What is professional advice?
1 June 1985Jun 1985 – The role of the valuer, at a rent review or lease renewal, is to argue for his client’s best interests and for the tenant, ‘best’ generally means the lowest rental. Most landlords and tenants get frustrated by the complexity of the rent review system, but many small tenants are expressing their annoyance by not honouring payment of the valuer’s fees. As a valuer is not personally responsible for rent levels and since most people confuse the withholding of payment with the need for confrontation when dissatisfied with goods or services, non-payment, by an otherwise solvent tenant, suggests that a major factor may lie in misunderstanding the role of the professional adviser.
As over 90% of my fee income comes from landlords and multiple retailers, my direct involvement with small tenants is limited, but discussion with other valuers, more dependent upon this source for their review instructions, suggests a growing problem. The small tenant’s knowledge of rent review law is likely to be very limited and confined to a range of popular suppositions, many of which are contrary to review law. In considering advice, the tenant will recognise that many aspects of rent review law are too complex for a layman to understand. So, in accepting recommendations, it is important for the tenant to have established mutual respect for his adviser so that, if understanding principles is not always possible, the tenant can still be confident the valuer has done the best job. For example, a most common problem is that tenants do not realise the rent is assessed by reference to the worth of the premises and not to the economics of the business. Since the tenant’s prosperity is inter-related with the level of rent, rational acknowledgement of this critical concept cannot compete with the absence of emotional appreciation when the outcome exceeds the tenant’s expectations.
It is all very well for the law and hence valuers to view rent objectively, but it is the tenant who has to find the money. Any reduction in net profit highlights the parallel with national unemployment when operating revenue no longer supports a full workforce. Assignment is too glib a suggestion, as many middle-aged individual tenants lack the energy or enthusiasm to relocate established businesses. Too many valuers do not make it clear precisely what their role is when taking instructions. It is a pity they allow their instinctive compassion for the tenant’s cause to cloud perspective. The valuer gets caught in the quandary between, on the one hand, fighting to achieve the tenant’s expectations and on the other, privately and technically surrendering to the substance of the opponent’s argument. By allowing reality to take second place to the tenant’s expectations, the valuer is no longer an adviser but an up-market messenger boy. The fact that many small tenants are openly caustic about the waste of money in instructing valuers adds to general disillusionment.
Only by ensuring that the client is kept informed, including explanation of technical factors, can the client recognise that every effort is being made on his behalf so that the outcome is not the valuer’s fault. In this way, the guilt for non-payment remains with the client.
Fee structures create their own problems. Incentive fees are not a guarantee of ability to pay, since the gap between the landlord’s proposal and the expected result does not exist in physical monetary terms. Some people believe that the more a valuer can earn, the more he is motivated to try for the lowest rent and at the back of their minds also is the awareness that if the result conflicts with expectations, the valuer will share in the tenant’s disappointment and not have his fees underpinned by the base settlement figure. In my opinion, the sole criterion for choice is the skill of the valuer and the method of payment should take second place, but in a ‘performance related perk-free society’ this attitude clearly places too much on trust!
The small tenant’s method of protest against the ‘injustices’ in the system is, in prosperous areas, to assign the lease so that, in the tenant’s view, the landlord loses the security of an established tenant (often in exchange for a debt-ridden newcomer) and, in the rest of the country, simple non-payment of rent. This invites the landlord to go for possession, which is often the last thing the landlord wants to do, for fear the premises will remain empty. The growing cacophony of inexperienced shopkeepers is witness to the widening gulf between competent professional valuers and parochial general practitioners.
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