How long will it take to agree my commercial lease?
Acquisitions, Disposals & Lettings
A typical straightforward negotiation would take between 6-8 weeks. A complex arrangement could take months.
What is a Schedule of Condition?
A schedule of condition records the current condition of a property. This will be attached to the lease and will help reduce the tenant’s liability at the end of the lease.
Are your surveyors RICS accredited?
Yes, Kirkby Diamond have a team of MRICS accredited surveyors as well as graduate surveyors undertaking their Assessment of Professional Competence (APC) to become a chartered surveyor.
What are the stages of a typical property transaction?
Acquisitions, Disposals & Lettings
The key stages in a typical property transaction are as follows:
- Identify a suitable property. One of our agents may be able to help you with this (view our agents here).Arrange finance, if required.
- Make an offer (usually made through the property agents) and negotiate commercial terms (again you can use an agent to help you. You might also use a valuer to ensure that you offer the right price).
- Agents will prepare Heads of Terms and these will be sent to all parties involved. At this stage, proposed time scales will be agreed and the agent will probably want to know how the acquisition is to be funded.
- Appoint a solicitor. Our agents can recommend a commercial solicitor should you not have one.
- Legal due diligence and physical surveys and inspections by a surveyor may need to be carried out.
- The legal advisors will prepare and negotiate the following transaction documents:
- Finance documents (if applicable)
- For a freehold purchase - the sale contract and transfer document
- for the assignment of an existing lease - the sale contract, the transfer document and any necessary landlord’s consents and any lease security documents
- for the grant of a new lease – the lease, any landlord’s consents and any lease security documents. There may also be a contract known as an agreement for lease, depending upon the circumstances.
- The solicitors report to you on the transaction
- The legal documentation is signed in order to exchange contracts (a deposit may be required)
- completion of the transaction either by:
- signing and dating the transfer of the property interest (where the freehold or an existing lease is being acquired) and paying the balance of the price agreed.
- signing and dating the lease (where a new lease is being granted) and making any necessary payments under the lease.
- payment of Stamp Duty Land Tax and registration at the Land Registry.
Note that some of the stages may occur at the same time.
What costs do I need to budget for?
Acquisitions, Disposals & Lettings
There are a number of other costs associated with the acquisition of property in addition to the rent. As a general rule you should budget for:
- Agent’s fees – This will be a small percentage of the purchase price plus value added tax (VAT is currently charged at a rate of 20%)
- Valuation/survey fees – On a case-by-case basis
- Legal fees - normally a percentage of the purchase price/rental value plus VAT. Such costs vary depending upon the nature of the transaction
- Search fees – these vary depending upon the nature of the transaction and what searches are necessary
- Registration fees – up to a maximum of £920
- Stamp duty land tax – there are differing rates depending upon the nature of the transaction
- finance costs – you will normally have to pay an arrangement fee and the fees of your bank’s lawyers and valuers
You should also budget for the cost of any works that may be required to the property, either for your own occupation, or to ensure the property is in a lettable condition should you wish to let to a third party.
When should I start to think about renewing my lease if I want to stay in occupation?
Typically you should start to engage with your landlord or surveyor in the last 12 – 6 months of your lease term. One essential point to establish is whether your lease is contracted inside or outside of The Landlord & Tenant Act 1954. Steps may need to be taken and notices served following strict time constraints. Leaving discussions too late could jeopardise your continued occupation and early discussions with a local commercial property surveyor are strongly advised.
What will a landlord need from me in the way of references and security?
Acquisitions, Disposals & Lettings
If you are looking to lease a property, the landlord (or the tenant if this is an assignment of an existing lease) will need to be satisfied about your financial strength (sometimes referred to as covenant strength) i.e. your financial ability to meet the tenant’s obligations in the lease.
You will have to provide:
- References (usually from your bank, accountants or trading suppliers or customers)
- Audited accounts (usually for three years).
- If satisfactory references/accounts cannot be supplied, a landlord may request a form of security. This could be in the form of a guarantee (from a parent company or the company directors) or a rent deposit.
I am having a mortgage valuation, do I still need a survey?
