Commercial Building Survey in Leeds

A different client, a different brief

The first conversation is about what you are trying to decide, not about the building. A purchaser of a multi-let office wants the report structured around capital expenditure over the holding period, because that is what will be argued about in the price. An owner-occupier buying a unit at Stourton wants to know whether the roof and the floor slab will take what the business does to them. A tenant taking twenty years on a parade shop wants the condition of the parts nobody mentions during the viewing: the flat roof over the rear store, the drainage in the service yard, the plant on the roof and the state of the shopfront above the fascia. The inspection is the same walk round the building; the report is not.

Because the client is commercial, so is the language. The report quantifies. Where a residential survey would say that a covering is nearing the end of its life, a commercial survey says how much of it, over what area, on what timescale, and whether it is a repair, a partial overlay or a full replacement, so the number can be put into an acquisition model or set against a rent free period. Where a defect is the landlord's under the lease and not yours, the report says so, because a liability that sits with somebody else is not a liability you should be pricing.

There is also a limit worth stating early. A building survey is not the whole of due diligence. It does not cover title, planning history, the accuracy of the tenancy schedule, contamination testing, or the valuation of the asset. It sits alongside the legal enquiries, the environmental report, any measured survey and, where required, a Red Book valuation, and it is at its most useful when all of those are read together rather than in isolation.

Lease context: schedules of condition and dilapidations

Most commercial property in Leeds is let on terms that put repair onto the tenant, and an unqualified full repairing and insuring lease is a considerably bigger commitment than most incoming tenants realise. The obligation is normally to keep the premises in repair, and the courts have long held that you can be required to hand back a building in better condition than you received it. A tenant taking a fifteen year old industrial unit with a tired roof and a patched service yard, on a lease with no limit on the repairing covenant, has just taken on the cost of putting all of it right.

The remedy is a schedule of condition, agreed and attached to the lease before it is completed. It is a dated written and photographic record of the exact state of the premises at the start of the term, and where the lease is properly drafted to refer to it, the repairing obligation is limited to that recorded condition. It has to be done before completion, it has to be detailed enough to be useful three or fifteen years later, and the wording of the lease has to tie back to it. A schedule of condition prepared after the lease is signed protects nobody, which is why we ask about the timetable as the first question.

At the other end of the term comes the schedule of dilapidations, where the landlord claims the cost of putting the premises back into the condition the lease requires. These claims are routinely overstated, and they are routinely capped in ways that surprise the landlord, because the damages recoverable are limited by reference to the effect on the value of the landlord's interest. We prepare schedules for landlords who want a defensible claim and challenge them for tenants who have been served one, and in both cases the argument turns on the lease wording, the evidence of condition, and what the landlord actually intends to do with the building afterwards.

• Full repairing and insuring lease with no schedule of condition: the tenant's repairing obligation is effectively open ended.
• Schedule of condition agreed before completion and referred to in the lease: liability is limited to the state recorded on the day.
• Interim schedule served during the term: the landlord is seeking repairs now rather than money at the end.
• Terminal schedule served at or near expiry: negotiation on scope, cost and the landlord's intentions for the building.
• Service charge in a multi-let building: the repairs you do not carry out directly still reach you through the annual account.
• Break clauses conditional on full compliance with repairing covenants, which is where an unexpected dilapidations position can cost a tenant the break entirely.
• Rent review evidence, where the condition of the premises and the terms of the lease both bear on the reviewed figure.
• Landlord works and reinstatement obligations at expiry, including removing the tenant's own alterations back to an agreed base specification.

The risks that decide a commercial deal in Leeds

Commercial buildings fail in ways residential buildings do not, and most of the money in a commercial survey sits in the roof, the services and the statutory position rather than in the walls. These are the issues that recur across the Leeds stock and that most often move a price or a lease term.

