Dying breeds: Graduate careers in rating and rent review

Rating and rent review surveyors appear to be a dying breed. Young surveyors are choosing to specialise in more glamorous and better-paid disciplines such as agency or investment, meaning the average rent review surveyor and rating specialist is getting older and older.

Rating and rent review have also been hit by changes in the property industry. In rating, the Valuation Office Agency has run a hugely successful campaign to slash the number of appeals from occupiers, which has led to less work for surveyors.

Careers in rent review are threatened by decreasing lease lengths. Shorter leases means fewer rent reviews.

Falling figures

The RICS does not record how many of its members are practising in rating or rent review, so there are no official figures to prove that these are dying arts. But the anecdotal evidence is plentiful.

‘Young surveyors are less inclined to come into rating. It’s not seen as a growing area,’ says Blake Penfold, chairman of the RICS rating panel and director of GL Hearn.

The number of appeals lodged by occupiers against their rating assessments has fallen by more than 50%, according to figures from the Valuation Office Agency. The number of appeals received following the 2005 revaluation of all business premises in England and Wales to 31 October 2007 is 478,287, compared with more than 1 million after the 2000 revaluation. The reduction has been achieved through measures such as giving the agency the power to fine occupiers who fail to complete assessment forms and forcing occupiers to declare rents for appeals.

Many rating surveyors also believe the agency deliberately made low assessments in the 2005 revaluation to discourage appeals, although this is denied by the agency.

Penfold reports of a ‘good volume of work’ in rating and says much of it is more stimulating now that it focuses on a smaller number of appeals. But he admits rating surveyors under 35 (see box, right) are ‘a rare breed’.

Junior organisation

David Parker, 38, head of rating at Savills, says he feels ‘relatively junior’ among his peers. Savills has not recruited anyone to the six-strong rating department in the 18 months he has been in charge and the youngest is 32.

Parker estimates that the average age of attendees at last month’s annual dinner of the Rating Surveyors Association was 55. He believes many will retire at or after the next revaluation in 2010.

‘[The sector] doesn’t seem to be filling up from the bottom end,’ he says. ‘There is a feeling that [rating] doesn’t have a future.’

Parker says that, as well as the fall in appeals, part of the problem is a lack of time given to rating on university property courses.

David Broom, rating partner at GVA Grimley, tells a similar story. ‘We have quite a number of young graduates that do a spell here [in rating] but it’s difficult to remember the last one that stayed for any length of time,’ he says. He has found that fewer appeals and a lack of coverage by the universities have contributed to the lack of interest, but adds: ‘[Rating] is not seen as the most exciting end of the business. [Graduates] are more interested in becoming investment surveyors.’

Roger Sewell, landlord and tenant partner at Montagu Evans, has also noticed a lack of interest. ‘There are very few [graduates] coming through who are good that want to do landlord and tenant work,’ he says, blaming the cyclical nature of the rent review market, as well shorter leases.

In the West End office market in which Sewell specialises there have been two big slumps in the last 15 years. Rent review work dried up between 1992 and 1996 and again between 2003 and 2006 because rents fell below levels reached five years previously. Rent reviews only happen when the landlord believes the market has risen higher than it was five years ago, otherwise there is no increase to play for.

While rents are currently rising fast in the West End, and reviews are plentiful, Sewell believes, ‘People are wary of doing this kind of work because in two years’ time, the market may fall and they may not have a job to do.’

He also points out that when he started his career in 1982, leases on big buildings were typically 25 years without breaks with four five-yearly rent reviews. Ten-year leases with one review is now the norm.

‘The corollary of shorter leases and no rent reviews means no landlord and tenant surveyors,’ says Sewell. ‘There will still be contested lease renewals, but if we end up with five-year leases, that’s the end of our industry.’

Charles Cowley, former director of the rent review team for West End offices at CB Richard Ellis, who moves to Savills in January as director in landlord and tenant, takes a less apocalyptic view. Long leases are still being signed on large buildings and there are plenty of reviews on older leases. Graduates are shunning landlord and tenant work, but he believes this is because ‘it is less sexy than investment and everyone wants to do investment’.

Retail rent review specialist Nick Klein, who is head of the in-town professional team at Churston Heard, says his business is thriving.

‘We’re busier now than we were five years ago,’ he says. ‘But there has definitely been a reduction in the number of graduates entering this sector.’

Only one out of six graduates in the 90-strong company is working in the professional department. Klein believes graduates have been drawn to the big money in investment and agency over the last boom, but suggests there may be more interest in professional roles now that the market has turned.

‘Given the current conditions, there may be a reversal if the jobs [in agency and investment] aren’t there,’ he says. It seems rent review and rating may not be finished yet.