Yes, the purpose of a mortgage survey is to establish value and is a less detailed survey. Whilst a bank valuation will pick up on significant defects, typically it will not consider minor defects which could lead to more significant issues. As the report is prepared for the bank, you will not be provided with a copy.
What are business rates?
Acquisitions, Disposals & Lettings
If you occupy business premises (whether on a leasehold or freehold basis) you will be required to pay business rates. Business rates are calculated by multiplying the rateable value of the property (which is usually less than the amount actually paid for the property) by a rate set annually by the UK Government.
LANDLORDS - What services can Kirkby Diamond provide?
As property managers, Kirkby Diamond provide a varied and wide-ranging list of services for commercial property, including but not limited to:
Service charge budgeting, administration, and collection
We will prepare and agree service charge budgets, administer demands and collect service charge funds on your behalf to ensure the efficient provision of services and timely collection of service charge monies.
We provide advice on lease matters including but not limited to repairing obligations and statutory obligations and will keep you advised of upcoming lease events such as lease expiry, rent review and break option dates.
Our credit control team have specific processes in place to ensure timely collection of rents and will chase overdue debts. Should recovery be unsuccessful we will provide advice on the measures available to recover debts.
Our dedicated Accounts team manage clients’ property data and accounting transactions. Our detailed knowledge allows us to provide a bespoke service for each client with this aided by our regular monitoring of tenancy information, income, expenditure and non-recoverable costs. Our team oversees all transactions and processes relating to clients’ funds, allowing efficient client payovers and accurate client statements & VAT reports. We monitor the service charge accounts and at year end will either reconcile or liaise with external auditors to reconcile the account. All client accounts are operated in accordance with the RICS Rules of Conduct. We are also Registered Agents for the HMRC Non-Resident Landlords Scheme and will report accordingly if necessary.
Repairs and maintenance
We arrange and manage any maintenance works required to the structure and common parts of the building. This can include general works such as redecoration, electrical repairs, and plumbing issues as well as larger works projects such as roof replacements, with the assistance of our specialist building surveying team.
Legal and regulatory compliance
As compliance becomes more and more prominent, it is important buildings meet current legal and regulatory standards. We ensure a property is compliant with all applicable laws and regulations such as those relating to asbestos management, electrical safety, gas safety, fire safety, lifting equipment, environmental laws, and current RICS standards.
We have asset management expertise within our property management and agency departments enabling us to coordinate the acquisition, management and disposal of a property to maximise value.
Procurement of third-party suppliers
We liaise with and directly manage third-party suppliers to ensure services are provided to a high and cost-effective standard. This includes items such as procurement of utilities and cleaning contracts, together with maintenance and repair works.
Vacant property management
Should a property become vacant, it is important this is managed in accordance with the vacant property conditions of your building insurance policy. We advise of the requirements and arrange for our trusted contractors to meet these conditions. We also provide advice and implement empty property rate mitigation schemes
As a consequence of owning commercial property, landlords may require assistance with acquisition, disposal and lettings of property together with dilapidation matters, building projects, development and planning matters and valuations. Kirkby Diamond has specialist departments with the expertise required to provide the best service possible in these and virtually all aspects of commercial property.
Is my land suitable for development?
Planning & Development
This will depend on many things. Firstly, the physical attributes of the land, such as slope and flood risk and then a whole range of ecological and environmental considerations. If there are no obvious environmental constraints, the land may be suitable for an appropriate form of development, but this will also depend on matters such as archaeology, landscape, contamination, access and most importantly the sustainability of the location and the designated planning status of the land in the council’s Local Plan for the area. In certain cases, it may be appropriate to ‘promote’ the land to secure an allocation for development in the relevant Local Plan. In all cases it is recommended that professional advice is obtained to appraise the suitability of the land for development and how best to promote it to get it allocated in the Local Plan.
What type of survey do I need? Difference between a Homebuyers and Building Survey
We recommend a HomeBuyer Survey (HS), also known as a HomeBuyer’s Report, for a property constructed more recently. The survey is completed to a standard format set out by the RICS. The HomeBuyer Survey does not detail every aspect of the property and will only focus on urgent matters needing attention. It is not usually suitable for properties in need of renovation, or if you are planning major alterations.
