The measurement costs may pay for themselves in a year

The desire to save money on area measurements is usually a result of a lack of knowledge of both financial and non-financial gains (saving the work time of a building manager or commercialization people – so a desire to save money). Speaking from years of experience, measurement costs pay for themselves even in a few months – in 1 year max. Most of lessors think they don’t need area measurement. However, each time I provide an example supported by specific figures and costs, the laughs quickly turn into curiosity and astonishment at the same time. Why are measurements or their updates worth making then? Below I have listed the most common benefits of performing area measurements.

Preventing errors in tax declarations

The first reasons to commission a building area measurement are tax obligations. The Act on Local Taxes and Charges (pl.: Ustawa o podatkach i opłatach lokalnych) of January 12^th 1991 and its technical support in the form of the PN-ISO 9836:1997 Standard are used for this purpose in Poland. Measurement in accordance with those standards is obligatory for every building located within the Polish borders. It seems simple – what are the benefits of that? As my observations show, the area in tax declarations (pl.: deklaracje podatkowe) is very often wrong because it’s taken from incorrect architectural drawings, which are sometimes measured according to different standards (different definitions from the ones in the Act on Local Taxes and Charges). It comes from the fact that the term “usable area” is not defined the same way in the Act and in the PN-ISO 9836:1997 Standard. This means that tax costs don’t correspond to reality. It’s not unusual for the tax to be less than it should, which could be because an underground parking area along with the communication routes (car traffic) was not included in the tax declaration. Another example is not including whole technical levels in the return, which should be subjected to taxation. The Act on Local Taxes and Charges says you need to pay for the usable area, but in a different meaning than in the PN-ISO 9836:1997 Standard. Sometimes the areas in tax declarations are too large – e.g. staircases, shaft, elevator shafts are included, or the area is not reduced despite the room’s height. A common mistake (this time resulting in an unnecessarily inflated area) is giving area values according to different standards, e.g. BOMA or Tegova, in which case the area is measured to the glass (from the office side) in case of a curtain wall. According to the Act on Local Taxes and Charges, the area is measured to the wall (to the lintels above the windows, and if there are none, to the beginning of the window frame, to the beginning of the aluminum profile). It generally is a difference of about 7-18cm between the widths. You could say it’s not much, but if the same mistake is made on the whole floor, multiplied by several levels, we will get a big difference. An example: for a 10 floor building in Warsaw with the dimensions 35m by 20m, the difference was 16 cm in width (the distance between the beginning of the aluminum profile and the glass). After performing some quick calculations, we see that it’s about 4,500 PLN a year of money needlessly spent on taxes. Another example of unnecessarily inflating taxed area is including the area of the last floor in a multi-storey car park, where the last level is not covered (has no roof). We don’t pay taxes for such areas – more about this in another article of mine. Some of the tenants’ premises are not subjected to taxation either, which always surprises managers and investors. The excluded premises are those leased by subjects providing medical services. It applies not only to places where trade or actual medical procedures take place, but also to a medical company’s offices, where accounting, PR, marketing and HR departments are located. Such areas are not subject to taxation either! Premises that are vacant buildings are another segment that is exempted from taxation. They are not subject to taxation only for the time they are vacant.

The last amendment of the Act on Local Taxes and Charges of autumn 2016 compels homeowners associations to measure and pay for the common areas in buildings (residential, office – if there are separate premises, and I know some examples of large office buildings like that). In residential buildings the following are considered common areas: hallways, entrance halls before a staircase, all technical rooms in the building (including engine rooms above elevator shafts) and garages if they don’t have a land registry (pl.: księga wieczysta) – they’re not separate premises.

“Pumping” the lease area

The next reason for commissioning a building area measurement is the desire to lease the biggest area possible. In order to do this, you need to choose the right measuring standard. In this case, the most commonly used standard in Poland is the BOMA standard (70%), followed right after by the Tegova standard (10%) and the PN-ISO 9836:1997 (10%). The other 5% of area measurement is spread out between the German GIF and English RICS standards. Shopping centers on the other hand are measured according to the non-normative GLA method, and currently I’m observing a crazy, if you ask me, trend of measuring retail objects according to the BOMA Retail standard (the years 2015-2017). It’s possible that the IPMS standard, which has been under implementation since not long ago, will change the percentages in this regard. I personally doubt that – it’s another standard. What would you introduce another standard for? By using the right standard we can increase or decrease the sum of the lease areas, standard modifications can also be used to “get what we want”. More on this topic in another article of mine.

Purchase and sale

Area measurements are also made for the purpose of purchase and sale of office and retail properties. A distinction should be made here between the sale of a building and its worth. The sale of a building (area put in a notarial act, and then in the Land Registry) located in the Republic of Poland is based, according to the first point, on the Act on Local Taxes and Charges and the PN-ISO 9836:1997 standard (there is probably no place in Poland where the area from Land Registry is the same as the area from Rent-roll). On the other hand, the building value is calculated by a real estate appraiser based on an algorithm that takes account of the lease area (any standard here) multiplied by the average rent in the area and by a particular number of lease years. Sometimes office buildings can have a higher value than the cost of the whole investment, together with the lot purchase, but a case when the value is lower than the actual costs incurred can also take place. For purchase and sale purposes, it’s good to have a current report with leasable area listing (broken into the “clean” area and the area increased by floor and building add-on factors), It’s useful in the case when renovations or interior design changes have been made before, or when the buyer requires the lease building area according to a particular norm to be presented to him. German companies, which operate mainly on the GIF standard, are an example. The current lease area is also needed for bank credits, even at the stage of designing the building.

