This four-bedroom family home has got it all: spacious, light and airy living areas, large garden, an enviable location in the beautiful seaside village of Mt Eliza on Victoria’s Mornington Peninsula, and a contemporary, stylish interior. If the house was for sale now it would be snapped up in minutes. But when the property was on the market three years ago it was a very different story. “People walked straight out of the open inspection saying it was a dump and too much work,” recalls homeowner Jo Verhoeft. “I called it the derelict house on the hill,” she says. “It was built in the early 1970s and was really dark inside with dated decor, ugly brick and plaster arches, dreary, dark wood panels, and wallpaper everywhere – even the shower was wallpapered!”
Despite the neglected state of the house, it was structurally sound, with a good floorplan and in a great position on the hill, so Jo and husband Bart, not daunted by a DIY challenge, instantly saw its potential as the perfect family home. “We moved in just six weeks after our third daughter Lola was born and immediately began planning what renovations needed to be done,” Jo says.
To save on costs the couple did the majority of the work themselves, hiring local builder Ray Hughes for the bigger jobs such as replastering, and constructing a pergola and two new gables. “We stripped the house back to basics,” Jo says, “removing the brick arches, ripping up the old carpet and lino, and taking down the wood panelling. We did keep the panelling on the hall ceiling and study wall as we wanted to embrace some of the original features that worked in the house. It’s a special surprise to see a modern influence married gently into an old home.”
The look the couple wanted to achieve for their interior was “a light space with cool forms, textures and luxuries throughout”, Jo explains. “Bart and I were both born in the 1970s and are drawn to mid-century-modern pieces.
With young children, the house also needed to be durable, easy to live in and easy to keep clean. The tired interior was given a contemporary facelift with newly rendered walls painted a warm white (Dulux “White Watsonia”) for a fresh, light and airy feel; dark flooring for practicality and to contrast with the white; and modern fixtures and fittings in the two bathrooms. Floor-to-ceiling windows were installed in the main living area to let in light and to maximise the garden views. With the budget getting tight the couple didn’t think they’d be able to afford to update the kitchen, but a good friend offered to make new cupboard doors for them. “Bart fitted and painted the doors in a white high gloss to match the walls and I bought new handles and a sink and mixer from eBay for a song. We had the old orange benchtop relaminated and a new Laminex breakfast bar installed where we knocked down the existing bar,” Jo says. “Our new, modern kitchen cost less than $2500.”
A commercial lease is a tricky beast, and tenants need to be clear about the extent of the potential liabilities they are accepting, reports Philippa Aldrich
As the credit crunch begins to bite, all businesses will be carefully reviewing their overheads. Premises costs are usually one of the biggest.
One of the most expensive mistakes commercial tenants can make is to assume that certain major areas of expenditure are the landlord’s responsibility. So what should tenants be looking out for?
Repair and maintenance
All leases will set out the tenant’s obligations in relation to the maintenance of a property. But the precise meanings of words generally used to describe a tenant’s repairing obligations have been settled over many years of court decisions, and the implications of certain phrases are not always obvious.
For example, a covenant ‘to keep the property in repair’ includes an obligation to put the property into repair if it is in a state of disrepair at the start of the lease. A tenant who has entered into a lease which contains this obligation and has decided to proceed without a survey, may find themselves paying for repairs of which they were not even aware.
An obligation to `keep the property in good condition’ can require works to be carried out even if there is no disrepair.
A covenant to `renew’, on the other hand, may extend to rebuilding the whole property if that is necessary to achieve repair. And the word `repair’ itself may include remedying and removing the cause of an inherent defect, such as a defect in the original construction or design of a building. This will even be the case if the building is several years old and the tenant has had no involvement with its construction.
In multi-let buildings, the landlord will often take responsibility for the maintenance of the structure and the common parts of the building and then recover the cost from the tenants via the service charge.
Service charges are one of the most often contested areas of commercial leases, and there is little statutory protection for commercial as opposed to residential tenants.
Again, close attention to the wording of the lease is important to make sure that the landlord is not only obliged to maintain those services which the tenant needs to operate from the premises – such as lifts, car parks and shared air-conditioning – but also that the cost is shared fairly.
For example, in a mixed use building with ground floor shops and offices on the upper floors, the retail tenants should not be paying for the costs of maintaining the lifts which solely service the offices.
It also worth considering carefully the areas of expenditure listed in the lease where the landlord is entitled to recover the costs from the tenant. For example, tenants should not assume that the cost of an expensive upgrade of the common parts of a building, which is designed to attract more tenants, will necessarily be borne by the landlord.