A Building Survey is a comprehensive inspection of a property reported in a bespoke style to suit the property and your specific requirements. It is suitable for all properties, especially Listed buildings, older properties, buildings constructed in an unusual way, properties you plan to alter or renovate and properties that have had extensive alterations.
What happens if the rent review is not agreed?
If the landlord and tenant fail to agree the rent review by negotiation, the lease will set out steps that can be taken to instruct a third party surveyor to determine the rent review. Considerable costs could be incurred if a rent review proceeds to third party. It is imperative that you seek professional advice from a local commercial property surveyor to mitigate costs and the level of rent payable from the review date.
If the rent review date has passed can my landlord still instigate a rent review?
Most leases state that time is not to be of the essence in respect of a rent review. This means that a landlord will be able to instigate a rent review if the review date has passed. We regularly advise clients on historic rent reviews. With access to rental evidence spanning back across the last decade, we are able to establish the rental value of properties at the appropriate time preceding the rent review date. Whilst it is rare, some leases do state that time is to be of essence with regards to settling a rent review. It is essential that you seek advice from a local commercial property surveyor who will provide advice in relation to the rent review provisions within you lease.
My house is non-traditional construction, can you still undertake a survey?
Kirkby Diamond are experienced in surveying non-traditional properties and are able to undertake a building survey, highlighting the issues with the type of construction.
When do I need a party wall award?
This is governed by The Party Wall etc Act 1996. The act is triggered by the proposed erection of a new wall/building along a virgin boundary line. Works proposed to a party wall i.e. a wall between two attached properties. A proposed excavation within 3 metres of the Adjoining Owner’s (A.O.) property and to a depth which is greater than the depth of the A.O.'s foundations, or to propose piling works within 6 metres of the A.O.'s property and to a prescribed depth.
What is a Schedule of dilapidations?
Prior to signing a new lease, it is essential to fully understand the requirements of the repairing covenants and the financial implications of not complying with them. When approaching the end of the lease the landlord’s surveyor will produce a schedule of dilapidations listing the items where the occupier has not met with their covenants.
The landlord has served me with a Schedule of Dilapidations, what should I do?
Depending on the time left to run on your lease, the options are to complete the dilapidations works or seek to reach a financial settlement with the landlord. In the first instance a surveyor can review the schedule you have received and issue a formal response setting out your position and which items are in agreement or disagreement.
I have been served a Schedule of dilapidations what do I do now?
A surveyor should be appointed to review the schedule of dilapidations which can lead to the minimising of the financial exposure in a settlement.
Why has a Schedule of Dilapidations been served on me without any notice or time to undertake works?
Most leases have no provisions for schedules to be sent to tenants before the end of the lease. The lease is a contract between parties. Therefore, the lease does tell each party what they need to do so either party can act rather than waiting for the other to act.
Why would I need a valuation?
Valuation of property is required for a number of reasons. Kirkby Diamond regularly undertake valuations for accounts purposes, loan security, statutory functions including Inheritance and Capital Gains Tax valuations and for business planning purposes. In addition, Kirkby Diamond have specialties in providing reinstatement cost assessment and valuations in connection with Leasehold Reform matters including Lease Extensions and Collective Enfranchisement.
Can the rent decrease as well as increase on a rent review?
This will depend on the wording within the rent review provisions of the lease. The majority of rent review clauses in commercial property leases are drafted on the basis of the rent review being what’s known as “upward only”. This means the rent will only increase or stay the same and not decrease, even if the rental evidence suggests it should. Having access to the comparable evidence of other similar properties let in the area is essential when negotiating a rent review. Without having access to rental evidence you negotiating position will be compromised. We regularly help clients to either make considerable increases or savings in rent with reference to the vast amount of lettings and comparable evidence held on our data base.
What is a s106 Agreement?
Planning & Development
A s106 agreement is a legal agreement entered into with a Planning Authority as part of a planning permission. Depending on the number of dwellings proposed, the agreement could require the construction of affordable housing and will also seek financial contributions intended to mitigate the effect of the development on the local area. These will usually include contributions to education and transport. In larger developments it can include an obligation to construct new community facilities.
