UKGBC, TFT and partners produce new Circular Economy guidance
Many people will be familiar with ‘the circular economy’, as the concept and terminology rises up the political and business agenda. But how can we turn thought into action in our own industry? UKGBC and TFT teamed up with stakeholders across the industry to publish new guidance to do just that.
Circular economy principles can have different implications across different industries, products or services – but The Ellen MacArthur Foundation identifies these three key traits of a successful circular model:
- Design out waste and pollution
- Keep products and materials in use
- Regenerate natural systems
It’s hard to name an industry which is doing all these things, but as we face more strain on resources of all kinds, it’s incumbent on everyone to improve models which generate waste and pollution for sustainability.
“…the quantity of reused materials in construction has actually decreased since 1998. At the same time, the rates of extraction of materials in our fast-developing world are already way beyond planetary capacity.”Sunand Prasad, Founder Penoyre & Prasad and Trustee of UKGBC
We face a big challenge to employ circular principles across the built environment and the supply chain which feeds it, due to the systemic change which is needed. Closer coordination is one way to achieve this.
To that end, TFT partnered with UKGBC and a range of construction industry stakeholders to formalise the steps to meet an industry-wide circularity objective.
The first output of this work is a guidance document, focusing on RIBA stages 1 & 2 (Preparation & Brief and Concept Design, respectively). Looking closely at setting a project up for circular success, the guidance provide practical steps to realise the commercial value of circular construction, from ensuring supply chain effectiveness to informing project management and mitigating risks along the way.
If you’re interested in learning how the guidance can be applied to maximise the long term value of your building project or your wider portfolio, contact Helen Newman.
The full guidance can be downloaded from UKGBC, here.
The rise of the contractor ‘Brexit clause’
Predictions from the UK property industry on the likely impact of Brexit continue to change and develop as negotiations progress. One of the more immediate concerns which face projects underway now and commencing soon is a possible trend towards contractors adding a ‘Brexit clause’ to the terms of their contract.
This clause relates to limiting the level of risk which contractors are willing to accept with respect to procurement and delivery of materials. Where contractors would normally take on the risks associated with importing materials, the ongoing Brexit discussions make for an unpredictable future process in which supply chains might be blocked or delayed beyond contractors’ control.
In cases where a Brexit clause is added to a contractor’s terms, the contractor is expecting the client to accept the risk involved in the form of project delays or cost fluctuations (as a result of tariffs or storage costs for example).
TFT is currently aware of a few instances of these amended Brexit clauses to date and advises clients that these are likely to become more common as uncertainty of the UK’s relationship with the EU continues, particularly if ultimately a “no deal” outcome is reached.
Our further advice to clients is to understand the supply chains for construction products and materials at an early stage to identify areas of risk. As an example, whilst a product may be produced by a UK manufacturer, it may have components from elsewhere all over the globe (or more importantly in this instance, from one of the 27 remaining EU countries). This level of scrutiny of the source of origin for products and materials will be beneficial from a risk perspective and may also be of benefit for sustainability reasons.
Additionally, it is worth clients and their advisors undertaking further due diligence during the contractor selection process to understand what contingency plans they have for managing some of the risks around importing of materials. For example, some contractors are already putting in place holding facilities either side of major ports such as Dover and Calais. With such facilities in place and with careful consideration of lead-in times, this will help to alleviate possible effects to programmes caused by importing delays.
Some contractors are also forward purchasing Euros to the value of supply chain commitments for goods and services from EU member states, to avoid the impact of currency fluctuations. In addition to the above, some contractors are looking to amend contract terms where if, following Brexit, there are more onerous changes to statute in the UK which were previously covered by EU legislation, the contractor is looking to push that risk back to the Employer.
If you have further questions relating to the nature of these Brexit clauses and next steps to resolve supply chain issues, please contact Dan Henn, Partner and Head of Development and Project Consultancy.
Manchester’s Beetham Tower in disrepair: Lessons from a “Draconian” remedy
A new disrepair case has been reported, relating to Manchester’s tallest building: the iconic Beetham Tower in Manchester (you know it; that new glass one with the top half larger than the bottom half). Here we explore the ramifications and lessons to learn from an unusual case.
In Blue Manchester Limited v North West Ground Rents Ltd  EWHC 142 (TCC), the judge heard about three issues including potential disrepair to the cladding.
The Landlord had obligations to the hotel-operator Tenant to keep the retained parts of the building (including the cladding) in repair. Problems had been found with parts of the cladding installation and, prior to the hearing, a temporary solution had been implemented. More particularly, the bond provided by the structural sealant of the insulated ‘shadow box units’ was failing in some cases. The temporary remedy was to screw-stitch pressure plates to the frame profiles, to hold the panels securely in position.
The question for the judge to consider was whether, at the time of the hearing, the cladding was in disrepair. He found that it was in disrepair. In so doing, he relied to a very large extent on the 5-stage analysis of disrepair published within Dowding and Reynold’s dilapidations text book. He also took the aesthetics of the building into account.
To the observer, informed only by the facts as reported in the judgement, it seems relatively clear-cut that the cladding would be found to be in disrepair.
