Blog question – Additional Increase in Cost of Working for a property owner

This is one of the questions put to me during the past week.

Hi Allan

Just a quick query which you may be able to shed some light on if possible.

If I have a property owner of a shopping complex, covering material damage and loss of gross profits, at which point would taking out an increase costs of working apply.

The only scenario that I can think of in which it may apply is if the building incurs a partial loss due to a fire, and for example, a particular item needs to be ordered from overseas for the repair process to speed up and minimise the impact of loss of profit. In saying this, I would think that this would be covered and paid for under the material loss section.

If you could shed any light or advice on this would be much appreciated.

Thanks

Dave” [surname and email address provided]

I answered as follows:

Hi David,

With property owners, some are finding that they lose or may lose a tenant and so getting the premises reinstated as quickly as possible is important. As such, having a sum of money to pay for extra crews or overtime is very useful.

The next thing is that if the client loses a tenant, they may need to incur additional advertising and/or rent free periods to entice new tenants. While some of this may be claimable at an increase in cost of working, the economic limit test would apply and so you could not claim both.

Hope this helps and all makes sense.

Regards

Allan

David came back quickly as follows:

Hi Allan,

Thanks for your reply. This is excellent, just what I was after.

Kind regards,

Dave”