Published in 2014, the International Property Measurement Standards (IPMS) finally took effect in the UK – for commercial premises only – on 1 January 2016. What are the implications of the new standards for commercial landlords?
Origins of the IPMS
The standards were set up by the International Property Measurement Standards Coalition (IPMSC) after its formation at the World Bank in May 2013. The coalition aims to create international measurement standards, allowing buildings to be measured consistently and transparently anywhere in the world.
While the IPMSC has confirmed that adhering to the standards is not currently mandatory, countries including Dubai are already taking the changes into account in legislation.
Pros and cons
With property market transparency set to improve, major corporations such as Serco, Vodafone and International Hotels Group have welcomed the IPMS. Greater transparency means these companies – and other multinationals like them – will be better placed to manage their property assets, which is ultimately good news for investors.
However, others have expressed concerns. The Tenant Advisory Group, a surveying firm that represents commercial tenants, has suggested that the IPMS could see businesses forking out an additional £1 billion annually in rent and other property expenses. Martyn Markland, Principal Consultant at the Tenant Advisory Group, said that companies are probably "oblivious” as to the standards’ effects.
“[The standards] require columns, buttresses, party walls and other structural intrusions to be included in the floor area measurement, which effectively means that business owners will now be paying for space they cannot physically use,” he warned.
A further potential downside to the IPMS, Mr Markland added, is that tenants could end up with greater rental outgoings than necessary – something he attributed to a “lack of awareness”.
While introduction of the new measurement standards is largely positive for commercial landlords, there’s a real possibility that tenants faced with higher rental bills will at some point default on their payments. Landlords must consider the impact of the IPMS on their future cash flows, and safeguard against this eventuality. Dukes Bailiffs can help tackle commercial rent arrears in an efficient and ethical manner.