Leasing Code improves occupier satisfaction

16 September 2010

Commercial tenants in the UK are only moderately satisfied with the service they receive from landlords, but there is still room for improvement, particularly sustainability, service charges and the application for consent process, according to the Occupier Satisfaction Survey 2010.

Occupiers gave an average satisfaction level of 4.9 out 10 (average weighted score where 1 is extremely dissatisfied and 10 is extremely satisfied) but as in previous years, satisfaction levels vary depending on the size of the occupier. Smaller occupiers remain the most dissatisfied, perhaps reflecting a need to engage with specialist professionals in order to help improve their experience as tenants.
These findings come from the Occupier Satisfaciton Survey 2010 conducted for the Property Alliance which comprises RICS, British Property Federation, Investment Property Forum, British Council for Shopping Centres and British Council for Offices.
The highest levels of occupier satisfaction related to the rent review terms and conditions agreed in the lease negotiation process (5.8 out of 10). This area also showed the best level of improvement, which may reflect the positive impact of the Code for Leasing business Premises. Some24 per cent of respondents found the process has improved over the last 12 months.
Whilst 48 per cent of occupiers felt the issue of sustainability was more important to them than twelve months ago satisfaction over sustainability and environmental issues received the lowest satisfaction score in the survey, with an average of just 3.5 out of 10. This score suggests occupiers may need landlords need to engage more with them on environmental issues. However, this may also point to opposing views on how to approach the issue and how to apportion the costs.
Cost continues to be an issue for tenants, in particular in relation to service charges. 19 per cent of occupiers feel service charges arrangements have worsened over the last 12 months and as in the 2009 survey, there are a number of areas where occupiers would like to see increased transparency on costs and better communication.
The application for consent process appears to be an ongoing problem area for many occupiers with 29 per cent believing the process has become worse or much worse in the past year. 44 per cent of occupiers claim they have to wait more than four weeks to receive a response to an initial application, with a further 31 per cent waiting more than 12 weeks to receive a decision.
Overall, relationships between landlords and occupiers remain stable with 81 per cent of survey respondents saying their relationship is about the same with their landlord as it was 12 months ago. However, small businesses remain the least satisfied across the board, indicating there is still work to be done in the sector.
John Story, Chairman of the Steering Group, comments: "The results show that many appear to be benefiting from increased flexibility over lease events. This may be a reflection of current market conditions, as landlords become increasingly responsive to the difficult trading conditions facing their tenants. This is positive news for the industry but will it endure when the market strengthens? There is still much work to do in other areas.to improve landlord and tenant relationships.
“Evidently sustainability is a key issue for occupiers. Despite a number of initiatives which landlords, occupiers and their advisers are all working on, it appears there still needs to be more clarity and a greater willingness to work in partnership. In these difficult economic times will occupiers be willing to pay for green buildings? Certainly, more creative engagement between the parties could help to ascertain exactly what it is that each wants when it comes to sustainable buildings.”
The complete research findings can be found at http://www.occupiersatisfaction.org.uk