To be or not to be? That is the question facing schools across the Country.

08 November 2011

It’s a brave new world which Academy schools are entering.  The new government initiative to give autonomy and fiscal control back to schools is proving to be increasingly popular but are schools really giving true consideration to the extent of the liabilities they are taking on?

Typically schools are taking a 125 year lease from the local Council with an opportunity to terminate the lease after 5 years.  By taking the leases, the schools are inheriting all those liabilities of the existing buildings along with repairing obligations.  This is a potentially a large liability which the Academy will be responsible for going forward therefore it is imperative schools fully appreciate the financial implications of this decision.

As with any business deal it is commonplace for a business to undertake a full due diligence exercise and to this end Alps Group is recommending that new Academies ensure  schedules of condition are carried out along with a building survey to assess these potential liabilities. 

A schedule of condition is essentially a visual inspection of the building resulting in a comprehensive record of its condition.  The purpose of this is to limit the tenant’s repairing liability in respect of a lease that places repairing obligations on the tenant.  The repairing liability cannot be removed but it seeks to limit it such that the tenant is not required to leave the property in any better state of repair at lease expiry.

We see this as being of particular benefit to those Academies where the property has sustained extensive wear and damage prior to lease commencement.  A landlord’s claim in these circumstances is commonly referred to as ‘dilapidations’.  By having the schedule the repairs required will be limited and should save the Academy having to pay extensive repair costs in lieu of dilapidations.

Again a building survey is a visual inspection but the report seeks to advise on the long term interest in the property and will suggest remedies to address defects and recommendations in terms of future maintenance.  Due to the combination of short term dilapidations and long term maintenance liabilities that come with Academy status we recommend both a building survey and a schedule are done in tandem which will ensure there are no hidden liabilities, the repairing obligations are limited going forward and Academies have clear and professional advice on a maintenance programme for the years to come.

Tom Houghton who is currently involved with a number of large Academy projects comments that ‘Despite the inherent risks and potential liabilities there are still massive benefits to be reaped by schools obtaining Academy status.  One of the main positives is that schools are now in charge of their own procurement process and are able to seek the best professional skills and expertise the private sector has to offer.  This does not simply extend to payroll or HR but also matters relating to property.  We are now proudly acting on behalf of Woodbrook Vale High School in Loughborough  and The Brunts School in Mansfield and hope to continue our success by extending our experience and client base in this new and exciting area.’

If you are a school considering becoming an Academy or are already an Academy and want to know more about how our services could benefit your school then please don’t hesitate to contact Tom Houghton at tom.houghton@alpsgroup.com.

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