London Property - Home of Super Prime

Managing Tenanted Premises and Planning the Annual Maintenance Budget

November 04, 2022 London Property - Home of Super Prime Season 5 Episode 8
London Property - Home of Super Prime
Managing Tenanted Premises and Planning the Annual Maintenance Budget
Show Notes Transcript

This week on the podcast, Farnaz and Fiona discuss what it is really like to manage tenanted commercial and residential premises, and what to consider when planning your annual maintenance budget. 

Fiona highlights the importance of Health & Safety, and how the current regulations affect landlords and tenants, and how to tackle any challenges that might arise. We also discuss and debate older buildings compared to new buildings in terms of energy efficiency and sustainability management. 

If you would like to learn more about communications between landlords and tenants, and what is really important to consider when looking at commercial real estate, join us for this week's discussion.

As always, we love to hear your feedback and comments. Connect with us on social media or send us an email at

At London Property, we use our experience, expertise, and deep-rooted relationships to connect super-prime property owners and tenants with hand-picked experts. We also aim to inform and entertain Londoners through content across multiple platforms.

Interviewer - Farnaz Fazaipour  | Property Investment & Ownership


London Property - home of super prime, where you can find informative educational and entertaining content, covering all aspects of property.

Farnaz Fazaipour  0:11  
Hello, and welcome to London property the home of super prime. I'm your host Farnaz Fazaipour. And today we're in conversation with Fiona Docherty, who when you're not doing magic tricks looking after 10,000 units, correct? Welcome to the show. So Fiona, please let's start by you telling our listeners the difference. The substantial difference between managing a building and managing individual units.

Fiona  0:37  
When managing an individual unit, you're only required to maybe repaired a washing machine or liaised with the block agent, if there's a communal issue. On a communal building, we're responsible for everything, all health and safety. Obviously, it's becoming far more complicated now with the new bills that are coming through, including the fire safety on the back of Grenville and everything that comes with that. So now an agent is become much more than just your traditional block agent, because they have to be a jack of all trades and have understand everything from cladding to engineering, for comfort, cooling, and communal heating systems.

Farnaz Fazaipour  1:20  
So these are all falling under health and safety what so if you know how thick can you go with health and safety when it comes to it?

Unknown Speaker  1:27  
Health and safety is now the absolute Bible is probably as important if not more important than loose now, because you have to ensure that you're ticking those boxes, because if you're not, and God forbid anything goes wrong, you're the one that's going to be sitting in the dock for it.

Farnaz Fazaipour  1:42  
So just as a brief summary, give us some headlines of what kind of things you need to be looking at when it comes to health and safety for buildings. 

Fiona  1:51  
So you have to have a health and safety audit done each year as well as a fire risk assessment, depending on the number of units. So if it's below 25 units, it's once every three years, if it's 25 to 50, it's once every two. And if it's over 50 states once every year. However, if a block of nine has got a communal boiler in a swimming pool, that would fall into the category of having it done once a year. And then from that you have your risks of what's been flagged up be signage, be there's no cash cash cupboard for cleaners put the chemicals in fire stopping. Anything that comes up on that risk assessment is in graded and you have a certain amount of time in which to have those fixed. And you have to make sure that that's all dealt with within that time period. Because in the event something goes wrong. As I say, if it hasn't been dealt with, and it's been flagged, we're responsible.

Farnaz Fazaipour  2:46  
So I'm imagining that that checklist just keeps growing Correct. As regulations go, you just keep adding to that checklist. Yeah. And when you're making a plan for a building, then you go to your checklist of things to do. And then you decide what times of year what things need to happen. How does that process work?

Fiona  3:07  
Depends, if you're planning, if you're just doing your routine budget, then you include to have your health and safety audit and your fire risk assessment. And what you already know is going to come up, then on top of that, you have what's called your capex plan. So it's planning, like cyclical major works. And those now have to include your m&a, whereas in the traditional block, it would just be the fabric of the building, there would be very little money other than the lift. And those lifts were built to last. So you'll have a lift in a block of 1930s. It's probably been there for 60 years with very few issues. When whereas in the new building, nothing's built to last. And there's far more issues.

