48 commercial property
How much should a service charge influence a rent?
It all depends on whether the service charge that is being paid in addition to the rent is reasonable or not, writes David Barden, associate, Vail Williams LLP
Where a service charge is excessive or higher than on comparable properties in the area, there is now a strong case, at rent review, that the rent should be adjusted accordingly. It is also a point to consider at lease renewal or a future break option.
Service charge is the landlord’s cost of maintaining the common areas including the plant and machinery such as heating and air conditioning.
In an ideal world, a
service charge would be strictly controlled, but how much do tenants generally know about the condition of their property’s plant and machinery and any future expenditure.
All plant and machinery has a life span and dependent on the maintenance, there will come a time when it needs replacing. In an ageing property, this may be sooner rather than later. A tenant in the property at this time is potentially exposed to some
or all of the cost of replacing this equipment which can be significant and unexpected.
Vail Williams has been involved in a number of rent review cases recently whereby a detailed assessment of the plant and machinery proved that there would be significant expenditure in the near future which would result in the service charge being increased above a reasonable level. Our knowledge from over 25 years in the industry enabled us to prove that the future service charge would be above that of an average level and we were able to negotiate a discounted rent to reflect the future cost.
Whether a tenant is faced with a rent review, lease renewal or break option in the near future, it is advised that the service charge and the building’s plant and machinery is scrutinised to ensure a tenant is maximising their position. In addition, if a tenant is committing to a property, they should make
Entrepreneur win boosts Marigold Cleaning
In 2005 Vicky Gregory was a young single mum juggling a demanding job and a growing family … so, as if she wasn’t busy enough, she went down to her garden shed and started her own cleaning business.
Such is the drive and spirit of a true entrepreneur, writes John Burbedge.
“Actually, I’d been doing cleaning jobs for people on and off since leaving school at 16, so I already knew the work, and my account manager’s job with a local courier company gave me lots of sales and administration experience.
“I’ve always been a people person, kept in contact, and began to hear about a few businesses unhappy with their service from large corporate cleaning companies.
“I saw an opening for a more personalised, flexible cleaning service within offices – one that today suits both our clients and my staff. It was hard work getting going and surviving the recession, but I get
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a lot of personal satisfaction from achieving things; a bit like I did after I’d left an office looking neat and tidy.”
Burnham-based Marigold Cleaning is Gregory’s achievement and she now employs 25 cleaners – with the garden shed replaced by a shiny new business unit.
The new home in the Enterprise Quarter on Slough Trading Estate has arrived following Gregory’s success in winning The Entrepreneur Competition, run by SEGRO, The Federation of Small Businesses, and Thames Valley Chamber of Commerce, supported by The Business Magazine and Berkshire Media Group.
The top prize worth £26,000 was the SEGRO business unit, free of rent, service charge, business rate and building insurance for one year.
Gregory spotted the Entrepreneur Competition when she was surfing the Internet looking for extra work opportunities.
Vicky Gregory
Deciding to boost awareness of her business, she put together a business plan proposing growth possibilities into broader ‘green’ cleaning through eco-friendly products and janitorial services. “I hadn’t really thought of expanding my business so much until I entered this competition.
“I took advice from a neighbour about writing the plan but all the ideas were my own. You can always find people to help you in business if you have contacts or look hard enough.”
Gregory’s toughest challenge was the presentation of her business plan to a Dragon’s Den-style panel of judges representing the competition sponsors.
sure they know the condition of the plant and machinery.
At Vail Williams, we have specialist lease advisory, business space and building consultancy teams who can advise tenants on any of these issues to ensure the best and most practical solutions.
Details: David Barden 07799-760323
dbarden@vailwilliams.com www.vailwilliams.com
“I didn’t expect to win, I mean we were up against technology, manufacturing and product companies. We are just a cleaning business.”
Just a cleaning business, but one run by a true entrepreneur.
Gregory stresses: “This win is such a huge opportunity for our company.”
Marigold Cleaning moved into its top-prize premises in May, immediately gaining much- needed extra storage and office space. There are plans to develop the company’s management set- up and update its website.
Gregory has already used the publicity generated by her win as a springboard for expanding the business.
Targeting smaller businesses, Marigold Cleaning has gained ten new clients in the past three months. They can expect customer-satisfaction.
“We have had most of our clients now for more than five years and still have several contracts with clients from when we started,” says Gregory with pride.
THE BUSINESS MAGAZINE – THAMES VALLEY – OCTOBER 2013
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