is no surprise that the development has been so popular and the letting of all but one of the units is great news.”

STANTON MORTIMER APPOINTED PETEREL AGENTS

Stanton Mortimer Property Consultants has been appointed as managing agent for Peterel Field Business Village close to Hexham.

Peterel Field Business Village comprises a range of former farm buildings, which have been redeveloped to provide eight self-contained office suites arranged in a quadrangle around a central lawned courtyard.

The development has been fully let by Stanton Mortimer, with a diverse range of occupiers including Hadrian’s Wall Heritage, a veterinary practice, a firm of building surveyors and a building company.

Peterel Field benefits from an excellent location. Hexham is the largest town in West Northumberland situated on the A69 main Newcastle to Carlisle road, 20 miles west of Newcastle standing on the banks of the river Tyne. The town is a thriving community with a wide range of facilities. It is very popular with tourists and has recently been awarded almost £1 million to restore some historic buildings including Old Gaol, which is now a museum and to develop the facilities.

Stanton Mortimer works with a range of clients, which include major charitable trusts, international property investment funds and private investors, with property assets throughout the UK. The property management service includes rent and service charge collection, service charge reconciliation, accounting, dealing with tenant's requests, service of notices and enforcement of covenants.

Michael Blake, director of Stanton Mortimer Property Consultants said: “Peterel Field is a real success story. The development provides an attractive and peaceful rural working environment and benefits from its close proximity to Hexham.

“Peterel Field is an excellent example of how disused, outmoded rural buildings can be developed to create a practical and ambient working space for a diverse range of businesses. We are delighted to be continuing our successful association with this exciting development and look forward to working with the occupiers in the future.”

THE NEW RICS CODE OF PRACTICE SERVICE CHARGES IN COMMERCIAL PROPERTY

BY MICHAEL BLAKE B.Sc (Hons) FRICS

Michael Blake is a Director of the Newcastle upon Tyne office of Stanton Mortimer who act on behalf of a number of institutional and private Landlords in the management of Commercial Property in the North East of England and throughout mainland Britain.

Service charges in commercial buildings are often the cause for disputes between Landlords and tenants. A Landlord is mainly interested in maximising rental returns whereas a tenant is keen to minimise all outgoings relating to property occupation. The service charge is one of these outgoings. A well managed building and properly administered service charge will reduce the opportunities for dispute and keep costs under control. They will also ensure that the Landlord maintains strong relationships with the existing tenants and attracts new ones.

It is seven years since the Royal Institute of Chartered Surveyors issued its previous guidance notes on service charges in commercial property. In June last year the RICS launched a new code of practice which comes into force on the 1 April 2007. The code comes with the support a five leading property industry bodies: The British Property Federation, The British Retail Consortium, The British Council for Offices, The BCSC and The Property Managers Association.

Since the last review of the guidance notes tenants have become far more interested in what expenditure is incurred in running their building. The new code seeks to reduce the opportunities for conflict between Landlords and tenants. The key objectives of the new code are as follows:

• The delivery of budgets for expenditure

• Ensure that the service charge is “not for profit, not for loss”

• Encourage transparency

• Improve communication and Landlord and tenant relationships

• Change the way that management fees are calculated

It is proposed that the Building Manager who is responsible for running the service charge will issue budgets to occupiers with an explanatory commentary at least one month prior to the start of the service charge year and reconciliations following the year end to all users within four months of the year end.

“Not for profit, not for loss” does not mean suppliers of services cannot make a reasonable profit on the services they provide or that managers cannot make a profit on their management services but the costs will be transparent so that all parties – owners, occupiers and managers, are aware of how the costs are made up and that management fees will be transparent with no hidden mark ups.

“Not for profit” means that the Landlord is not entitled to refurbish a building for its own capital gain. The code recommends that service charge costs should be restricted to costs properly incurred in the operational management of the building. This includes the reasonable costs of maintenance, repair and replacement (where beyond economic repair) of the fabric, plant, equipment and materials necessary for the operation of the building. Many leases enable the Landlord to go beyond ordinary maintenance giving the right to recover the cost not only of repairing but also of general refurbishment.

In some cases service charges combined with business rates can be as much as the rent for commercial properties. Occupiers often complain about how little communication there is from Building Managers on how they are spending what is effectively the tenant’s money. It is hoped that encouraging openness both in the accounts and explanatory notes the Building Manager provides will prevent disputes.

It is proposed that the fee for the management service is the reasonable price for the total cost of managing the provision of the services at the property. Sometimes leases prescribe that the management fee should be a proportion of the amount of the relevant service charge expenditure. The code recites that such linkage is no longer appropriate and is a disincentive to the delivery of value for money. The code recommends a fixed fee for a reasonable period of time which may be subject to indexing.

It is recommended that the provisions of the new code are implemented as soon as possible. It is acknowledged that existing leases will generally follow the previous code but surveyors are urged, when renewing new lease documents, either on a new letting or in a lease renewal situation, that all opportunities are taken to align the new lease with the code.

The property industry generally has welcomed the RICS’s new commercial property service charge code of practice. The President of the RICS, Graham Chase, is reported to have said that the code will “balance the two sides of the equation”. If the new code is adhered to, both Landlords and tenants will benefit. The tenants will ensure they receive value for money in the services provided. The Landlords will have well managed buildings, strong relations with the tenants, and will be confident in the knowledge that the value of their investments will be maintained with all appropriate costs borne by the occupiers.