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In 2012, Building Cost Information Service (BCIS) conducted research into under-insurance in commercial property. Results confirm that despite regular reminders, as many as 80% of commercial buildings are still under-insured.

Coinciding with the launch of BCIS's commercial property rebuilding calculator, this was a stark reminder that if shortfalls in reinstatement claims are to be avoided, regular reassessment of property value is vital.

Morag Keohane, Caxtons' insurance manager, says: "Unfortunately too many property owners rely on the building value to be index linked and allow the value to go unchecked year on year.

"We also see many purchasers relying on the value the vendor insured the property for without confirming if this is correct, or adopting the asset value as the reinstatement cost.

"This means that insurance companies will not have accurate details regarding the value of the building and any claims may therefore be subject to average if a property is under insured.

"Carrying out regular valuations is essential to ensure property owners are not left out-of-pocket should they need to make a claim in respect of their property."

The Royal Institution of Chartered Surveyors (RICS) recommends that a reinstatement cost assessment (RCA) should be carried out at a minimum of every three to five years. Property owners' insurance policies make it a policy condition that regular valuations are carried out by a RICS qualified surveyor, normally every three years, although this depends on the insurer.

In a recent on-line article published by RICS they said: "The Insurance Act, which came into force in August 2016, contains important changes, which those in the

property sector should be aware of. Insurers do not need to rely on their policy wordings to reduce the costs of claims as they will be able to proportionately reduce these due to non/inaccurate disclosures. Therefore, the duty to provide a fair presentation of risk should be given the utmost care and consideration to ensure that the property at risk is accurately presented to insurers to avoid any detrimental settlement adjustments."

There are two types of policy cover. A building can be insured on a 'reinstatement basis' where the amount of indemnification is determined by the cost of repair or reconstruction at the time of the loss rather than at the start of the insurance period. This means the sum insured at the start of the insurance year must include an adequate allowance for inflation both during the insurance period and during the rebuilding period, which may be longer.

The alternative is 'day one reinstatement basis' method, where the actual rebuilding cost is set as at the first day of the insurance period. Inflation is included automatically in the policy. This represents good value for money as the insurer may only charge, for example, 5% of the full rate for an inflation provision of 30%.

For information and assistance with the preparation of Insurance Reinstatement Cost Assessment Valuations, contact Mark Laherty, head of our Building Consultancy Department; on 01474 330960 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

For advice on property owner's insurance contact Morag Keohane on 01474 537733 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

Caxtons Commercial Limited is an Appointed Representative of Morrison Edwards Insurance Services Limited which is authorised and regulated by the Financial Conduct Authority.

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Morag Keohane

Charlotte Bland BSc (Hons) MSc MRICS has been appointed a full board director at Caxtons, one of the largest independent firms of general practice chartered surveyors and property consultants in the South East.

Born, raised and living in Kent, Charlotte graduated from the London South Bank University with a Distinction in MSc Real Estate Appraisal. Her first job was with a small, independent firm of surveyors in Hertfordshire, working mostly on landlord & tenant and corporate real estate matters. Charlotte joined Caxtons in 2011 and now heads up the Commercial Management and Investment department. She specialises in acquiring and disposing of property investments for a variety of clients.

Neil Chatterton, Managing Director of the award winning firm said "It has taken Charlotte less than six years to become a director of the company, which was founded in 1990 and is a busy regional practice.

"Charlotte's experience, knowledge and passion ensure that clients benefit from her advice. She is a great advocate for all who enter the sector, which is seeing more women taking on influential and powerful roles across the property and construction industry.

"We are delighted that Charlotte is taking on the role and I and my fellow directors welcome her considerable expertise to the Board."

Charlotte was pragmatic about her appointment saying that when she began her career in property she knew that it was for her: "I always needed a career that I would enjoy every day - a career for life – and I found it in property. I am serious about the sector and ensuring that it flourishes. I have learnt so much since qualifying and I endeavour to use that knowledge and expertise to my clients' advantage, whatever the project in hand."

Charlotte took up her post on 1st July 2017.

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Charlotte Bland

Latest analysis from Caxtons Chartered Surveyors points to how business change is raising demand for office space in many of Kent's town centre office markets. This is having a knock-on impact on capital values in the county.

Caxtons reports the prime town centre office yield in Kent fell sharply during 2016 to 6% by the end of the year, the lowest level since the financial crisis. This 200 basis points decline since 2015 has bolstered capital value growth for investors in the county's town centre office markets.

Kent prime office yield

Kent office market source data

Source: Caxtons

Business change is a key driver of rental growth that is underpinning much of the upward pressure on values. Quality town centres with good accessibility to London have a growing appeal to companies, including those that may have wholly or partly relocated from London. Companies remain cost conscious and are increasingly seeking to reduce overheads. For example, office rents in what was affordable Shoreditch now stand at £60 per square foot. This compares to £26 per square foot in Sevenoaks and £25 per square foot in Tunbridge Wells, both offering a short commute for meetings.

Furthermore, staff are increasingly seeking to work nearer home, for greater flexibility. This is reflected in a growth in flexible working practices as well as the number of freelancers providing high value services to companies in London or further afield. This is generating demand in Kent's town centres for both traditional office space as well as co-working space.

The upturn in demand has depleted available office space, which has fallen across quality town centre locations in the South East.

The loss of stock as a result of large scale office to residential conversion of older, more obsolete buildings

has added to the shortage in some locations. This has particularly damaged the availability of smaller, cheaper offices suitable for start-ups and freelancers. Potentially, this has negative implications for innovation and small business growth in the county. On the upside, increased numbers of residents in the county's towns has been positive in generating a dynamic environment for business and residents, which helps to attract high skilled staff.

The success of Kent's town centre office market has served to bolster investor demand, also placing pressure on prices. A wide range of investor groups are seeking to increase exposure to quality locations. These include a growing number of local councils, who, with the benefit of low cost debt, are joining the bidding for assets that do come to market. This has placed further pressure on values.

During 2017 Caxtons expects to see continued strong occupier demand for quality town centre locations across Kent. This will put further upward pressure on rents in some towns. Sevenoaks for example is expected to reach close to £30 per square foot this year. However, Caxtons also anticipates yields will stabilise for office assets this year.