Renting out property for shoots can be a good earner. Alex Plane discusses what to consider before the cameras start to roll
Granting a film crew access to a property, along with lorry loads of equipment and high-maintenance celebrities, may, at first blush, seem far from a Hollywood dream. However, as a flexible source of income, the financial rewards of hiring out properties for photo shoots and filming can be considerable and may help to raise the profile of featured locations. As with any occupation or use of a property though, allowing access to third parties carries risks and potential liabilities.
Do the paperwork
A location agreement should always be entered into and will govern the use of the property. Property owners should be confident that they can meet its terms and that they are adequately protected by the agreement. A key point will be whether the production company requires sole and exclusive rights to enter the property and film during specified dates and times. This is often the case and crews will expect to work in the property uninterrupted, free from other third party use. In a multi-let building, consideration needs to be given to possible breaches of other occupiers’ rights. Public access rights and potential nuisance or disturbance claims, if interference is substantial enough, should also be considered. Additionally, the nature of other occupiers or users can affect filming, particularly where there is an increased security element (for example, government buildings, banks and schools).
Production companies will often need the right to significantly alter a property. It is vital, for both parties, that the location agreement clearly documents what alterations will and will not be permitted. The agreement must address reinstatement, including specified timings for reinstatement, and possibly an escrow arrangement to deal with any failure to comply with reinstatement, particularly where alterations will be significant. It might also be advisable for property owners to agree a photographic schedule of condition clearly documenting the state of the property prior to access.
Ensuring that the agreement is clear on liability for any damage is of course key. While production companies will accept the general principle that they are responsible for any damage caused, standard form location agreements should be checked as they will not always include this protection. Certain types of property (for example, those with a high-value ?fit-out, period or irreplaceable items) may require greater protection, such as payment of a security deposit or liquidated damages.
Parties should be clear on what the agreed location fee includes, particularly as the production may lead to increased use of utilities. It is essential that the parties have considered how they are going to deal with these costs (ie, by inclusive location fee or separately reimbursed to the owner).
Receipt of a location fee is generally chargeable to income tax (or, for UK companies, corporation tax) as income from a property business in much the same way as rental income is taxed. Expenses (which are not of a capital nature) incurred by the owner wholly and exclusively for the purposes of the use for filming should be deductible in the normal way. If the property is a private residence, care needs to be taken to ensure that the capital gains tax relief is not affected.
Other considerations
The requirement for any third party consents or notifications should also be considered. Check the building’s insurance, including whether the premium payable will increase. Depending on the wording of any legal charge, consent may also be required from a mortgagee. Tenants should review their lease (and any restrictions) carefully before entering into a location agreement. Crucially, they should review user restrictions, alienation, restrictions on sharing, alterations and reinstatement and the limitation of rights granted (particularly use of services and access). Landlord consent may be required.
Filming or photographing brands, logos and products is subject to complex intellectual property rules and legislation. Given this, and that large corporations will aggressively pursue infringement action, production companies will generally avoid or edit out intellectual property. From a landowner perspective, however, while production companies will be aware of the constraints, location agreements often grant rights to film logos, trademarks or other branding, along with a warranty that no third party consents are required. Again, consideration needs to be given to other third party users and occupiers, particularly where heavily branded organisations use or occupy the property or the owners’ adjoining property (for example, shopping centres, retail premises or leisure). From both a legal and a tenant relationship perspective this could clearly otherwise prove contentious.
While a production can help to raise the profile of a building or location, thought should also be given to any possible adverse effect on value, including understanding the “nature” of the filming or shoot generally (avoiding inappropriate productions) and, if the property is being used for a commercial, is the product one that the owner is happy to be seen to endorse (by association)?
The types of production that a property may be used for vary from a one-day photo shoot to a series running for many years. While a photo shoot may be completed in the intended timeframe, productions rarely complete within a traditional eight-hour working day and can go days or weeks over schedule. Location agreements also often include provisions allowing the production company to return to the property and film in the future. This level of flexibility is understandable from a production company perspective. Property owners need to consider whether they can accommodate this and negotiations should take account of future plans for the property (for example, letting opportunities, any intended disposals or development plans).
On the flip side, location agreements also often include rights for the production company to rescind the agreement, owing to unforeseen circumstances, before filming commences, with no fee becoming payable and thereafter on a pro rata basis. This is particularly important for production companies working with high-profile actors or personalities whose limited availability can mean that the production does not go ahead if there are delays. If a property owner has foregone other opportunities owing to the existence of the location agreement, this may be an unacceptable position and it should be considered carefully as part of the negotiations. A cancellation penalty to cover expenses and inconvenience may be needed.
A star turn
In some cases, the property is as much a lead character as the main cast. Highclere Castle in Berkshire, for example, has recently been propelled to fame as “Downton Abbey”. For this size and value of production, obtaining security for future use will underpin the form of location agreement a production company will seek. Production companies will also want to include controls on the fee payable going forward to ensure that the production is not ransomed by the property owner in subsequent series.
Any property owner should carefully consider these points before production commences to ensure that the terms of the location agreement are more blockbuster than Hollywood flop.
Alex Plane is a solicitor in the property team at Boodle Hatfield
A production company perspective
Hiring out properties for photography and filming is an easy way for properties to generate income. What a property will earn depends on the production and the extent of the filming to be done, potentially generating hundreds to thousands of pounds per day. Stills photography shoots will generate less income, but are far less disruptive than film or TV shoots. For a small editorial shoot, there could be just six crew members and the property may only be required during normal working hours (9am-6pm). Location owners need to understand that larger shoots often start earlier and finish late and have much larger crews.
The majority of location owners or managers are happy not to be present during the shoot. However, location owners should ensure that the production team can use or access the services and utilities previously agreed (for example, electricity, toilets and water). The production team will bring everything else that it needs for the shoot.
A location manager should always be present on large-scale shoots to manage the process and to ensure that a client’s property is protected. For example, ensuring that flooring is protected, vehicles are parked in the correct spaces, that the crew know which parts of a property can and cannot be accessed and used, and protecting furniture and fittings. The location manager should be the first person to arrive and the last person to leave, so that they can ensure that the property is left as they found it. If the worst happens and damage is caused to a property this should be covered under the (production company) client’s public liability insurance.
Production companies are interested in a variety of locations and commercial property is becoming increasingly popular, in particular, furnished office space. Disused factories and warehouses are also in demand for the gritty backdrop that they offer and disused property generally is popular to enable a production company to film for longer periods.
Lauren York, UK Locations?
