Interview

We asked Michael Lever about his style and approach to commercial property in general.

Q: How would you sum up your style?

ML: Professional and entrepreneurial.

Q: Where did you work when you started in commercial property?

ML: I left school in 1967 and a few weeks later my first job was in the town planning department at Montagu Evans, at its office, then in Holborn, London. My duties included colouring plans for planning applications. ME acted for property companies such as Hammerson, Capital & Counties, Haslemere Estates, Land Securities, and I prepared plans for the planning appeal for development of Brent Cross Shopping Centre. I was on the planning team for St David’s Centre, Cardiff, and helped advise against a town centre scheme for Saffron Walden. In 1969 or so, I transferred to ME's management department, where my duties included a weekly rent collection at an estate of tenanted houses in Homerton, East London. Many tenants paid in cash, so every Monday morning for a couple of years I would travel by bus to Homerton, walk the streets, knocking at doors and fill my raincoat pockets with a few hundred pounds in notes and coins and then return by bus to the office. (Within weeks of his taking over the round, my successor was mugged and the cash stolen; after that tenants were required to post cheques or pay by standing order)

Whilst at Montagu Evans, I started studying for professional qualifications, evening classes 5 nights a week at the College of Estate Management, then in South Kensington. Had it not been for my getting claustrophobia on London's tube trains, it is possible I should have stayed at Montagu Evans and perhaps become a partner. However, having interpreted the claustrophobia as my not having had the confidence to change direction of my own accord, instead having it forced upon me, I should not have taken the path to set up my own business.

In 1971, I started working for my father's firm at its office in Harrow, NW London (Middlesex). My father’s firm was Fineman Lever & Co, Chartered Surveyors and the head office in London W3. (The name nowadays is nothing to do with my late father or me: originally, Fineman Lever & Co was set up by my father and his business partner, Mr L Fineman, who also started Dorrington plc, which is now one of London’s largest landlords). We handled the sale of residential property, the management of residential lettings, carried out mortgage valuations for Halifax Building Society and other lenders and structural surveys for house buyers. As the boss’s son, I imagine my presence was tolerated. The manager did what he could to teach me residential estate agency but, because I'd been trained by a leading firm of commercial property surveyors in Central London, I lasted about 6 weeks selling houses to the general public; ever since I've admired anyone that deals with the house-buying public on a regular basis! Instead, I set up a commercial department and, in 1973, was made an equity partner of the Harrow office.

I soon lost interest in commercial agency in the Harrow locality, preferring professional work, which I think it fair to say my chartered surveyor partner was of the opinion he should handle. To cut a story, what with the long-term nature of some projects I was working on, my department was, so far as my partners were concerned, not heading in the direction they had in mind. I resigned from the partnership and set up on my own. By agreement with the ex-partners and arrangement with the Registrar of Business Names, I also practiced as Fineman Lever & Co, but whereas I was bound by restrictions, my ex-partners were not, so when things became untenable, I changed my business name to Lever Commercial. Some years later, I started practising in my own name, Michael Lever. Incidentally, a little known fact, I was, when I set up as ‘Lever Commercial’, one of the first to tag the word ‘commercial’ to my business name.

Q. Are you a chartered surveyor?

ML: No. But my father was a BSc (Est Man) FRICS, so it’s in the blood. However, I did get to the intermediate qualifying stage for the Chartered Auctioneers’ Institute (CAI), which was one of the organisations that, years later, merged with the Royal Institution of Chartered Surveyors (RICS).

Q. What was it like in 1975 when you started doing rent reviews?

ML: Exciting and frustrating. It was exciting, partly because for quite a while I became a centre of attention, having generated considerable publicity through my letters in the Estates Gazette and articles in other property and law magazines, but mainly it was very stimulating to be able to explore and challenge so many aspects of the review process that had been taken for granted. But it was frustrating, because there were many surveyors that had always done rent reviews their way, so were resistant to change. I remember one occasion when my father took me along to an RICS branch meeting about rent review arbitration. I was made very welcome, until I disagreed with the chairman saying the parties have to pay half the arbitrator’s costs when stated in a lease. The chairman did his best to be polite, as were his ‘old-school’ supporters, by suggesting I check my facts. The following day, the chairman telephoned me to say he’d read the Arbitration Act 1950 and admitted I was right. Probably, it was the United Scientific decision of the House of Lords that set the cat among the pigeons because thereafter hardly a week passed without yet another rent review case adding to the growing list of precedents.

Q. Have you found not being a chartered surveyor a disadvantage?

ML: Yes and no. Yes, because there are always going to be people that feel more comfortable dealing with a qualified person, so I know I’ve missed out on a lot of the sort of work that I would love to do. And no, because I knew from the start that if I were to get anywhere, I should have to strive to provide and maintain a standard and quality of advice much better than most chartered surveyors offer. Fortunately, that's not too difficult!

Q. If you had your time again, what would you do differently?

ML: I am inclined towards wanting to help others more than myself, so an early mistake was spending too much time cultivating business relationships with surveyors, rather than getting to know clients. In 1975, when I started the idea of specialising in rent reviews, it was contrary to RICS rules for its members to promote themselves as specialists. I think the publicity I generated was one factor that contributed to the rules being changed. I know many of my original ideas helped created what is nowadays a vast industry for surveyors and lawyers.