The requirements of the s106 agreement will have a direct effect on the value of land and so professional representation at an early stage is essential to ensure that the s106 requirements put forward by the Planning Authority are reasonable.
Do I have to vacate the property at the end of my lease if I haven’t agreed a lease renewal with my landlord?
It is possible that you can remain in occupation of the property after your lease expiry. It will depend on whether you lease is contracted inside or outside of the Landlord and Tenant Act 1954. If the lease is contracted outside of the Act then the landlord does not have to grant you a new lease, the lease will end on the expiry date and the landlord would be within his rights to take occupation back of his/her property.
If the lease is contracted inside of the Act it is possible that you can remain in occupation. This is known as holding over whereby the terms of your existing lease will continue until action is taken by either the landlord or tenant to bring the tenancy to an end.
What is a service charge?
A Service charge is a charge to cover the cost of services to be provided by the landlord as specified within a lease. Typically, this will include the maintenance, repair, and if necessary, the renewal of the building structure and any common areas, amenities and facilities used by other tenants. Typically, a service charge budget will be issued by your managing agent at least one month prior to the start of each service charge year. This identifies the services provided together with estimated costs and an apportionment schedule showing the cost payable by each tenant.
How is my service charge apportionment calculated?
The method of service charge apportionment will be specified within your lease and these can sometimes be fixed percentages, although it is more common for the lease to state only that the apportionment must be ‘fair and reasonable’. With commercial property, apportionments are often calculated having regard to the lettable floor area of your premises as a percentage of the total lettable floor area of the estate or building or units to which the service charge is being demanded.
What is service charge balancing?
At the end of the service charge year the actual expenditure incurred by the landlord is balanced against the estimated budgeted cost and is also referred to as a reconciliation. A service charge balancing demand or credit will be issued depending on whether the actual costs are higher or lower than the budgeted figure. The reconciliation should be carried out within 4 months of the service charge year end but in some instances the lease may specify a specific timeframe.
What if I have a maintenance issue?
The landlord or its managing agent is usually responsible for the maintenance of structure of the building and any communal parts or facilities used in common by building occupiers. If there is a maintenance issue within your premises, such as faulty light fittings or broken door handles, this will usually be the responsibility of the tenant. The maintenance responsibilities vary significantly depending on the specifics of your property. If the property is a self-contained standalone building, it is likely the lease will be granted on full repairing and insuring terms with you will have sole responsibility for all maintenance. The repairing obligations are set out within the lease but if uncertain seek clarification from your solicitor, the landlord or landlord’s managing agent.
Is building insurance included in my service charge?
Depending on the provisions of the lease, building insurance premiums are either demanded separately from the service charge, or the premium is incorporated within the service charge. If unsure, seek clarification from your solicitor, the landlord or the landlord’s managing agent.
My Bank have asked me to contact you, can you provide me with a quote?
Kirkby Diamond are on many bank panels (list of appointed valuers) and instructions are received direct from the bank or it’s panel. Whilst a customer may request a valuation, our duty of care lies with our client who is the bank. Therefore, quotes are either provided to the bank direct or through its panel manager.
Do you need to inspect my property to produce a valuation?
Typically, when we undertake valuations, we inspect the property. Although, there are exceptions to this when valuations are prepared on a desktop basis. A desktop valuation will require us to undertake our own due diligence, typically using online sources as to what the property consists of and its size but also using our knowledge of the property. Most desktop valuations are carried out for properties that have been previously inspected by the valuer.
What are sinking and reserve funds?
Sinking funds are formed by setting aside money for the replacement of wasting assets, such as a roof, lift, heating ventilation and air conditioning system. Typically, the service charge budget will specify the sum set aside for this element. Sinking funds can benefit tenants and occupiers as they spread the cost of the works over a period of years so that the service charge costs do not increase dramatically in the year the replacement works are carried out.
