West Midlands small and medium sized businesses are losing thousands of pounds due to their failure to take advice when doing property deals, according to Birmingham commercial property consultant Charles Brookes.
A survey by Birmingham-based property consultancy Curry & Partners shows that SMEs continue to regard property surveyors? advice as less valuable than solicitors, with many dispensing with it altogether when it comes to taking on new property.
?Small and medium sized businesses will pay for legal advice on property transactions, but many refuse to engage a surveyor, only to regret this decision at a later date, when they are landed with a bill for many thousands of pounds, which could easily have been avoided,? said Mr Brookes, commercial property partner at Curry & Partners.
?SMEs know they need a solicitor and understand what one does. But they are not clear about the valuable role a chartered surveyor can play.
?They believe they can make their own judgements on property, only to come unstuck later,? Mr Brookes added.
The Curry & Partners survey found that leases caused SMEs most problems.
?Most businesses lease their premises, but many are unaware of the potential pitfalls, liabilities and costs, if they fail to cover themselves by taking professional advice,? said Mr Brookes.
Curry & Partners? survey also exposed a number of cautionary tales.
A small Birmingham printing company took out a lease on adjoining premises without seeking a surveyor?s opinion.
The premises were in poor condition but, because the company was doing well, the landlord asked for a relatively high rent and the company agreed without seeking independent property advice. No survey was carried out, nor were the poor state of repairs recorded.
Because it had agreed to a fully repairing and insuring lease, the company ended up being liable for a #20,000 repair bill for a new roof, for a building for which it was paying 40 per cent more than the market rent. ?A surveyor would have ensured the company paid the market rent and that the landlord footed the repair bill,? said Mr Brookes.
Paying over the odds for rent was also the problem for a city centre accountancy firm, which took on a 20-year lease on new offices at #4 to #5 per sq ft above the market rate.
?Although there was a five-year break clause, which allowed them to leave after five years, this company ended up paying #25,000 more for its property than it needed to, simply because it did not seek advice from an agent,? said Mr Brookes.
He says break clauses can be valuable for businesses, but can also pose problems if they are unsure as to how and when to use them.
One company decided to close one of its offices just two days after it could have exercised a break clause option, leaving it facing the prospect of paying rent for a further two and a half years if it failed to find a new tenant.
Mr Brookes said: ?This oversight cost the company more than #4,000 in rent. They managed to keep the amount down, as we found a new tenant to take on the office after less than six months.
?Otherwise the final bill for rent, service charges and business rates for an empty office could have been much larger.? Mr Brookes also said that, not being able to afford full time property professionals, SMEs are particularly vulnerable to property related problems.