• Reinforced autoclaved aerated concrete planks in flat roofs and floors of buildings put up between the 1950s and the mid 1990s, which have a limited design life and need identifying, recording and assessing rather than assuming.
• Cut edge corrosion and failed fixings on profiled metal sheeting across the industrial estates at Cross Green, Stourton, Gelderd Road and Seacroft, where the sheet itself may be sound and the laps and gutters are not.
• Single ply and asphalt flat roofs on 1970s and 1980s offices, where the falls are inadequate, the outlets are blocked and the insulation beneath is saturated without anything showing inside.
• Northlight and valley gutter roofs on converted mills at Holbeck, Hunslet and Armley, where the gutters are internal, the overflow route is into the building, and access for maintenance was never properly designed.
• Asbestos in the services and later fabric of anything predating 2000, with an absent or out of date register transferring a live legal duty to the incoming owner or occupier.
• Energy performance and the minimum standard required before premises can be let, which on older Leeds offices and shops can mean substantial expenditure before the building is capable of producing income at all.
• Fire compartmentation breached by later service runs, missing cavity barriers above suspended ceilings, and means of escape compromised by subdivision of floors into smaller suites.
• Made ground, historic contamination and flood exposure on former industrial land along the Aire corridor, from the Kirkstall Road frontages through to Knostrop and Stourton.

How the inspection is carried out and what the report contains

The surveyor inspects the structure, the external envelope, the roofs, the internal finishes, the common parts, the external areas and the services on view. Roof access is arranged in advance and, where it cannot be made safe, a drone is used rather than a set of assumptions. Plant rooms, risers, roof voids and sub-floor areas are entered where access allows. On a purchase the vendor will sometimes permit limited opening up, and where they do, that is often the single most valuable hour of the whole exercise. Statutory and maintenance records are requested as part of the instruction: electrical condition reports, gas and heating certification, lift inspection records, water hygiene risk assessments, fire risk assessments, the asbestos register and any warranty documentation for recent roof works.

Mechanical and electrical plant is reported on visually by the building surveyor, and that limit is stated plainly rather than glossed over. Where a building has significant plant, air conditioning, a lift, a sprinkler installation, a substantial three phase distribution system or process equipment, a specialist services engineer should inspect and test it as part of the same due diligence. On an investment purchase that specialist input is usually the difference between a report that reads well and a report that protects the money.

The written document runs to an executive summary that can be read by somebody deciding whether to proceed, a description of the construction, a section by section account of condition with photographs, and a schedule of the matters that carry cost. Where you have asked for one, the costed schedule sets out budget allowances for immediate work, work within the next five years, and work within ten, which is the format that drops straight into an acquisition appraisal or a service charge forecast. There is a separate section of matters for your solicitor, covering rights of access, shared service media, boundary responsibility, statutory compliance gaps and anything the lease or title needs to resolve.

Instructing a commercial building survey in Leeds

Come to us with the heads of terms or the draft lease if there is one, because the report should be written against the obligations you are actually taking on. Tell us the transaction date, whether the building is occupied, who holds the keys and whether roof access is available, since those four answers set the programme. For a multi-let building we also need the tenancy schedule, because whether a defect is yours, a tenant's or recoverable through the service charge is a question about the leases rather than about the brickwork.

We attend within 3 to 5 working days of instruction and report within 3 to 5 working days of the inspection, and where a deal is moving faster than that we will say honestly what can be delivered in the time rather than promising a date we cannot hold. The fee is fixed and agreed in writing against a defined scope. If the scope changes, because a second building is added or the vendor agrees to opening up, we requote rather than adding to the invoice afterwards.

The survey rarely travels alone. Alongside it we prepare schedules of condition for tenants signing leases across the city, dilapidations schedules and negotiations for landlords and tenants at expiry, commercial valuations to Red Book standards for purchase, lending, pension and accounting purposes, rent review advice and negotiation, fire risk assessments for the responsible person, and asbestos surveys where the register is missing or out of date. Where you need several of those, they are more useful commissioned together, because the same surveyor sees the building once and the reports do not contradict each other.