Reserve funds are different to sinking funds. These are formed to meet anticipated future costs of periodic maintenance, which can include redecoration of common parts or external cleaning, which may only be required every five years. Similar to sinking funds, the purpose of a reserve fund is to avoid large fluctuations in service charge costs in any year.
What is a Red Book Valuation?
A “Red Book” Valuation is a valuation prepared in accordance with the latest edition of the RICS Valuation Standards. Valuations are prepared in accordance with strict guidance and are typically undertaken for some of the functions detailed above. Red Book Valuations must be undertaken by RICS Registered Valuers to ensure a ‘Kite Mark’ of quality. A Red Book valuation is not the same as a market appraisal which is undertaken to provide advice on marketing a property for sale or let.
I’ve seen values reported on a Fair Value basis. What does this mean?
Fair Value is a basis of valuation used for company accounts purposes. The definition of Fair Value depends on whether the company accounts are being prepared in accordance with International Financial Standards (IFRS) or UK Generally Accepted Accounting Practice (UK GAAP). In most cases, Fair Value will be the same as Market Value.
Why do I need my own insurance when the landlord has building insurance?
The landlord’s building insurance policy covers the physical structure of the building. Some of the risks commonly insured against (referred to as ‘perils’) include fire, theft, malicious damage, riot, storm and flood, escape of water, and subsidence. The full list of perils will be detailed in the building insurance policy schedule which the landlord or landlord’s managing agent will provide on request. The policy will also cover loss of rent, usually either 2 or 3 years’ loss, as well as public liability.
Tenants require to have their own contents insurance policy, as this is not included in the landlord’s policy.
What is entailed in undertaking a valuation?
Where valuations are undertaken with inspection, a thorough inspection will be undertaken of the property. This will not be as detailed as a building survey but will involve us measuring the property and considering its individual attributes including age, accommodation and location. Typically, valuers measure the property with a Distometer in order to ascertain its floor area, commonly expressed on a Gross Internal Area or Net Internal Area basis. Once we have undertaken inspection, we undertake our own due diligence and source appropriate evidence in order to arrive at our opinion of value and produce our valuation report.
I don’t need a bank valuation. How do I go about instructing Kirkby Diamond to undertake a private valuation?
Initially we would need to prepare a quote. In order to prepare our quote, we would need to have a brief understanding of what the property consists of and what the valuation is required for. We would ask that we have all relevant information including leases, what parties will be relying upon the report and how access is arranged. Once we know this information, we will provide you with a quote whereby you will need to accept our Terms and Conditions of Engagement which will be required before any work is undertaken on any case.
This all sounds brilliant, how do I start the valuation process?
To commission a valuation, you should contact one of our experienced valuers or contact email@example.com or on one of the numbers below.
What expertise do I need when considering development on my land?
Planning & Development
The planning process associated with any development has become more involved over recent years, even where only outline permission is being applied for. It will first be necessary to assemble a team of experienced advisors.
KD should be your first point of contact to determine the options available to you relevant to any legal, planning and physical opportunities and constraints that your land may have.
Once we have undertaken a thorough assessment of your land we can recommend the best strategy for you, which will also take into account your own personal circumstances. Such a strategy could be to gain a development allocation for your land through the local planning policy process, to seek a development partner through an option or promotion agreement or to pursue planning permission yourself. We could even recommend a collaboration with neighbouring landowners if we recognise additional potential.
Whichever strategy is adopted, we will advise you throughout, represent you in securing the best terms for a development agreement (usually paid for by the developer), undertake negotiations to determine the value of your land, and can compile and manage a team of consultants to pursue your own planning permission.
Each detail of each strategy is carried out to protect the interests of the landowner, and to secure maximum value for your land.
I have been approached by a Developer showing interest in my land. What should I do?
Planning & Development
The first thing to consider is why are they interested - Is the approach genuine and from a reputable developer? Does your land have any special value to the developer – maybe to provide access or connectivity with other land they control?
It’s also important to consider the detail of what they have in mind for your land to make sure that fits with your own objectives in terms of timing, tax, financial planning and your personal preferences. Asking the right questions is very important. Reputable developers are generally happy for a landowner to appoint a professional adviser to represent them in these discussions and will give an undertaking to pay the landowners costs.