Farnaz Fazaipour  3:47  
So actually, that was going to be my next question, which is, you know, what are the major differences you see, from a new development to the more old traditional buildings, and how you approach it and how they last and how they work?

Fiona  4:03  
Yeah, I mean, older traditional buildings, you know, what you're dealing with, you're dealing with a fabric, what's gonna go wrong, it might be that you have to do your cyclic decorations, your internal decorations, and you might have a board that you know, is quite elderly because people have lived there forever. On your new building. A lot of new buildings or leases lasts longer than the actual fabric of the building. So you might have only an 80 year guarantee on the fabric of your building, but your actual leadership that's been granted as 125 years, plus you have much more complicated services such as communal heating, CHPs, and communal comfort, cooling, all of which carry all sorts of different risks. If you haven't got breaks in your comfort, cooling, and one person doesn't service their air conditioning, then that affects the quality of your own the overall system as a whole and then can result in that system failing over time.

Farnaz Fazaipour  5:01  
And are you seeing that as more modern buildings are built that, you know, all the systems are becoming internal to the flats rather than communal? No, the opposite the opposite is happening. Yeah. And is there a bigger percentage of expenditure now with all these demands on on landlords from health and safety and from technology?

Unknown Speaker  5:21  
I mean, without a doubt, I mean, you're looking at if you know, traditionally, you'd probably be about, I know, five, six pounds per square foot, if you had 24 hour concierge in a mansion, block, plush or reserve. On the new build, you could be looking at anything between nine and 13 to 14 pounds per square foot, depending on the services, and also the number of units. I mean, we've got buildings where we've only got very few units, but they've got 24 hour concierge, they've got a building manager, swimming pool, spa, those are coming in at near 25 to 30 pounds per square foot.

Farnaz Fazaipour  5:55  
What are some of the really pressing issues that landlords are facing in the older buildings that they have to do, versus new buildings?

Fiona  6:05  
In new builds in the older buildings, it's probably making it more energy efficient, because those buildings aren't, you know, built for energy, you don't have LED lighting, stuff like that. So you have to bring in processes like that, to try and make those more energy efficient. And also, try and reduce your common parts where you've got you know, draughty common parts and big ceilings where the heats just going straight through the season and nowhere else. You know, new buildings are far more cost effective when it comes to heat retention. If you go into new building, you'll normally feel that there's heat in the common parts. If you go into an older building, you'll normally see a number of radiators, which needs to be switched on to keep the heat in the common parts.

Farnaz Fazaipour  6:48  
So do you feel that the efficiency together with all the new technological abilities of a new building balance out so that both cost percentage wise more or less the same to run or it's still more expensive to run a modern building.

Fiona  7:03  
Is still more expensive, because with modern buildings, you have far more technology. Unfortunately, technology is constantly moving. So what might have been a state of the art system that was put in three years ago is now no longer state of the art, or it could have been, it's something that had to take the environmental box box, so you had to put a geothermal plant in will you use this that guinea pig that geothermal has now failed, and you haven't got a system to compare against. So you're suddenly faced with a massive expense of having to replace that system.

Farnaz Fazaipour  7:36  
And presumably, your your, your trades, people have to be specialists, whereas you can't have a general person, like you did the build. And so you've got a lot more people that you need to tap into

Fiona  7:46  
100%. I mean, in the olden days, you could get your porches as they called them, rather than concierge, they'd go off a ladder, they change a light bulb, you can't do that now, because health and safety dictates they have to be ladder trained, they can say it's not within their duties, because they're scared of heights, you know. So again, you're paying a lot more for a company to come in and change a light bulb, than the old days where you could actually get one new site staff to do it.

Farnaz Fazaipour  8:13  
And if you had to say so the little that I know about building management is that the actual cost of signing up to an agency is quite minimal per unit. And a lot of the income comes from having to manage works. And

Fiona  8:30  
I think I mean, H changed, it's horses for courses. Now. You know, if you want quality, I think people realise they have to pay a little bit more. You know, we had, we've had an example recently where we took on a blog, and it was so labour intensive, that when I actually sat down and worked out how much we were actually paying them to manage the blog. So we had a meeting with the people and we set out, you know, what we were doing and, and we've literally, we've had to double the mental fee. And I think people do realise you will, of course, you're still gonna get the other piece, the other side of the coin, where everyone thinks you can do something for nothing. But it's whether or not you want the boxes, tips, and you to be used to now as a resident and also maybe have a directory of a man code, that you can sleep easy at night because everything is compliant. Or you go the other way and go cheap and you know, settled. Sure, isn't it pay peanuts get monkeys.

