Property snakes and ladders

Moving house is highly stressful as most people will know from
personal experience. But the stakes are far higher if you are
working for a charity on limited resources and do not know where to
seek affordable help.

More charities are having to face the fact that local authorities,
which used to provide low-cost premises, are now determined to
realise the full market rent. Many voluntary sector organisations
are finding that they cannot afford the rents demanded on the
office space they occupy. As a result, they are having to look
elsewhere.

Whether the charity’s landlord is the local authority or in the
commercial sector, the realisation that the lease is up for renewal
can bring with it anxiety and upheaval.

The potential pitfalls are many; they can also be costly. Annette
McGill, director of Upkeep, which runs the Charities Facilities
Management Group, says: “Charities such as Save the Children or
Oxfam are of a size where they will have facilities managers,
surveyors and lawyers on their staff. For small charities needing
to move offices, you will usually have people who are learning
about this stuff as they go along, and that is not their main
job.

“Suddenly they have to take responsibility for negotiating complex
leases which could commit their organisation to significant sums.
It’s a stressful time. And when an organisation has only a few
people, who are not expert in the field, mistakes can easily be
made. I’d say to anyone in this situation: get a surveyor on to
your board of trustees.”

Pat Tulloch, director of Southwark Action for Voluntary
Organisations in London, is concerned that increasing demands on
charities create additional pressures for those considering a move.
“There’s a push for the voluntary sector to professionalise itself.
Having suitable premises for the services you offer is part of
that. But unless the resources underpin that, it is difficult to
offer credible services at the standard you’d like.”

Small groups are particularly vulnerable when negotiating leases.
Many of them do not know where to access legal advice, or even what
is reasonable to ask of their trustees in terms of support for
their new property.

Tulloch says: “There are horror stories of trustees being asked to
act as guarantors for the lease. That puts their homes at risk, and
is very bad practice.”

Julie Ballard, business manager at the Mental Health Foundation,
has just organised her organisation’s move. She says people are now
choosing to work more flexibly, and this has implications for the
type of office space required.

“The way charities are changing means we increasingly have home
workers, so you don’t need so much dedicated space perhaps. But you
do need to cater for people hotdesking, and you also need to invest
in better communications infrastructure,” she says. “Any move to a
new property needs to take account of the internal dynamics of how
your organisation is developing.”

Property company Workspace was set up to cater for fast-changing
working practices. It lets to charities of various sizes in
buildings designed for flexibility.

Maddy Carragher, operations director, says: “We operate like a
hotel, and people come and go according to their needs rather than
ours. We specialise in buying large buildings and chopping them up
into small units. If you’re growing we can easily knock through to
the next unit.”

Workspace does not undercut the market rate specifically to cater
to the voluntary sector, but the rent includes all maintenance,
cleaning, power and insurance and, according to company surveys, 90
per cent of tenants say they would recommend Workspace as a
landlord.

“Our lease allows the tenant to move out at three months’ notice,
and that is very unusual in this sector,” says Carragher. “Most
landlords grudgingly only offer a break after two or three years.
We also make sure that our lease is self-explanatory so small
organisations aren’t confused.”

However, not all landlords are so flexible and most charities will
have to approach lettings agencies that have no concept of
voluntary sector requirements.

Ballard recalls with some amusement her first forays into the world
of commercial lets. “I was inundated by all the commercial agencies
trying to ‘help’ me, but they have no understanding of the
voluntary sector, and were offering me things like interior design
services that weren’t relevant,” she says wryly.

Although the Mental Health Foundation moved only a few floors
downstairs, Ballard viewed many other properties. She estimates
that managing the entire move took 20 per cent of her time.

“It’s a big responsibility on behalf of your charity and also your
charity trustees,” she warns.

“A lot of charities have to raise funds from scratch each year, and
you’re never quite sure until near the time whether you’re going to
get the grant.

“That can make it difficult to look at a long-term strategy in
terms of where you’re located.”

Given that local authorities are unlikely to revert to offering
subsidised rents – and, from this year, charities have had to meet
statutory obligations to ensure disabled access – it may well be
that there is space opening up in this market for canny
entrepreneurs to offer tailored lets that meet the needs of the
voluntary sector. 

– Charities Facilities Management Group is at www.upkeep.org.uk/cfmg and
Workspace at www.workspacegroup.co.uk  

Ethical lets without hindrance

 With a mug of Fairtrade tea in one hand and his company’s
annual report proclaiming “Ethical property – investing in social
change” in the other, Jamie Hartzell, managing director of the
Ethical Property Company, is a landlord with unusual
motivations.

“We set ourselves up to support social change organisations through
the provision and management of property,” he says, “and we aim to
run the company as a transparent, ethical business, trying to
tackle poverty through regeneration.”

With clusters of buildings in Brighton, Bristol, Sheffield,
Manchester, Leeds, Oxford and London, the company offers fully
serviced lets from about 85 per cent of market rate.It will let to
voluntary sector groups and social enterprises only. Insurance is
included, all electricity comes from renewable sources, recycling
facilities are available on-site and modern IT facilities are
installed so that costs can be shared collectively by tenants, who
then benefit from cheaper rates.

The concept has been so successful that two share issues to buy
stock in the company have been oversubscribed, and voids are almost
unheard of. The deal was barely closed on its biggest and most
recent purchase in Old Street, London, before the first tenants
started moving in recently.

To address the needs of voluntary sector tenants who must rent on
standard commercial terms, Hartzell has just founded the Ethical
Property Foundation, a charity offering advice and support to
people learning to negotiate the more unscrupulous practices
commonly used in the lettings market.

“We’ll be using the knowledge we’ve gained of the industry to
publish a range of troubleshooting guides looking at some of the
unfair practices that landlords use, even if they’re still within
the law,” he says. “They’ll cover what to look out for when you’re
moving in, also what might come up when you’re moving out, and how
to manage your office in a way that won’t damage the
environment.”

He also intends to establish an accreditation scheme for good
landlords with an ethical property mark. To get their names on the
list, property companies will have to meet the criteria. For
charities contemplating a move, it may soon be the hottest list in
town. 

– Go to www.ethicalproperty.co.uk