In commercial leases, business rates are generally the tenant’s responsibility and tenants might also anticipate that they are free to claim the benefit of any rate reliefs. But it is common for commercial leases to provide that the tenant will compensate the landlord for any empty property rating relief that the landlord `loses’ after the end of the term because it has been awarded to the tenant. This can be costly.
Disability Discrimination Act 1995 (DDA)
The DDA requires a `provider of services’ to take positive steps to make its services accessible to disabled people, which may include making physical adjustments to the property’s access. This new duty is not only the concern of landlords – it falls on whoever is providing the service – and this can be the landlord, tenant or even both.
It is usually the tenant’s responsibility to comply with all relevant laws in relation to a property, including those relating to fire prevention. The statutory regime has recently changed.
Under previous legislation, if a fire certificate had been issued, tenants could be confident that the property complied with the fire standards. But fire certificates have now been superseded by the Regulatory Reform (Fire Safety) Order 2005, which came into force in October 2006.
The order imposes a new regime of self-assessment, more in line with health and safety regulation, and a tenant is likely to be the `responsible person’ for ensuring compliance in relation to the property it occupies. And compliance can be expensive. For example, in an extreme case, the tenant may be required to pay for the installation of a sprinkler system.
Where property has been previously contaminated, a remediation notice requiring it to be cleaned up is generally served on the landlord rather than the tenant.
But commercial leases will often provide that the tenant is responsible for complying with all legislation in relation to a property, and in particular for carrying out any work required by law.
Such a clause would make the tenant liable for the clean up of historic contamination, even where the notice was served on the landlord. However, if a remediation notice is served on the landlord and the notice is not complied with, it is the landlord and not the tenant who will incur criminal liability.
In addition, there may be circumstances when the tenant could be liable to carry out remediation works by virtue of other obligations in the lease, for instance a covenant to comply with health and safety legislation or to maintain the property.
Energy Performance Certificates (EPCs)
The obligation to produce EPCs will now apply to commercial as well as residential premises. In the case of new leases, the production of such certificates is the responsibility of the landlord.
But EPCs also apply to the disposal (or `assignment’) of a lease by a tenant and also the grant of a sub-lease – where a tenant grants a new lease to a third party.
In the case of an assignment, the assigning tenant needs to provide the EPC to the incoming tenant. Where a tenant proposes to sub-let its property, it has to either negotiate with the landlord to obtain an EPC for the whole building (as long as there is a common heating system) or obtain an EPC for the part of the building that it being sub-let.
Regulation 4 of the Control of Asbestos at Work Regulations 2002 came into force on 21 May 2004, and created a significant new duty to manage asbestos risk in `non-domestic premises’.
This includes determining whether asbestos is present in a building or is likely to be present, and managing any asbestos that is identified. The broad definition of `duty holder’ means that, under Regulation 4, a wide range of people will be liable and, like the DDA, this can include tenants as well as landlords.
Management issues are discussed in excerpts from ‘Managing for the Future: The 1990s and Beyond.’ The trend for organizations to employ independent outside contractors for many maintenance, clerical and support work is expected to become the norm in years to come. Such unbundling of support services from the corporate structure generally leads to more productivity because similar staff on payrolls have little motivation to produce without the promise of advancement. For businesses to earn a return on their research dollars, success depends on other things besides knowledge and luck. Given the changes in the world’s economy and organizations, new skills for executives are demanded. Three important skills for executives in the coming years are looking outside the business for management plans, assuming responsibility for obtaining information about a new position and building continuous learning into the system.
Today even more than ever before, Peter Drucker, the world’s most influential management thinker, is being looked to and listened to by business leaders and economic scholars grappling with the challenges of change. This major new book brings together his latest, most stimulating and enlightening views on the new world business order and management imperatives of the 1990s and beyond. This is the final excerpt from his latest book. From “Managing for the Future: The 1990s and Beyond” by Peter F. Drucker. Copyright (c) Peter F. Drucker, 1992. Reprinted by arrangement with Truman Talley Books-Dutton, an imprint of New American Library, a division of Penguin Books USA Inc.
…The trend is accelerating sharply in all developed countries. In another 10 or 15 years it may well be the rule…to farm out all activities that do not offer the people working in them opportunities for advancement into senior management. This may indeed be the only way to attain productivity in clerical, maintenance, and support work. And increased productivity in such work will increasingly become a central challenge in developed countries, where such work now employs as many people as manufacturing does.
