Monthly Archives: October 2014

Tenant covenant reviews: a timely reminder

October 24th, 2014 by

The UK property market is booming: rents are rising, yields are improving and interest rates have been held at 0.5% for a record five years – what could go wrong? Well, we have been here before and historically there has been a property ‘correction’ every eight to ten years. Good quality tenants are a protection against voids and can help preserve asset values.

With a recent change in legislation covering a landlord’s right and ability to recover arrears of rent, Moore Stephens’ Tenant Covenant Review team believes that now is the right time for landlords and managing agents to review tenants’ covenants and make sure that tenants will be able to continue to meet all rent obligations, particularly given the increasing likelihood of an increase in interest rates.

A landlord’s ancient right of distress to recover arrears of rent was abolished on 6 April 2014. In its place, is a new statutory regime for Commercial Rent Arrears Recovery (CRAR).

Key aspects of CRAR

  • Lease must be in writing.
  • Commercial premises only.
  • Rent only (plus VAT and interest).
  • Must give seven clear days’ notice in writing before entering premises to seize goods.
  • Exercised by Enforcement Agent.
  • Notice to sub-tenant to redirect rent takes effect 14 days after service.

Miles Needham of Moore Stephens’ Corporate Advisory Services team comments: “Whilst a landlord will always want to avoid the situation where a tenant is in arrears of rent, the change in legislation has arguably weakened the power of the landlord to threaten distress or to act quickly to seize goods to recover arrears of rent.”

The change in legislation has brought the position of the landlord more in line with other creditors. It is therefore more important that ever for a landlord to understand the current and future ability of a tenant to pay rents and, where possible, to take security.

How Moore Stephens can help
Moore Stephens’ Tenant Covenant Review team is a multi-disciplined team, drawing expertise from the Real Estate Specialist Sector group, Corporate Advisory Services, Tax and Corporate Finance teams.

The team regularly undertakes desktop reviews of proposed tenants in support of a new lease or of existing tenants in support of an asset purchase.

We also undertake more complex assignments to assist landlords and managing agents in fully understanding the financial health of a tenant when faced with a request for a rent reduction, or other material change in the lease, or when a tenant is in financial distress and faces the threat of insolvency. The Tenant Covenant Review team are able to quickly assess the tenant’s situation and provide a recommendation to the landlord or managing agent.

First published by Moore Stephens London, October 2014

VAT on residential construction projects – What a relief!

October 24th, 2014 by

There are many ways of reducing VAT costs for residential construction projects, yet the reliefs available are frequently overlooked or misunderstood. The 0% or 5% VAT rates can apply to construction/conversion/renovation services and building materials in a wide range of circumstances, resulting in very substantial savings. It may also be possible to reclaim VAT that has been incurred using one of the mechanisms made available by HM Revenue & Customs.

As well as benefiting the end customer, the VAT reliefs available can give businesses a commercial advantage when tendering for residential construction projects, as competitors will often be unaware of the rules and quote at the 20% rate of VAT.

First published by Moore Stephens London, October 2014

Jersey claims Investment Week best fund administration centre award

October 2nd, 2014 by

For the second consecutive year, Jersey has been named ‘Best Fund Administration Centre’ in the awards of leading investment management publication, Investment Week.

Jersey, which was once again shortlisted alongside Luxembourg and Dublin, was announced the winner at a dinner ceremony in London on 23rd September, following Investment Week’s two-day Fund Management Summit.

The awards are designed to recognise those service providers and jurisdictions who can demonstrate the knowledge, drive and expertise to provide solutions for the fund management industry in a seamless, efficient and innovative way. Winners were selected through a combination of online voting and by a panel of independent judges.

Commenting on Jersey winning the award, Deborah Benn, chair of the judging panel, said:

“The judges felt the passion and commitment to fund services clearly shone through in Jersey’s submission. In particular, the judges felt that Jersey demonstrated leadership in its aims to become a key jurisdiction for alternative investment funds. Messages and intentions on industry issues need to be transparent and explicit, which Jersey does extremely well.”

Geoff Cook, CEO, Jersey Finance Limited, said:

“For Jersey’s fund administration services to be recognised not only by a leading and long established investment publication like Investment Week but also against some heavyweight EU competition for the second year in a row is naturally extremely welcome for our funds industry, which continues to perform strongly. The market has reacted well to Jersey’s approach to international regulation, whilst fund creation volumes and net asset values are growing. This, backed up by this latest accolade, which was awarded at a ceremony attended by London’s leading investment professionals including many of the UK’s major fund service providers, is extremely encouraging for our funds industry.”

Ben Robins, Chairman of the Jersey Funds Association, added:

“At a time when unprecedented regulatory change is causing fund promoters to re-assess fund domiciles, this award serves as a timely reminder of perhaps the most important factor they should consider – will your fund and its investors receive the consistently high levels of service they demand? This award is an excellent reflection of the long-standing quality, depth and experience of Jersey’s fund administrators and it’s notable that a significant number of service providers with a presence in Jersey are recognised in other categories in these awards too.”

First published by Jersey Finance Limited, September 2014