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Are Conflicts of Interest prevalent in the UK commercial real estate industry?

While the finance & legal industries have clear robust guidelines and protocols, there are question marks within the commercial property industry as to whether enough is being demanded of the advisors who trade within this multi-billion pound industry. 

Professor Gerard McCormack and Mr Adam Baker, who are members of the Centre for Business Law and Practice at the University of Leeds are researching this very issue, with an expected white paper report due out in September 2015.

There are suggestions that there are regular conflicts and if they are not properly dealt with, may act to the disadvantage of commercial tenants within the office, leisure, retail and industrial property sectors. The issues can have an effect through less optimal transaction terms and privileges when these businesses are advised by a potentially conflicted property advisor.

The study will also develop an understanding around;
• The potential scope for conflicts of interest (including the reasons for this)
• The market generally (including the amount of market information reasonably available to prospective tenants; the factors which most influence tenants when looking for commercial property; and their awareness of tenant only agencies)
• The current regulatory regime (including consideration of the effectiveness of the RICS guidance, as well as the Open Market Investment Agency Protocol issued by the Investment Property Forum in 2014; and the efficiency of information barriers in dealing with the issue)
• How far, if at all, the current regime could be strengthened

The Royal Institute of Chartered Surveyors define this issue as:
“A conflict of interest is anything that impedes or might be perceived to impede an individual’s or firm’s ability to act impartially and in the best interest of a client.”

A conflict of interest can cast doubt on your integrity; it can also have a damaging effect on your firm and the profession as a whole.

A conflict of interest may occur where you or your firm:
• Are acting for another person with competing interests at the same time (e.g. advising both the seller and buyer of a single commercial property simultaneously)
• Are faced with conflicting duties owed to different clients (e.g. acting for two or more parties competing for an opportunity)
• Have other obligations or pressures that detract from or affect your relationship with the client (e.g. acting as an expert witness where you/your firm has an interest in the outcome of the proceedings)

Here are the definitions of Conflicts of Interest within various business sectors via their regulatory bodies;

The Law Society –

The Financial Conduct Authority –

Solicitors Regulation Authority –

Government, Charity sector –

The pensions Regulator –

RICS ––professional-standards/conflicts-of-interest/

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