Newspaper article The Journal (Newcastle, England)

Market Pressures Giving Rise to More Disputes

Newspaper article The Journal (Newcastle, England)

Market Pressures Giving Rise to More Disputes

Article excerpt

Byline: KEVAN CARRICK

FAIRNESS is the key to a good deal - you can't dispute that! Whenever a dispute between the landlord and the tenant arises the air becomes charged with emotion.

The dispute may be about renewal of the lease, a review of the annual rent, the amount of service charge payable, disrepair or any other matter affecting the parties.

I am finding that more disputes are arising because of the pressures in the market. Demand is low, rents have fallen and landlords are offering more incentives to attract tenants to consider the property and higher incentives to encourage them to sign longer leases.

Tax on property is relatively high, especially empty property rates. Landlords who have borrowed for five-year terms, in the rising value market up to 2007 are now finding the banks are putting pressure for the repayment of the loan or refinancing at much more costly terms. In some cases charging penalties where the borrower cannot pay the loan nor can it find alternative finance.

This is the time when relationships are put to the test. Rising values cannot wash away mistakes. High demand for space cannot protect the landlord from obligations to repair. Thus there is greater exposure to those factors that cause dispute between landlord and tenant.

Having managed property on behalf of owners, whether they were companies, individuals or charities, the secret of success is good communication. The objective is to ensure that the landlord's investment is maintained to the best position the market would allow.

This was relatively easy in a rising value market with high demand but today and for the next five years or so the market is likely to be one of relatively low demand.

That means the landlord's approach to maintaining the investment will require careful handling. Stability of income will be the crucial driver; being able to repay the mortgage and avoiding costly vacant space, where costs for operating an empty building will be incurred including empty property rates. The landlord will suffer this outgoing and revenues stream, which will reduce income.

Good landlord and tenant relationships will be most important. …

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