Client
A professional firm based in south west London.
Requirements
The company had seen costs escalate over a number of years that was now threatening profitability. Bonsors were called in to carry out a ‘Healthcheck’.
Practicalities
Occupying a 3-storey building, the ground floor was used as a reception, meeting room and storage, the first floor was used as offices and the second floor was an apartment let on an assured shorthold tenancy. The whole building was owned personally by the directors of the business and leased to the company.
Solution
A complete review of leases, freeholds, rents, mode of occupation and occupation costs was carried out.
i) Refurbishment
The entire company was relocated to the ground floor after plans for more open plan offices were drawn up complete with a reception area and meeting room. By tendering from within its existing client/contact database, Bonsors identified contractors who carried out the refurbishment and created a self-contained office suites on the ground and first floors.
ii) Tax Savings
The analysis by Bonsors of the leases and method of owning the building demonstrated, with input from the firm’s accountants, that the property could be more tax effectively utilised if the upper floors were retained in the directors’ ownership whilst the ground floor was sold to the firm’s pension scheme. The resulting cash that was released was returned to the directors, the rent from the ground floor letting to the company was contributed directly into their pension scheme as was the rent from first floor offices which were let to a third party and became income producing. The commercial parts of the property were held in a tax free environment to earn rental income and provide capital growth for the future benefit of the members of the pension scheme.
Results
The ‘Healthcheck’ analysis prompted a review of all business overheads including utilites, telephony/IT and business rates.
Bonsors then implemented the results of the review exercise on all utility costs and general overheads for the business resulting in savings across the board.
The cost of the ‘Healthcheck’ was recovered within the first 12 months in savings from utilities costs alone.
If you would like a Healthcheck on your company’s property assets/holdings to identify where savings could be made then contact Tim Gauld or Andrew Pollard of Bonsors on 0208 546 0022.