We all know what a "devil spoon" is. It is an ordinary tea spoon with a much longer handle, so that you don't get your fingers [burned] covered in marmalade when trying to get the last dregs of marmalade out of the jar.
It is the same for Landlords who choose to "do a deal" with Scottish Water regarding their tenants.
The dangers of doing deals is that when the deal is laid on the table, only the short spoon is made available, or put in other terms - the full ramifications of the deal are not made plain.
It should be remembered that Scottish Water have a lot of fiscal strength and see the courts just as a means of bullying people into paying. To them revenue is all important, not compliance with the law - more specifically adhering to Section 27 of the 2005 Act. See the paper on The Law for more information.
So what are the risks with trying to do a deal. The Law is very simple, very explicit, so what is the problem ? The answer is even simpler: by charging tenants on a rateable value basis a typical calculation shows that Scottish Water may be able to rake in as much as TWENTY times the revenue than just charging the Landlord for the water used in the common shared areas - which is then charged on to tenants.
So put down the spoon of whatever length, get the offer in writing, and take up the magnifying glass, and then go and see a competent lawyer. Ignore any dire warnings [bullying] from Scottish Water.
The main risk then to the Landlord is that the properties become relatively more expensive: prospective tenants do not just consider the rent. They consider the total cost of taking on a property including inter alia the rent, the business rates based on rateable value [but from which the tenant may be exempt], the Landlord's other charges such as Insurance, cleaning etc etc, and of course the all important Water Charges which may be TWENTY times higher than if paid via the Landlord.
There are other risks. The main one would appear to be that a deal attempting to make the tenant directly liable for water charges would not be in accordance with the provisions of the 2005 Act, and would thus not be enforceable.
Please read the paper on Voluntary Help. Noted that it appears that the FSB has been knobbled - certainly the legal insurance which they sell and promote now excludes anything to do with Water. The SCVO and CAB have suffered similar treatment, and sad to say their advice can no longer be relied upon with regard to water charges. The 2016 Scottish Government Paper on rateable value updates confirms this.
When a landlord finally persuades Scottish Water to install a meter for the supply to the common areas, ensure that it is the right size. Most business centres will only need a one inch or 25 mm supply and meter. Take advice - ring a firm of Consulting Engineers.
It is suggested that Landlords beware of contrary advice from Scottish Water Business Stream, Clear Business | Water and other similar firms. These two organisations are quoted as they are known to be proffering erroneous advice.
An explanation of what should happen.
A better title might be "How a Business / Shopping Centre can save its tenants a huge amount of money and hassle", thus making it a more attractive proposition for a small business.
This is usual factual situation:
- The Landlord usually provides toilets and kitchens for the use of tenants and others.
- These are connected to a Scootish Water provided Water Supply, and similarly for sewerage.
- As a consequence, these facilities are classified under Section 27 of the 2005 Act as "Eligible Premises".
- As the kitchens and toilets cannot be separately let out as a unit, they have a zero Rateable Value.
- Although the Ministerial Directive states that charges will be based on metered volumes or in the absence of meters, on an estimated volume, Scottish Water persist on using Rateable Values. There is absolutely no relation between rateable values and water consumption. Rateable Values are simply an estimate of likely rental. A meter ought to be installed, or an estimate prepared by a reputable firm of Chartered Engineers.
- The charges raised to the Landlord are recharged to the tenants along with all the usual charges.
- Since 1st April 2018, there is no exemption for empty premises ... meaning that the Landlord will have to pay. It will thus be much cheaper for a Landlord to install meters and require that toilets and kitchens for tenants and others to use be designated as Eligible Premises.