Farnaz Fazaipour  9:24  
It is very much compliant driven, isn't it? All of it? So what I was what I was curious about is that a lot of times, you know, in the smaller buildings where people are very sensitive to the cash flow, and they're not necessarily investment institutional investors or what have you. People are very sensitive and they pay an amount per unit to have the properties manage, but then they kind of are always on the defence when you say you've got to spend this money and you've got to spend that money because they feel that the managing agent is being motivated to actually encourage works. Yeah. And is there a way that you give comfort to your clients to try and, you know, demonstrate that actually our interests are aligned, we're here to help you. We're not here to generate work just to be.

Fiona  10:09  
To be transparent. But they also have to understand that if we tell them that they have to do something, because it's compliance issue, it's not down to our discretion as to whether or not it gets done, if you don't do it, and we've said to you that you've got to do it, then unfortunately, if something goes wrong, we can actually show an audit trail and that person will be then held liable.

Farnaz Fazaipour  10:30  
So what would be your best advice to our listeners right now who are listening to you from both a lease holder tenants perspective and a freeholds perspective. So if you're speaking to a lease holder, what will be your best advice as to how they should engage with the management of their building and respond or feedback?

Fiona  10:52  
Communication is key. If you'd get that communication going, then it you know, everything should be aligned, it's understanding, what we find is if we give people a proper explanation as to why we have to do something. And that's backed up with, you know, evidence, then people show up, I understand now. And when we've got a case now, where we're having to raise a substantial amount of money on an older building, but it hasn't been touched for, like 30 years, and it's now dilapidated, and straight away, we've had a resident come back and slip in, you know, in 2000, the next we went to the FTT, well, that was 10 years ago, it's a completely different scenario. Now, you know, you've got windows that aren't compelling, you open those window, a child can fall out, there's all sorts of things that needs to be done calling me in explain to him go through what we've got, and why we need to do it when we need to do it. But also, by doing it, their values will once a works down, their values will double overnight, because their values are probably two thirds of where it should be in that area because of the state of the building.

Farnaz Fazaipour  12:00  
So they really need to understand that the more you look after your asset, the more you're going to maintain or enhance the value?

Fiona  12:06  
Is like your car, you wouldn't drive your car and not service it, would you? So why do you think it's okay not to do that to a building? 

Farnaz Fazaipour  12:13  
And what about landlords? What what resistance do you get from landlords and what would be your best advice for landlords?

Fiona  12:21  
most landlords and let's say have an underlining issue, ie they might have apartments in the building, which is why they'll drive into keep the service charges low. Most landlords want their buildings maintained properly. Because it's some time that at some point, they leave or try and sell the building, or the residential training franchise. And if it's a well run building, they'll keep their values.

Farnaz Fazaipour  12:45  
And before we say thank you goodbye, and let you get on with your very busy day. If somebody one of our listeners is listening to you, and they wanted to explore what you could do for them, how do you differentiate yourself from other residents, residential managers?

Fiona  13:02  
Iquite difficult. It's I mean, management is very much about personalities. And we take a view that buildings like people have personalities. And it's not one size fits all. So we don't go in, you know, well, that buildings there and it's in that area. So that should be prior to that. And it's also for our seats, understanding what the client wants, and also matching someone within our organisation to the clients requirements from clients personality. And by doing that, that tends to build up relationships. And you can see people working together and getting things done.

Farnaz Fazaipour  13:35  
Well, thank you very much for giving us this time and, and I know you need to run off. So we will put you on our experts directory and any one of our listeners who need any help with their building management. We'll be in touch with you directly to get some out. Fantastic. Thank you very much. Thank you. Thank you. Thank you for listening and thank you to Fiona for giving us an insight into the crazy world of property management. To find experts like Fiona and get assistance for any of your real estate problems, please head over to our experts directory where you can find a professional handpicked for you that you can engage with directly and ask your questions and get help.

Unknown Speaker  14:13  
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