Interview

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

Q: How would you sum up your style?

ML: Professional and entrepreneurial, with a touch of creativity and original thinking added for good measure. Also, as well as finding angles, I am good reading between the lines and listening to what is not said.


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

ML: After I left school in 1967, my first job was at Montagu Evans, at its office, then in Holborn, London. They wanted a junior for the town planning department. I remember the interview. After a few minutes, the partner interviewing me said they’d already decided on someone else, so I said I was wasting my time and was about to leave when he told me to stay. At the end of the interview, which lasted over an hour, I was offered the job, pay £8 a week. In the planning department, my tasks included colouring plans and I learned about colour-washing with watercolours. ME acted for major property companies such as Hammerson, Capital & Counties, Haslemere Estates, Land Securities, etc and I prepared plans for the planning appeal for development of Brent Cross Shopping Centre. I was also 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 the 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 the pockets of my raincoat with a few hundred pounds in notes and coins and then return o the office. (Within weeks of his taking over the round, my successor, a snappier-suit than me, 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 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 my 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 Harrow branch. My father’s firm was Fineman Lever & Co, Chartered Surveyors (the name still exists, but 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, nowadays one of London’s largest landlords). The branch staff comprised an estate agent manager, a chartered surveyor and a secretary/bookkeeper. The branch handled the selling of residential property, management of residential lettings, mortgage valuations for Halifax Building Society 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! So, to earn my keep, I set up a commercial department and, in 1973, became an equity partner, equal with 3 others.

I soon lost interest in selling, buying and letting agency instructions in the Harrow locality, preferring to focus on professional work, which I think it fair to say my chartered surveyor partner was of the opinion he should handle, not me. To cut a story, what with the state of the market and 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. That things weren’t working out led to my resigning from the partnership and setting up my own firm. By agreement with my ex-partners and arrangement with the Registrar of Business Names, I also practiced as Fineman Lever & Co, but whereas I was bound by certain restrictions, my ex-partners were not, so when the agreement 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 surveyors to add the word ‘commercial’ to my trading 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 professional organisations that years later merged with the Royal Institution of Chartered Surveyors (RICS). Had my father not been dismissive of the Incorporated Society of Surveyors and Valuers, I should have joined the ISVA when O-levels were basically all that were needed, because the ISVA too was subsequently merged with RICS. (Although, nowadays, RICS is graduate-only entry, I wonder how many people outside the profession are aware many of its members got in by the back door!)


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 from writing letters to the Estates Gazette and articles in 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 also 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 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. Although I’ve since made up for lost time, I gave away opportunity so, because good ideas spread like wildfire, it didn’t take long for others to jump on the bandwagon. 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 dealt with rent reviews in 4 parades of shops in NW London, Stonefield Estates, which owned a parade of shops in Kingsbury, London NW9, and the Courtway Group, which had a sizable portfolio. My approach was tried by numerous landlords, a few of whom I still act for today, 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 the early years, I acted for Roboserve Ltd (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 every 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, a friendly network of agents and surveyors but I found industrial property a bit 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 be flexible in 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 when, in my newsletter, I said “the emergence of the 'Green' consumer marked the onset of a major shift in attitude that would have repercussions for all aspects of future retailing." ….“the lethal combination of rising costs and flat demand suggests that the shopper is concentrating on fewer retailers.” "…A long-term business plan is rarely straight-forward. Anticipated events can be avoided, difficulties can reflect specific situations, but often the cause of problems is failure to empathise with the purpose of change. In general, problems arise when an expectation is out of sync with reality. Problems increase costs, reduce efficiency, generate stress, demoralise people, damage health, deter shoppers and can lead to failure. Therefore, problems of any kind should not be regarded as normal.”

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 (MLog News), 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 government 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 (including property fund managers) 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. I'm tempted to say I think that's childish, but what I'd prefer to say is 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. Those of us that don't have millions of pounds of other people's money to spend on throwing caution to the wind are I think somewhat annoyed, to say the least, at not only having to be caught up in the mess, but also expected to bail them out.

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 I do 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 in practice. When appraising investments, I prefer to be realistic which, if you’re into positive thinking, can seem like I'm too negative when you talk with me, but actually I think it’s better to be cautious, because if you’re not careful, enthusiasm can run away with you and make you think you're successful when actually it's just the market's momentum. One of the great things about negative thinking is that it's likely to consider every angle - before it takes a chance. Which is why when people only listen to what they want to hear, often they come unstuck.

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. Frankly, I think the objective process by which rent reviews are set is unnecessarily confrontational and, when referred to 'arbitration' the costs disproportionately expensive. 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. I care, perhaps too deeply, and sometimes even when others do not, but that never stops me caring.


Q. Thank you