Notarial acts

The current area is also needed to sign a notarial act, in order to calculate the common area fraction (pl.: mieszkaniówka), which is then put in Land Registers. Those areas are also used for common area expenses settlement of the whole association. The fraction is calculated by adding up usable areas of all the flats in a building (excluding balconies, terraces, loggias, mezzanines, but including associated spaces (pl.: pomieszczenia przynależne), for example storage rooms) – the value is then multiplied by 100, so there are no numbers after the decimal point. Separately for each flat, its usable area (excluding balconies, terraces, loggias, but including associated spaces) also multiplied by 100, is put in the nominator. This results in a fraction, which is then multiplied by particular costs that are generated by the association in the common areas of a building or a plot, in order to get the amount of money each flat has to pay. For example, if a flat’s usable area is 55.42m², and the sum of all the flats in the building is 15553.36, the fraction will be 5542/1555336. If the association has to pay 5,000 PLN a month for the gardener, a flat will pay 17.81 PLN a month (a flat’s fraction times the sum).

Seller inspection

Sometimes, during the purchase and sale transaction (pl.: mieszkaniówka), one party wants to inspect the other one. That’s because of developer frauds, which appear in court judgments – developers submit premises certificates (pl.: metryczki lokali) with inflated areas to the buyers, and what follows they obtain unearned financial benefits (e.g. I personally have supervised court trials regarding the AS-Bau developer’s frauds in Wrocław, who inflated the areas in premises certificates presented to a buyer (the developer had two premises certificates with different areas, but the date and standard was the same, and the same geodesist signed two different certificates) – the trial was successful, a court sentence). On April 29^th 2012 the PN-B/70-02365 standard was withdrawn (cancelled – it’s archival) under the ordinance on the detailed range and form of a building project, and since then all purchase and sale measurements (pl.: mieszkaniówka) – office buildings, warehouses and other – have to be made in accordance with the only applicable area measurement standard in Poland, so the PN-ISO 9836:1997. However, the developers (only some of them!) have come up with the idea that they’ll include the areas of all or some partition walls in the flat’s usable area, which I absolutely don’t agree with. Allow me to remind you that partition walls are part of the structure area in the PN-ISO 9836:1997 standard – I discuss this topic in depth in another article.

Easier building management

Possessing current reports (projections) of a managed building in accordance with a chosen standard is another reason to perform area measurements, especially if we add further information to the projection. It later has results in many matters regarding negotiation, architectural and technical aspects among others. Area measurements, which reflect the real state of a managed building according to a chosen standard (of area measurement) will be useful for many years, and will allow for operating the areas easier when talking with tenants, technicians or construction crews, and for easier settlements with those people. It’s important to commission measurement of all walls (both load bearing and partition) along with the area measurement, as well as location measurement of profiles next to curtain walls – partition walls, which make up lease boundaries, can be put up only in those places. Dimensioning of the walls is also worth commissioning (potential tenants or construction, service crews have it easier when it comes to determining the size of rooms or shafts). There’s nothing in the way of adding ceiling measurement to the area measurement (let’s say it’s floor measurement) – sprinkler installations, vents, lamp holders and other building installation elements will be precisely measured. Dear manager, please imagine how wonderful your life would be if you had all the information about a building in a single CAD file, that is: all lease areas, all areas for tax purposes, the current architecture along with the dimensioning, current ceiling and floor projections along with all the installations, etc. Everyone would work with this file, and one company would make small area updates. You can always dream, right? Or call a geodesist. But how do you convince the owner to pay for it all? Let’s maybe stick with dreaming.

Occupational safety and health and fire safety

Current area measurements are also essential when mapping current evacuation routes. Those are requirements regarding OSH and fire safety. I’ve had commissions like that after fire department inspections, since there were no current evacuation routes (the walls on the evacuation map didn’t correspond to reality). The projections, which are a product of area measurements, are ideal for creating evacuation maps.

Better report quality

It sometimes happens that you have to improve the quality of a report (pl.: opracowanie), which the manager or the owner is currently working on – a new area measurement is commissioned for these purposes. It’s important when the current report’s quality is low, which can manifest as a lack of a digital copy of the report, chaos in the report or in the sorting of layers in the digital copy (.dxf, .dwg, I’m sometimes surprised by 200-300 layers in architectural projects. It comes from the fact that many things are mixed up and not in the right place, the previous measurements are not accurate enough, the measurements are taken from the project and not from reality etc. and that the previous report is not detailed enough/its quality is too low). There often aren’t any digital versions with building area measurements of objects that weren’t updated for a long time at all. In order to obtain that, a digital copy of the report is made. It can be done one of two ways: by performing measurements in reality or by vectorizing the drawings received from the commissioner. However, a vectorization will never be a reflection of the reality, because of the mistakes in the scan of the paper version and the content errors in it. It’s worth highlighting that the costs of vectorization and measurements in reality are comparable, with the vectorization being a waste of money.

Reports and statistics

Having a current version of building projections measured at the same time according to the same or different standards (the same rules of calculating lease area – not to be understood as a standard) is also useful when making reports and statistics in a company that wants to have the whole property portfolio measured according to one measurement rule and report standard (PHN can be an example – we were hired to measure over 100 buildings all over Poland, and now they don’t have a mess).

Summary

I hope that after reading this article, owners, managers and real estate experts will be more conscious of the sensible and purposeful ways of spending money on geodetic services regarding area measurements.

Copying an article or its parts without the author’s permission is prohibited.

Author: Adrian Hołub

Translate: julia Pająk

Contact us

 Monika Hołub

Co-owner Polish Geodetic Group

szkolenia@geodezyjny.com

Tel.: +48 785 041 07

 Adrian Hołub

Co-owner Polish Geodetic Group

adrian.holub@geodezyjny.com

Tel.: +48 608 577 042

Measure it soon!