How an Employer’s Property May Start to Influence Employer Appeal

Morton Fraser Partner Jonathan Seddon
Jonathan Seddon
09 January 2020
Property Week
Press Release

There is new UK legislation being announced soon that will see a requirement for more disclosure of beneficial ownership, which is going to make it much more straightforward to identify individuals behind corporates.

The British government’s plans for a publicly accessible register detailing the foreign entities that own property in the UK aims to improve transparency over ownership.

But why is this development important for employers? Let's say the major shareholder behind a corporate landlord is a high-profile trophy hunter. Would someone with strong beliefs around animal welfare perhaps not take a job with a business that is the tenant of that corporate landlord? Possibly.

Commercial real estate in the UK is going through a fascinating phase of evolution and development, where it seems that almost anything might be possible. For example, it is not impossible to envisage a time in the near future when a commercial lease might require the landlord to obtain the consent of the tenant before proceeding with an investment sale.

How would that come about?

Well, we live in an era now where so much is tailored to suit the end user. Accommodating the needs, wishes and even beliefs of individuals has never been so relevant.

The evolution of the private rented sector (PRS) in the UK, particularly through build to rent (BTR) where quality rented homes are created amidst a structure of life's more mundane chores being taken care of for a monthly management fee, is a good example.

On leaving home, a person could move straight into purpose-built student accommodation (PBSA) where, at the higher end of the market, almost everything is done for them. On graduation, they could move into a private rented development, operating a largely similar culture to PBSAs with shared common facilities and day to day tasks taken care of. Multifamily residential, where the concept of community living is extended to rented developments comprising family homes, is still in its early stages in the UK, but does exist and that market is likely to expand. Assisted living and care homes complete the "cradle to grave" journey of a lifetime of renting property without ever having to change a light bulb.

In the workplace, the health, the needs and even the beliefs of employees are a similarly major consideration. Wellbeing has become very important, with employers nowadays seeking to create workspaces that have a positive impact on mental wellness, happiness, energy and stress to help them compete for and retain the best talent.

It goes further than that, of course. Employees will now look at the employer's culture and their corporate ethics. Do they have an environmental policy? Do they follow it? Does it track right through the supply chain? What does the employer stand for? What values do they live? Who do they associate with? More and more individuals and in particular, millennials, are basing decisions on employment around these kinds of added criteria rather than the expected salary and career progression opportunities.

For example, if a business has recently been fined for an environmental offence, or a service provider business has a serial environmental offender as a client, would someone with strong beliefs about protecting the environment think twice before taking a job? Almost certainly.

This means that employers will have to be increasingly careful about aligning themselves with the principles and beliefs of their target employee pool if they are going to successfully position themselves as an employer of choice.

It is conceivable that potential employees might take an even closer look at an employer. For businesses that rent their premises (my law firm for example), would potential employees be influenced, positively or negatively, by the identity of the landlord?

It is impossible to tell where this will all lead. But in a world where employers are battling it out for the best talent in their markets and where this talent is looking at every angle of the employer's corporate persona, their culture, their work environments and their business relationships to give them an edge over their competitors, it seems inevitable that they will also start looking closely at who their property relationships are with.

And if this matters enough to employers of the future, then when they are negotiating heads of terms for the lease of their next office premises, they are going to insist on having some say over who owns their building.


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