Effective Research Pays
Some businesses…get a fiftyfold, or even a hundredfold, return on the research dollar. Many more get little or nothing. The key to success is not all knowledge, intelligence, or hard work–and least of all, luck. It is following the 10 Rules of Effective Research:
* 1. Every new product, processor, or service begins to become obsolete on the day it first breaks even.
* 2. Thus, your being the one who makes your product, process, or service obsolete is the only way to prevent your competitor from doing so.
* 3. If research is to have results the…distinction between “pure” and “applied” research had better be forgotten.
* 4. In effective research, physics, chemistry, biology, mathematics, economics…are not “disciplines.” They are tools.
* 5. Research is not one effort–it is three: improvement, managed evolution, and innovation. They are complementary but quite different.
* 6. Aim high! Trivial corrections usually are as hard to make and as staunchly resisted as fundamental changes.
* 7. …Effective research requires both long-range and short-range results.
* 8. Research is separate work, but it is not a separate function.
* 9. Effective research requires organized abandonment–not only of products, processes and services, but also of research projects.
* 10. Research has to be measured like everything else.
While mergers and takeovers, imports and exports grab headlines, business alliances rarely do. Nor do they generally show up in statistics. Yet for small and medium-sized businesses they are increasingly becoming the way to go international, and for big business, they are the way to become multi-technological.
…These are all dangerous liaisons…but the problems can be anticipated and largely prevented:
Before the alliance is completed, all parties must think through their objectives and the objectives of the “child.”
…Equally important is advance agreement on how the joint enterprise should be run.
…Next, there has to be careful thinking about who will manage the alliance.
…Each partner needs to make provisions in its own structure for the relationship to the joint enterprise and the other partners.
…Finally, there has to be prior agreement on how to resolve disagreements.
Corporate capitalism was the buzzword of the 1960s…Under corporate capitalism…economic superpowers were run by autonomous managements…Corporate capitalism was a delusion from the beginning and an arrogant one to boot. When attacked, no one supports it–as U.S. managements found out as soon as the raiders appeared…Speculator’s capitalism is the wrong remedy. Its side effects threaten to kill the patient. Speculator’s capitalism is probably not even very good for the shareholder. At least that seems to be the conclusion of America’s major shareholders, the pension funds.
…The proponents of corporate capitalism 20 years ago thought that they had the right answers. Speculator’s capitalism has proved them wrong. But they may well have asked the right questions. Now that speculator’s capitalism is in turn proving inadequate, and indeed a threat to America’s long-term economic future, we have to tackle these questions again. On our answers to them the future of free enterprise…may well depend.
We cannot build it yet. But already we can specify the “post-modern” factory of 1999. Its essence will not be mechanical, though there will be plenty of machines. Its essence will be conceptual–the product of four principles and practices that together constitute a new approach to manufacturing.
Each of these concepts is being developed separately, by different people with different starting points and different agendas. Statistical Quality Control is changing the social organization of the factory. The new manufacturing accounting lets us make production decisions as business decisions. The “flotilla,” or module, organization of the manufacturing process promises to combine the advantages of standardization and flexibility. Finally, the systems approach…[integrates] the physical process of making things…[which is] manufacturing…[with] the economic process of business…[which] is creating value.
New Management Skills
…In the light of changing world economy, the advent of the information-based organization and the need to systematize innovation and entrepreneurship, what skills and abilities will an executive need to be effective in the next years? The old skills are, of course, required, but there are some new ones which are likely to become increasingly important. I can think of three.
* Skill 1: Management by going outside…Learn to be outside where the results of the business take place. Nothing is more wasteful than a visit to the Barcelona subsidiary. But work for two days, standing behind the counter, and it is surprising how much the manager will learn about that company.
* Skill 2: Find out the information you need to do your job…People must learn to take responsibility for their own information needs…Most managers still believe that they need an information specialist to tell them what information they should have. But information specialists are providers of tools. It is the manager’s job to figure out what information he needs to identify: 1) what he is doing now; 2) what he should be doing; and 3) how he can get from (1) to (2).
Auctions can be a fast way for a retailer to turn stock into much- needed cash and the quality of goods for sale is often high, says Caroline Munro
Whether times are exceptionally good, or horribly bad, furniture auctioneers are bound to benefit. But it’s not only auctioneers that can enjoy the benefits of a less than ideal climate – auctions can be an effective and fast means for retailers to convert stagnating stock back into cash.
For Roger Darrington-Mosley, Midland Furniture Auctions (MFA) md auctioneering is his passion and good customer service his business. `To me, I am an auctioneer and that is what I will always be,’ he says.
Darrington-Mosley has worked in auction rooms since he was 15, but he supposes his love for it grew from when his grandfather, who was a farmer, took him to livestock markets.