Why haven’t you sent me a copy of the bank valuation?
Again, the bank is our client and the borrower is the bank’s customer. We only provide reports to the bank as they will be relying upon the report. You must request a copy of our report from the bank as we cannot provide these to you direct, unless instructed to by the bank.
What is a Special Assumption?
A Special Assumption is made where an assumption is known not to be true. An example of this is the Special Assumption that a proposed development is complete at the date of valuation. This is often interpreted as being the gross development value and is the starting point for establishing the value of land to be developed in accordance with a planning consent.
Can you provide a Probate valuation?
Valuations provided to assist in obtaining probate are prepared in accordance with the Inheritance Tax Act 1984. Under this Act, the definition of Market Value differs slightly from that set out in the Red Book. The main difference being that the value “shall not be assumed to be reduced on the ground that the whole property is to be placed on the market at one and the same time”. Under the Red Book, a phased sale may be assumed in order to achieve best price (Market Value).
What is a Reinstatement Cost Assessment and why is it different to Market Value?
A Reinstatement Cost Assessment (RCA) is an estimation of the likely costs of re-building a property after total destruction, including site clearance fees, and is used to establish whether a property has adequate building insurance cover. It has no bearing on Market Value, which is the price a property would sell for, having been openly marketed, between a willing buyer and a willing seller.
Do you undertake valuations of business?
Unfortunately, we do not produce valuations of business interests as this is known as a Trading Valuation. You would need to instruct a valuer experienced in this specialism however we can value the property in which the business is in occupation.
Can you tell me how much my land could be worth?
Planning & Development
In addition to providing specialist advice to Landowners on how to maximise the value of their land through development, we are also RICS Registered Valuers and so can provide land valuations as a standalone piece of work or in conjunction with our wider involvement with an area of land or a development. We regularly undertake development appraisals for clients who wish to know the options available for their land and its existing and potential value. In doing so we will consider several aspects, including planning policy and legal title, which will inform our advice to the client of the potential for their land and also of its value. Such an appraisal is often used to form the basis for a development strategy for the land going forward.
What are Leasehold Reform Valuations?
Leasehold Reform Valuations are those undertaken in accordance with the Leasehold Reform Act 1967 or the Leasehold Reform Housing and Urban Development Act 1993. These valuations are prepared in connection with acquiring a lease extension or freehold acquisition also known as Collective Enfranchisement. This is one of Kirkby Diamond’s specialisms and we are Association of Leasehold Enfranchisement Practitioners (ALEP) members which ensures we remain at the forefront of leasehold reform matters.
I want to know what my building is worth, what should I do?
Worth and value are two different things. As valuers, we are concerned with ascertaining a property’s value. A building may be worth more to an individual i.e., if they own an adjoining premises or can see an opportunity that others cannot reasonably obtain. We cannot put a figure on worth, only provide an opinion on value.
What is a Price Notice?
Planning & Development
A Price Notice is part of the land purchase process where an Option Agreement is in place between a landowner and developer. When the developer has secured a satisfactory planning permission, they have the option to serve a Price Notice on the landowner, which effectively starts the price negotiation process for the land.
It is critical that a landowner has professional representation when they have received a Price Notice, through a firm that has significant experience of handling these negotiations, as they will ultimately determine whether or not the landowner receives the maximum payment for their land.
How do I know if I'm getting value for money on my refurbishment?
By undertaking a specification of works allowing contractors to price against similar items, it will allow the tender return prices to be compared on a like for like basis.
By inviting 3+ contractors to provide a tender, you can be sure you are getting a competitive market price.
Can I alter my property and what should I do?
The lease will place specific conditions as to the extent alterations can be made with or without the landlord’s consent. By understanding what is or is not permitted, you can proceed without risk of the Landlord discovering the alterations and requesting they be reinstated.
Do I have to pay for the party wall if it is my neighbour who is building?
Under the Party Wall Act the fees should be covered by the people doing the work. However, as you instruct us, if they don’t pay the fees you would need to settle and recover through the courts.
It is rare that this happens but this is how the Party Wall Act works.