Property Asset Management Explained

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Category: Further Resources

Here is the transcript from our quick training video on property asset management, with slides available here:

Here’s a quick training video explaining what is asset management for properties, which will help you see the greatest returns in property as an investment. In short, asset management looks at the property’s market value and how things can be actioned to see greater value longer term.

It focuses on the property interest as a pure investment and therefore what rental or capital values it can generate as a reward for holding this interest. This often sees reduced costs but not necessarily straight away, as an additional cost now may provide a larger return in the future. It’s also more popular with commercial properties, but sill applicable for residential schemes, particular those with mixed uses.

In terms of how it relates to normal property management, it’s best to look at an example, let’s say a retail shop with two flats above it under one commercial lease to a newsagent. Normal property management focuses on the nuts and bolts and daily issues like correct maintenance and services charges, insurance cover and rent payments, and lease renewals and sub letting of the upper floor flats.

Asset management though goes a stage further and considers other angles to see a greater return on the owner’s investment longer term. So this might involve re-gearing the lease and agreeing a new one earlier than it’s renewal date, or agreeing the flats to come out of the main newsagent’s lease for the landlord to separately rent or sell these after certain project works.

Ideally you need these two elements of property management and asset management working together, with an effective longer-term asset strategy and plan to adhere to. These can be by the same person or company, although you can have a different asset manager’s job role and asset management company to specialise just in this particular area.

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CRAR Commercial Rent Arrears Recovery

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Category: Further Resources

Here is the transcipt from our quick training video on the CRAR procedure, with slides available here:

Here’s a quick training video explaining what Commercial Rent Arrears Recovery is, otherwise known as CRAR. This will help you understand how a landlord of a commercial property can take action to collect tenant rent arrears by seeking to cease the actual items of the tenant and re-sell these.

This is a drastic measure, and has evolved since 2014 from the previous principle of distrain and instructing bailiffs, and although under CRAR there are now more procedures and time limits to slow and soften the process down, it is still a serious remedy that all commercial property landlords, tenants, and other parties need to be aware of.

In terms of how this is carried out, here are 10 of the most important aspects to it, with full details available at our resources website.

1. You must have a written lease in place between a landlord and tenant, although this right actually comes from legislation and so doesn't need specific reference in the lease.

2. It is only for pure commercial property, so even any part with another use like a flat above a shop under the same lease will mean CRAR is not applicable.

3. It is only for pure rent arrears, including VAT and interest, but excluding other costs like service charges and insurance premiums, even if they’re labeled as rent.

4. CRAR can only be implemented by an authorised Enforcement Agent. This excludes any landlord directly, or even a solicitor.

5. There are 2 main notices needed with 7 days notice each, one after the other. Now these must have correct information on them, and only begun after the arrears are due.

6. An Enforcement Agent can first attend the property to complete a Controlled Gods Agreement which is basically a list of what actual tenant goods are available to claim.

7. An Enforcement Agent can finally attend for Ceasure of Goods and taking items from the property to re-sell in order to pay the arrears.

8. It’s important to note the costs involved, and who will eventually pay these on top of the main arrears.

9. The tenant does have a right of appeal and application to the court, to make sure CRAR is being implemented fairly.

10. Finally, watch out for tenants being insolvent for both longer-term prospects to pay rent and immediately being able to instigate CRAR.

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Commercial Rent Arrears Recovery Regulations & Notices (CRAR)

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Category: Further Resources

The notices are critical under CRAR as these will ensure a valid claim or course of action. They therefore need to be correct, and the circumstances and time frames clearly understood under them. One example is once notice is served then the Enforcement Agent can take action within 12 months from the date of the notice.

This can be important where, say, action under CRAR will hopefully force the tenant to realistically pay the arrears without any further action being needed, however action can be taken up to 12 months after the date on the notice, a fact that the tenant will need to be aware of in order to understand that there can be clear consequences from not paying.

Another issue with the notices is to make sure that they are correctly authorised and signed by the landlord. Sounds straightforward, but this needs to be the landlord under the lease with the tenant which will hopefully match the freeholder, plus whether any representatives of the landlord can act on the behalf, even if they provide written documentation from the landlord giving them authority, for example a managing agent or firm of solicitors.

Also, this authorisation and instruction from the landlord to the enforcement agent will need to include important pieces of information, which will need to be issued in a similar fashion to current bailiffs under distain, some examples being:

• the date of authorisation

• the landlord’s name and contact details

• the name/contact details of the person authorised to act for the landlord

• details to identify the actual commercial premises and the demise correctly

• the amount of rent owed

• the period which the rent is owed for

In terms of the actual Notice issued by the Enforcement Agent to the tenant, this will need prescribed information and accuracy, some example of what it will need to contain being:

• the name and address of the debtor/tenant

• the reference number or numbers

• the date of the notice itself

• details of the enforcement power being exerted

• information about the debt including sufficient details for the debtor to identify correctly the amount being pursued including any interest as at the date of notice

• the amount of any enforcement costs up to the date of notice

• the possible additional costs of enforcement if the sum outstanding should remain unpaid as at the date of which the sum outstanding must be paid

• how the payment can be made.

• between which hours the payment can be made

Need More Help?

Claim your FREE Property Management Pack here – including a 15-point Property Deal Cheat Sheet, and Introduction & Chapter from our amazon-best-seller book, the Property Management Guide.

Check out more property-management resources here, or contact us for help and advice.

Please leave comments below with any thoughts and queries.