`As my mum always said, “the right peg in the right hole”. Auctioneering is all I’ve ever done and it’s all I’ve ever wanted to do,’ he says. `It’s the whole game – it’s matching a product to a buyer, coaxing them, educating them, giving them as much information as I can to make a deal work.’
Already behind the lectern at the tender age of 19, Darrington-Mosley hasn’t looked back. He worked for a number of firms, until eventually he grew unhappy with the way things were run and decided to start his own auctioneers.
MFA’s first gavel sounded in January 2005, and the business has since grown in leaps and bounds. Its premises in Alfreton, Derbyshire, will have doubled in size by June this year. `But in terms of turnover, it’s more than quadrupled,’ he says. `And that is predominantly down to the fact that we are pitching ourselves in the middle to upper market – that’s where we work best.’
While the past year has meant hard times for people in the furniture industry in the UK, for auctioneers it has meant good returns – or at least that is Darrington-Mosley’s standpoint. A clear sign of bad times is when MFA receives a delivery direct from the docks.
`We really do well – unfortunately – when businesses are struggling because we provide a very quick turnaround from physical stock into money. And we’ve been seeing an awful lot of gear – especially imported gear – coming directly to us from the docks because people have obviously ordered three or four months ago predicting better sales than they have perhaps had,’ he says.
At times like this, auctioneers are a good means of getting rid of stock very quickly. MFA holds an auction once a week, which last about four hours. In that time, it will sell between 3,500 and 5,000 pieces of furniture. These sales are made on-site and via a live web auction. Each lot sale lasts for about a minute, from the start of bidding to the gavel falling.
`We try to make it as quick and painless as possible,’ he laughs.
The company’s personal record for the amount of lots sold a week is 2,500, which, he says, `equates to a vast amount of furniture’. For retailers, it is a very convenient and quick way to get rid of stock, and in most cases their stock will be gone within a week, or a fortnight at worst, he says.
But it is not always a case of auctioneers doing well only when times are hard. He says there are various reasons why retailers would utilise the services of an auctioneer: some aim to get rid of old stock and clean out various lines, while others would prefer to auction goods rather than hold a sale.
`One or two of them are of the opinion that customers will wait for a sale, and they will probably buy anyway if they don’t have a sale,’ he says. `Depending on the price range of the product, they can get a good return for them.’
For other businesses, it may be a logistical issue because many modern retailers no longer have warehouses for storage. Stock also comes from large retailers who are looking to get rid of products used for photo- shoots and for display.
`They’re often in all the best styles, in the best covers – they’re beautiful,’ says Darrington-Mosley.
Yet, at the same time, he concedes that the credit crunch and the worsening state of the furniture retail market in the UK are revealing definite trends. `The volume of new A-grade product that we sell is 10 times what it was a few years ago.’
And although he has noted a larger number of cheaper products, many of which originate from the Far East, he says this does not necessarily mean a fall in quality of items sold at auction.
`The vast majority of the containers coming to us are of an exceptionally good quality for the price point that they are at. There is good and bad in all – but certainly the clients we deal with who import goods from China, import very good stuff. Certainly, the man on the street will be amazed at some of the items made in China.’
While this may be a good time for auctioneers, Darrington-Mosley points out that it is not always the case for some who are stuck behind the times.
`The antiques game has been the traditional bread and butter of auctioneers for a long time and, unfortunately, they’re all going,’ he says. `One side of the auction game is shrinking and dying and the other side is starting to take off. Auctioneers are having to branch out. At the end of the day, there has always been a type of snobbery in auctions, where its product is looked down upon whereas, to my mind, I sell some fantastic quality furniture.’
He says he would much rather be selling a top quality brand than a house clearance of the effects of someone who has died, or of house transformation.
`It’s a funny old game,’ he laughs. `I think that all auctioneers, sooner or later, will have to realise that people expect more these days, and those who don’t offer additional services at cost effective rates will fall behind. In my opinion it’s been a comfortable, overpriced market for a long time. You have to work for your income now, and that is what we are doing.’
He feels that another problem with auctioneers is that many are still not embracing new technologies, which Darrington-Mosley believes is to their detriment.
`It’s a very antiquated industry and auctioneers traditionally hate investing in their companies,’ he says. `I can still think of a dozen or so outfits in the Midlands near us that don’t even have a website. We have invested heavily in new technology and we are as up to date as any other furniture company can be. We’re following the furniture trade instead of following the auctioneering trade.’
But he adds that this does not mean traditional values are lost, and insists on good customer service and `the human element’.