Trustees who hold commercial property as an investment can pass its day-to-day running to a property manager, but they cannot pass over their responsibility for it. That single point shapes what good commercial property management for trustees looks like. A competent manager should collect the rent and deal with arrears, keep the buildings maintained, insured and compliant, and report in enough detail for the board to show it is overseeing the arrangement. The appointment should rest on a written agreement, and the trustees should know from the outset which decisions remain theirs. Below, we set out each of those expectations, the legal framework behind them, and the questions worth asking before a manager is appointed.
Can trustees delegate the management of commercial property?
In most cases, yes. For trusts, section 11 of the Trustee Act 2000 allows trustees to authorise an agent to carry out their delegable functions. For a charitable trust, those functions include managing land held as an investment. Charitable companies and charitable incorporated organisations work under different rules, so their trustees should check their governing document and take advice on how the delegation provisions apply to them.
Delegation does not move the responsibility. The Charity Commission’s guidance, The essential trustee (CC3), is clear that trustees remain collectively responsible for decisions taken with their authority. It also asks boards to set the limits of any delegated authority in writing and to put reporting procedures in place, so they can confirm the authority is being used as intended. A good manager works within that framework and makes the board’s oversight straightforward.
What should a commercial property manager handle day to day?
The core of the role is keeping the income secure and the buildings in good order. On the income side, that means collecting rent promptly, operating a firm arrears procedure so shortfalls do not undermine cash flow, and managing any service charge on behalf of the landlord. On the buildings side, it means planned and preventative maintenance, routine inspections and a reliable network of approved contractors. At Wishtower, commercial inspections take place quarterly, and we raise anything that needs attention with the client.
Insurance and compliance sit alongside this and are easy to underestimate. A building can be insured and still fall short of the terms of its policy. We work with a panel of brokers to arrange cover, then monitor the building against the policy’s conditions throughout the period of cover, including fire safety standards, fire and health and safety risk assessments, and five-yearly electrical installation inspections. Under the Fire Safety Order, the owner, the landlord and a managing agent can each be a responsible person for fire safety in non-domestic premises, with a duty to carry out a fire risk assessment and review it regularly. Trustees should know who holds that duty for each property and see evidence that it is being met. You can read more about how we approach this on our commercial property management and commercial property maintenance pages.
What should the written agreement with a property manager contain?
The agreement should set out the scope of the service, the fees, how the manager reports and how either side can end the arrangement. For trusts, a written agreement is a legal requirement rather than good practice alone. Section 15 of the Trustee Act 2000 says trustees may only delegate asset management functions, which include managing trust property, under an agreement that is in or evidenced in writing. The trustees must also prepare a written policy statement giving guidance on how those functions should be exercised in the best interests of the trust, and the agreement must include a term requiring the agent to comply with it.
The same Act restricts certain terms. Under section 14, trustees should only agree to terms that let the agent appoint a substitute, limit the agent’s liability, or act where there is a conflict of interest if doing so is reasonably necessary. Those are worth reading for in any draft agreement.
Fees deserve the same scrutiny. The Charity Commission’s investment guidance, CC14, was written with investment managers in mind, but its advice translates well: trustees should know what payments and charges to expect, and about any benefits the manager or anyone else will receive under the agreement. Our own approach is clean, simple agreements, with no charging of fees on fees.
How should a property manager report to trustees?
Reporting should give the board what it needs to meet its duty to review. Under section 22 of the Trustee Act 2000, trustees of a trust must keep the arrangements with their agent under review, and where asset management functions are delegated, assess whether the policy statement is being followed. CC3 adds that trustees should know the terms on which each property is held, make sure it is maintained and adequately insured, and regularly review whether property let to generate income is still a good investment.
In practice, a useful report covers the rent position and arrears for each property, the service charge position, insurance and compliance status, maintenance completed and planned, and upcoming lease events. It should also flag gaps in the information. This is the ground our asset management team covers in a portfolio review: checking the leases, health and safety, fire and insurance compliance, when and whether rent is being paid, and the service charge position, so that anything drifting off course is visible early.
What is the difference between property management and asset management?
Property management keeps a property running: the lease is complied with, the rent is collected and the building is looked after. Asset management goes a step further and works with the owner on decisions that protect and grow the value of the portfolio over its lifecycle, such as lease strategy, capital reinvestment and programmes of works. For trustees answerable to a board, the distinction matters, because an asset manager should bring a recommendation rather than a question. Our approach is to say what we would do, based on our experience, and leave the decision with the trustees.
One set of trustees who instructed us on a commercial portfolio described the result this way: “leases have been regeared, maintenance plans have been established, complaints from tenants have all but stopped. […] Not only have they increased income but they have secured the underlying asset and protected value.” (Trustees of the J. Mann Portfolio). More detail is on our property asset management page.
Which decisions stay with the trustees?
Overall responsibility always stays with the board. CC3 advises that high-risk and unusual decisions should not be delegated at all, and some property decisions carry specific legal requirements that no manager can satisfy on the trustees’ behalf.
Lease transactions are the clearest example. The Commission’s guidance on disposing of charity land (CC28) treats granting, transferring or surrendering a lease as a disposal. In most cases, trustees must obtain and consider a report before agreeing the transaction, and the type of report depends on the terms. A lease with a premium, for example, needs a report from a designated adviser, such as a fellow or professional associate of the Royal Institution of Chartered Surveyors. CC3 also notes that Commission permission is needed to sell or lease property to a trustee, someone closely connected to a trustee, or an employee of the charity. A good manager will see lease events coming, such as expiries and break clauses, and raise them early enough for the trustees to take advice and decide.
There is a practical reason to get the arrangement right. Under section 23 of the Trustee Act 2000, a trustee is generally not liable for an agent’s act or default unless they failed to meet their duty of care when setting up the arrangement or when reviewing it. A careful appointment, a clear agreement and regular review protect the trust and the trustees alike.
What should trustees ask before appointing a commercial property manager?
A short set of questions will tell a board most of what it needs to know:
- Who will be our named contact, and how quickly will calls and emails be answered?
- What will the regular report contain, and how often will we receive it?
- How are rent arrears handled, and at what point will we be told?
- How is insurance arranged, and how is compliance with the policy terms monitored?
- Which inspections and compliance checks are carried out, and how often?
- What exactly is included in the fee, and what is charged separately?
- How will lease events be tracked and brought to our attention?
- Will the agreement accommodate our policy statement and our reporting requirements?
Clear, specific answers are a good sign. Vague ones are worth pressing on before anything is signed.
How we approach commercial property management for trustees
Wishtower has managed commercial property since 2009. We are regulated by the Royal Institution of Chartered Surveyors, members of the Property Redress Scheme, and our team includes chartered surveyors. We act for charitable, public, commercial and private clients, managing individual properties and whole portfolios, from offices in Eastbourne, Brighton and Croydon. Trustees speak directly to a property manager rather than a call centre, and we make sure calls are returned before we go home at night.
If you are a trustee reviewing how a commercial property or portfolio is managed and would like to talk it over, call our Eastbourne office on 01323 312121 or email info@wishtower.com. You can also contact us online.
This article is for information only and does not constitute legal advice. Trustees should take their own legal advice on how the rules described apply to their charity or trust. Wishtower accepts no responsibility for any reliance placed on it.
