Accountants set to take the lead on property decisions

Accountants set to take the lead on property decisions

Fraser Trust, a property management consultancy which specialises in advising corporate occupiers, predicts that the Accounting Standards Board's latest proposals for new lease accounting rules will strengthen the role of accountants in the property decision-making process.

Analysis undertaken by Mike Ringer, Fraser Trust managing director, and Jeffrey Unerman, accountancy lecturer at King's College London, reveals that, if the new accounting standards are adopted as widely expected, they will have a dramatic impact for some occupiers of commercial property. For example:

• net assets could be reduced by up to 40 per cent.

• property costs being charged to the P& L could increase by as much as 50 per cent.

• the true level of a company's gearing could be as much as four times higher than currently stated.

These accounting issues are set to become the overriding factor in many future occupiers' property decisions and will put the accountant firmly at the heart of the decision-making process for companies taking on new leases.

Says Mike Ringer:

All occupiers of UK commercial property should begin to plan now for the likely impact that these changes will have on their balance sheets and to start considering alternative strategies for managing their existing portfolios.

For further information or a free copy of the Fraser Trust publication An Occupier's Guide – Potential Changes to UK Commercial Property Leases,please contact Mike Ringer via e-mail on mike.ringer@fraser-trust.co.ukor on 020 7291 0550.