Education Matters – Top tips for property assets

As places of learning begin to open their buildings to staff, students and others once again, a path to achieve this that offers both clarity and safety to all needs to be found.

For many, September is the month where a full as can be expected schedule – one which resembles something close to the start of a typical academic year – is to be in place.

Therefore, now is the time to review a number of essential elements of your property portfolio, whether a building is operational or utilised for income generation.

We explore some of the main issues below.

Building management

Managing footfall and enabling safe social distancing will be key to any premises that are open to members of the public. All properties must have risk assessments and make alterations to previous customs. The smooth flow of people both entering and leaving buildings, designating some corridors as one way only, limiting capacity in common areas and reducing touch points where possible will help and are just a few things to consider. There is likely to be a higher demand for facilities such as bicycle racks as public transport is avoided. Fire evacuation procedures that are already in place may need to be updated especially as additional routes will require open access.

Health and safety and risk assessments will need review. Additional safety measures to be considered includes screens and barriers and ensuring clear signage is used. Hand wash points and increased ventilation are also recommended.

Statutory Compliance

Check building systems

Inspection of electrical, gas and water systems after months of minimal use should be carried out. Air conditioning and water storage tanks will need checking to test for and prevent against legionella and the servicing of equipment may also be needed before they are used again. Expert advice should be employed. EPC and asbestos registers should be updated where works have been carried out that affect them.

Security

Keep any existing security measures in place. CCTV is to be maintained during long absences. Perhaps introduce regular visits or patrols – as increased visibility is very much advised. Pinpoint any weak areas that could be taken advantage of. External lighting should be reviewed as we enter autumn.

Works

Where you have carried out any adaptions to a property to allow for social distancing check that all insurances, planning and building regulations are in place for them.

Commercial Leases (where you are landlord)

Leases

Your tenant’s lease may have expired during lockdown. This should be reviewed to ensure the tenant does not obtain ‘security of tenure’. This is a statutory right of protection for a tenant, enabling them to remain in occupation and request a renewal lease, thereby limiting the landlord to a small specific number of statutory grounds to object. Assuming you want to put a new lease in place with this tenant, to mitigate the risks of them obtaining security of tenure whilst new lease negotiations are ongoing you should consider whether to agree a tenancy at will pending completion of any new lease. This type of tenancy will be on the previous lease terms and allow for you to terminate on minimal notice. However it is important that this tenancy at will should only be used for short periods and ideally whilst there are genuine lease negotiations ongoing.

If you no longer want your tenant in occupation you should discuss this with a property litigation solicitor to ensure you follow the correct process in asking your tenant to leave. This is particularly important given the changes to commercial and residential leases terminations under the Coronavirus Act 2020. The Act includes time limited but additional protection to business tenancies from forfeiture for non-payment of rent.

Rent review

You should check all of your leases to see if any rent review dates arose during lockdown. If so, then you should consider taking advice as to the type of rent review mechanism and whether the rent review should be implemented now or left until the economic climate is more certain. It may also be that you want to implement now but defer payment of the increase until a later date if your tenant is struggling financially. If you decide you want to do this, then seek legal advice as to the best way to document this.

Tenant works

As tenants across the country begin drawing up plans as to how to fit-out their premises so they can open in this new ‘socially distant’ world, it must be remembered that such works may require landlord consent. You should engage with your tenants on this, asking them whether they need to carry out works to re-open and, if so, for them to provide detail of the works proposed. Once you have this detail, and assuming their proposed works are approved in principle, then we would recommend the following:

a. The consent is given in a licence for alterations to ensure there is a paper trail of the works carried out by the tenant, useful for both identifying works to be removed on lease expiry, rent review calculations and also in giving any purchasers of your interest full details on works carried out by the tenant.

b. Discuss the works with your buildings insurer to make sure that the works will not affect the existing cover and also that if relevant, they will be covered by the insurance going forwards.

Opportunities

Many higher education institutions own land that is no longer needed and which could instead be repurposed or sold. Now is the time to evaluate your options on these assets.

The first step should be discussing options with a reputable land agent and your solicitor. Together, they can help you identify what land is the most marketable and formulate a structure, and sales strategy for that land.

Conclusion

Now is the time to engage all your professional advisers to ensure that as we come out of the strictest phases of the current lockdown, you are in a position to maximise your operational assets and streamline your current and future income streams.

This article is from the June 2020 issue of Education Matters, our newsletter for our clients and contacts in the education sector. To download the latest issue, please visit the newsletter section of our website. Law covered as at June 2020.