Q. How did you get work?

ML: As a friend remarked at the time, I metaphorically drove the specialising in rent review ‘bus’ out of the garage and waited at a bus stop and, because what I was offering was overdue, it wasn’t long before a queue formed. In my early years, my regular clients included Clerical Medical and General Life Assurance Society, for whom I handled rent reviews in 4 parades of shops in NW London; Stonefield Estates, which owned a parade of shops in Kingsbury, London NW9; the Courtway Group, which had a widespread portfolio; R G Elms & Son, a retailer with about 45 branches, and W Waide Pollard & Son, a retailer with over 70 branches. My services were tried out by numerous landlords, a few of which I still act for, as in fact I still do for some retailers. For a while, I was consultant surveyor to Anthony Green & Spencer, which was set up in 1980 “with the objective of providing best practice property advice to forward thinking clients”.

Q. Why shops?

ML: I didn’t start off with shops alone in mind. In my early years, I acted for Roboserve (subsequently bought by Sketchley). I’d acted for Roboserve since 1974 when I’d let its former HQ in London W3 to Parfums de Paris, (associated with Hermes) - I dealt with each rent review in that lease over 20 years and each time the rent increased - and I dealt with the leases on its industrial premises in Park Royal and acquisition of a freehold in Perivale. I was a member of the Industrial Agents Society, but I found industrial property too impersonal for my liking. For a while, I employed an assistant and he handled the agency side and, because it was ‘Lever Commercial’, we dealt with shops, offices and industrial to a lesser extent. Shops evolved as my strength for the same reason industrial and offices did not: better suited to my personality.

I think it important to have a feel for what you do, because then you can find your way around in the dark. One of the important things about rent reviews is that the market is continually changing, so negotiation involves different sets of circumstances, which means you have to have a flexible attitude.

Q: The credit crunch is affecting the commercial property market at present. How do you see things panning out?

ML: I expect the problems to rumble on until about 2012. Having experienced numerous downturns and recessions, usually at 5 yearly intervals, since 1975, much of what is happening at present I predicted in June 1989 in my newsletter.

I can’t claim to have foreseen the banking crisis, because it was news to me that not only do banks do business with one another, but also banks themselves borrow money from the money market, as well as their customers. As I say on my blog, I think the crisis was deliberately orchestrated by some very shrewd operators who have made trillions out of the debacle. Be that as it may, recession is a time for an economy to come to its senses and trying to kick-start it into action before it is ready can, in my view, only lead to more severe problems in future.

Successful retailers are masters of the science and art of buying and selling. When they buy something that, for whatever reason, customers do not want, retailers will make it more attractive until it does sell, which could mean repackaging, reducing the price, or extending credit, or a combination of everything. Selling it, getting something back and moving on is progress. What this downturn is highlighting is that, despite the brilliant minds that are said to inhabit the landlord-world, many landlords are not as good at buying or selling as they like their shareholders and investors to think. Instead of making the proposition more attractive which, in the prevailing market, could include reducing the price, such landlords get emotionally attached to what they’ve over-bought and call upon the government to do something. What a revelation it is to observe they're not so very wonderful after all. Fact is that had such landlords not overpaid by ignoring property fundamentals in the first place, they would not now be in such difficulties.

I think it's good we're in for a period of stability. In my newsletter June 2005, I wrote an article entitled “What’s in it for you” in which I talk about the consequences for tenants of landlords constantly buying and selling. I recommend reading it.

Q: Finally, surveyors are noted for being predisposed towards landlord or tenant. Whose side are you on?

ML: I have a cautious nature, so much so that a landlord told me he’d never buy anything if he took my advice all the time. Actually, I’m not that bad, but when appraising investments, I am naturally holistic so I tend to think deeply and long-term as a matter of course, so I’m adept at spotting problems in the making, long before they emerge.

Successful retailing is about always being in the right place at the right time, whether that involves the internet and/or physical shops. Although a living can be made from selling what customers want to buy now, the big money is made by anticipating and identifying what customers will want to buy in future and being around to provide it when they do. For landlords, the same principle applies, except that landlord customers are retailers. So, although money can be made from business tenancy management, the big money is made from rental and capital growth, by anticipating and identifying what retailers want in future. Therefore, because the terms and conditions of a business tenancy can last for years, getting it wrong from the start can, in times of change, lead to horrendously costly consequences at rent review. As a client said "for lessons in how to be stitched up, the shop property market has no equal".

Ideally, the landlord and tenant relationship should be a partnership, sharing the ups-and-downs together but, in practice, landlords generally expect rents to increase, regardless, whereas tenants want costs to be affordable. This may be wishful thinking, but the only way for the ideal to become the norm would be for landlords to stop being indifferent to the wider consequences for tenants - those that are actually paying the rents - and accept they've got their investment decision wrong.

To answer the question, I'm on the caring side. Perhaps too deeply, and sometimes even when others do not, but that never stops me caring.


Q. Thank you