Cottrell, P. (1999), "Property Management Conference - The Issues Affecting Property Managers, Henry Stewart Conference, 28 May 1999, The Brewery, London", Property Management, Vol. 17 No. 4. https://doi.org/10.1108/pm.1999.11317dac.001
Emerald Group Publishing Limited
Copyright © 1999, MCB UP Limited
Property Management Conference - The Issues Affecting Property Managers, Henry Stewart Conference, 28 May 1999, The Brewery, London
Keywords Property management, Proactive approaches, Y2K, Disabled people
This was Henry Stewart's annual review of the latest issues affecting property managers. Arguably, property's slice of the investment cake has been reduced to near crumbs in recent years. Yet it is that unique potential to transform poor performers into best performers which attracts managers of property companies and, increasingly, many of the funds.
Whether Cinderella gets to the ball or not depends, therefore, on the effective application of active and skilled management in the context of a changing world. The conference began with an analysis of some of these changes.
Changes in markets, technology and the economy continually present the manager with both opportunity and threat. The information revolution, as we are all aware, is leading us closer to a paperless environment but changing employment trends still call for more types of buildings in new locations. The impact of e-commerce on retailing patterns represents a threat to established retailing patterns. At the same time, road haulage is giving way to rail haulage as the Government introduces transport development zones for commercial hotspots. The proactive manager will be alive to the changes and avoid managing off the backfoot. Indeed, such management will result in inferior performance - which could lead to a take-over from a competitor. This is where threat is transformed into opportunity.
Teamwork, imagination and market awareness (TIM)
One thing was made clear: in the current low inflation climate the smokescreen of inflationary conditions will no longer hide the manager's performance. This will be particularly pertinent should the spectre of deflation materialise. Pro-active management it was suggested should depend on TIM (teamwork, imagination and market awareness). Imagination, otherwise known as lateral thinking, is crucial if owners and shareholders are going to exploit hidden value. This was certainly the case for one London local authority who, charged with maintaining an area of scrub as public open space, put a helium balloon on it, thereby generating much needed revenue.
But what about the daily grind of property management? Much of the conference was devoted to these issues - some old, some new. Alterations, break clauses, rent deposits, VAT, insurance, remedies - they were all there. The lease, one speaker commented, was the surveyor's "job description". This was true, except that it failed to reflect the ethos of active management expounded above.
Some time was devoted to the vexed issue of services and recovery of costs. This is where the "job description" is so important. Where a service charge is ambiguous, the courts will generally determine uncertainties in the tenant's favour. And, lest we forget sinking funds, fine in theory, but in the speaker's experience, the problems outweigh the benefits. Rather, it was suggested that it was more practical to adopt proper planned maintenance programmes.
Two issues stood out as both topical and challenging:
Year 2000 (Y2K) compliance. The range of plant and machinery which may be adversely affected by the millennium bug is extensive. The consequences are enormous. For buildings let to a single tenant on FRI leases, it is the tenant's responsibility to ensure compliance. However, if a building is less than seven years old and has a sophisticated building management system, the tenant may have a claim for "inherent defects". Agreement now with the tenants will avoid legal disputes later over consequential losses. For multi-let buildings the responsibility for common parts will be the manager/landlords. Here the watchword must be to check compliance as the agent's PI cover may exclude cover for failure to check compliance. The agent is therefore advised to protect himself by commissioning a specialist survey of Y2K compliance. It is understood that insurers will not be responsible for paying to make plant and machinery compliant. However, if the assured has made all reasonable steps to become compliant, the insurer will remain liable for any consequential loss, such as if a building burns down because of a failure by the fire alarm.
Disability Discrimination Act 1995. By virtue of the Act's staggered time frame for implementation, the effects are gradually impacting on both employers and owners. The scope of the Act is wide ranging. It makes it unlawful to discriminate against disabled persons in connection with the provision of goods, facilities and services or the disposal and management of premises (Part III). The only sections of the Act which remain to come into existence, are the second and third sections of Part III. Section two comes into effect in October 1999. This imposes a duty to change: practices, policies and procedures that are discriminatory; to provide auxiliary aids and to overcome physical restrictions by the provision of alternative methods. The third section of Part III will become operable in January 2004 and will impose a duty to remove physical barriers. Notwithstanding the timetable, the Act implies a duty to pre-empt its requirements. To avoid the usual stereotypical thinking, delegates were reminded that wheelchair users represent only about 3 per cent of the disabled covered under the Act.
The Act makes it unlawful for managing agents or any other person involved in the letting, selling or managing of premises to discriminate against a disabled person in the disposal or management of premises. This will typically involve terms on which the disposal is offered or a refusal to make use of any facility.
With regard to leases, as one might expect, the Act effectively prohibits contracting out. This could have the effect of overriding restrictive covenants within a lease. Further, it implies terms which would entitle the occupier to make alterations following a written application to the lessor and for the lessor not to withhold consent unreasonably.
Contravention of the Act by a service provider may result in civil proceedings in the County Court and an award of compensation or injunction.
The "disabled pound"
The Act is good news for the disabled, elderly, parents with young children and those with temporary impairments and may provide opportunities for owners too. Potentially 11.7 million people will benefit, implying huge market potential - a point that the leading supermarkets for example have not been slow to appreciate.
Paul CottrellUniversity of Glamorgan