Options for Change Workshop 2008

22.07.08

Property Solutions held a workshop at which the findings of the recent "Options for Change" report were fed back to industry stakeholders.

On 8th May 2008, Property Solutions hosted a workshop at The Oval at which the findings of the London Business School MBA project entitled “Service Charges in Commercial Property – The Options for Change” were fed back to the industry stakeholders who contributed to the study. In attendance were landlords, tenants, Options for Change managing agents and RICS members. The study’s findings (click here to view the summary report) were then discussed and the remainder of the day focussed on what the next steps should be. A number of important conclusions were reached.

Enforce the Code

The key outcome of the workshop was that the stakeholders agreed that not only should the RICS Code of Practice be put into operation as quickly as possible but that on its own the Code was unlikely to make the industry fall into line nor ensure value for money service charges are achieved.
To achieve compliance with the Code and value for money the industry needs concerted leadership from the RICS on a number of further measures.

Benchmarking.

A large scale study of both service charge costs and compliance with the Code needs to be carried out by an independent body such as IPD Occupiers. The study should be updated annually and made publicly available to improve transparency.

Management.

Improvements need to be made to the quality of the management of buildings and service charges through improved training and personnel selection.

Management Fees.

Assistance needs to be provided to agents to transfer from fees based on a percentage of costs to fixed fees based on management workload. Proposals need to be developed to split the existing contract with landlords into two with agents contracting separately with landlords for the asset management role and with both tenants and landlord jointly for the management of service provision.

Transfer of Risk.

As a response to shortening lease lengths, proposals need to be developed with the RICS to provide all-inclusive rents as a way of transferring the risk of a building’s life cycle costs from tenants to landlords.  The potential impact on valuations will need to be considered.