For the defendant landlord though, this appears to have been a problematic case for three particular reasons:
- They are a ground rent company and may have had little expectation of having to get involved with works of this scale, the recovery of the cost of which might be restricted by the terms of leases with the various tenants.
- Matters were also complicated somewhat by the demise of Carillion and by both parties holding warranties against the cladding sub-contractor.
- The claimant tenant was (unusually) asking the judge to award the remedy of ‘specific performance’ as well as damages.
It is the granting of an order for specific performance which perhaps elevates this case to the unusual.
That remedy was awarded despite the judge describing it as ‘draconian’ and also despite the tenant having an alternative contractual remedy akin to a Jervis v Harris process.
It is more normal for specific performance not to be granted in England and Wales, because the terms of any order can be difficult to draft, such that it would be difficult for the party obliged to comply with the order to know whether it was doing so in an appropriate manner. In this case the judge allowed what he considered to be a reasonably generous time frame (of 18 months) for the landlord to comply, and also allowed the landlord to apply to the court for further guidance under certain circumstances.
The Tenant was also awarded damages for any continuing loss it may suffer as a consequence of the landlord’s various breaches.
It is not known whether leave to appeal will be requested or granted, or any appeal made or won.
Lessons to learn:
- Parties to a lease (or indeed any contract) should understand the potential implications of the obligations they are signing up to. It sounds as though the landlord might have difficulty recovering all of the cost of the works through the service charge, and this in circumstances where their 999 year interest will have meant that any opportunity to claim against the development team would expire (relatively) quickly, because the warranties would not be for an equivalent 999 years.
- Don’t assume that specific performance will not be granted. It just might; going to court is an uncertain business.
- Inspect cladding installations regularly and frequently, even if they are ‘new’.
Japanese knotweed: a new statutory concern for dilapidations
Japanese knotweed is a concern to our clients when dealing with dilapidations and investing in property: it’s important that its presence is identified due to the potential damage it can cause from rhizomes (roots) penetrating masonry, foundations and paving and the potentially high cost of remedial works.
On top of the well known financial imperative, there is a further legal aspect which has recently come to light.
The Wildlife and Countryside Act 1981 and the Environmental Protection Act 1990 remain the overarching legislation that control the growth and correct disposal of Japanese Knotweed in the UK; with the Wildlife and Natural Environment (Northern Ireland) Act 2011 and the Wildlife and Natural Environment (Scotland) Act 2012 applicable to the respective regions, alongside the relevant disposal regulations.
However, the Anti-Social Behaviour, Crime and Policing Act 2014 introduces a further facet to what can become a problematic issue. A recent prosecution case by Bristol County Council demonstrates that local authorities are using the legislation available to them, taking action against those who fail to control invasive plants on their land. Under the Act, local authorities can serve a Community Protection Notice (CPN) on individuals or bodies acting in a way that has a detrimental effect on quality of life of those in the local area. Bristol County Council subsequently fined MB Estates Ltd £18,000 for failing to control the weed’s growth.
So landlords, tenants and professional advisers beware. It is important for property professionals and clients to be aware of the risks associated with Japanese Knotweed and that lease obligations relating to its presence and recovery of costs are carefully considered. Leases tend not to cover invasive species very well and linking its presence, and an obligation to remove, to a breach of covenant can be difficult.
For further information and advice specific to your property, please get in touch with Jay Ridings, Associate at TFT.
The TFT Purple Book: A guide to Dilapidations in the UK
The TFT Purple Book: A Guide to Dilapidations in the UK is a comprehensive guide which identifies the legal context, best practice, background to how and why dilapidations is dealt with as it is, and addresses areas of legal uncertainty. It aims to serve as a single point of reference from which the reader can develop a solid foundation of knowledge. It even considers cattle, children and ‘chattels-vegetable’ – and not many text books can make that boast.
You can read more and order the book here.
TFT Dilapidations Flowcharts – Scotland
Can Real Estate turbo charge the Midlands engine?
In this paper we pose the question whether the UK Industrial Strategy and the Midlands Engine will succeed. Of course, they have the potential, but we believe real estate is one, if not the key driver to Birmingham achieving the international status its size and economy deserve.
TFT Scotland advises commercial property investors, owners and occupiers wishing to acquire, dispose and manage property in Scotland. Our team includes highly motivated and skilled building surveyors who provide professional advice and guidance.
Technical Due Diligence in Commercial Property
Technical due diligence (TDD) enables those involved with the acquisition, occupancy and disposal of commercial property to understand and manage risk, make informed decisions, and future-proof their investments. Building services installations are more dynamic – and their associated issues often result in greater disruption and cost – than the building fabric elements, so M&E technical expertise and advice is a fundamental part of the TDD process.
The new MEES regulations are here. So is the right support.
On 1 April The Minimum Energy Efficiency Standards (MEES) come into force, making it unlawful for a landlord to let or renew a lease on a property if the energy performance certificate (EPC) rating is F or G.
There are exemptions. There are common misunderstandings. And there is a support on hand to review EPCs, at risk properties and landlord and tenant obligations. Like it or not, MEES comes into force on 1 April but with TFT’s help the introduction need not be onerous.
Email us if you would like to discuss your portfolio with one of TFT’s MEES experts.