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Legal Developments in the The Legal 500 United Kingdom 2011
Opposing lease renewal proceedings on the ground of redevelopment
Redevelopment is (alongside the ground of owner occupation) perhaps the most common of the bases upon which a landlord might seek to deny a tenant’s entitlement to a new lease of business premises. The following serve as some useful points to remember when a landlord seeks to rely upon the ground of redevelopment for denying a tenant a new lease of business premises.
An article on raising the roof -
an important change affecting many tenancies of residential property
Landlord & Tenant Briefing
Dilapidations in commercial premises – ten points to consider
Being a helpful Landlord may be a mistake!
Most landlords and their solicitors try to resist the impulse to be helpful, however, in these recessionary times when landlords are concerned to avoid empty space, there may be the temptation to take shortcuts to ensure a letting proceeds. In circumstances where it is intended that Part II of the Landlord and Tenant Act 1954 (the 1954 Act) should not apply to the tenancy, i.e. that the tenant should not have the benefit of security of tenure, then occupation before the lease has been finalised (and the appropriate ‘contracting-out’ steps taken) is a potentially dangerous step and needs to be taken only when the landlord has fully comprehended the potential consequences.
New regime for approval of major transport projects set to ‘switch on’
The Planning Act 2008 (the Act) introduces a new regime designed to speed up the planning and, in turn, the delivery of infrastructure projects of national significance. For transport projects, it is one of the most important pieces of legislation in recent years. The new procedure will have to be used for any third runway at Heathrow, amongst other high-profile projects.
Community Infrastructure Levy – Latest Developments
On 30 July 2009 the Government issued a consultation paper under the title ‘Detailed proposals on the draft regulations for the introduction of the Community Infrastructure Levy’ which included a set of draft regulations. The consultation closed on the 23 October 2009. The proposals flesh out the provisions made for the Community Infrastructure Levy (CIL) under Part 11 of the Planning Act 2008 (PA 2008) and the Government is consulting on the draft proposals prior to the regulations coming in to force on 6 April 2010. This article summarises the key proposals and some of the talking points raised by those proposals.
The commercial lease renewals – ten tips for landlords
Unlike other aspects of property work which are cyclical with or counter cyclical to the economic climate the renewal of business tenancies remains a constant for landlords, tenants and their professional advisers. From a landlord’s perspective it is important to be prepared in order to be in a position to secure the best commercial deal. The practical tips that follow are aimed at providing landlords with a head start to achieving this goal.
Implementing the new regime for national infrastructure projects under the Planning Act 2008
An article on the progress of the implementation of the new regime for national infrastructure projects under the Planning Act 2008
Access to justice: protective costs orders in planning challenges
Third parties and competing developers have no rights of appeal to the Secretary of State against planning decisions. Disappointed applicants can appeal to the Secretary of State and can have the merits of the application reconsidered. The only remedy available to a disappointed third party is a challenge by way of judicial review in the High Court on a point of law. The sense of frustration and disempowerment this creates has not been helped by the increasing complexity of the planning process and the use of consultation to legitimise decisions that many perceive may already have been taken.
Lease re-gearings and extensions: some issues to consider
As a result of the recession, lease re-gearings and extensions are becoming increasingly popular for landlords and tenants.
Original tenant liability
It is well known that, until 1996, an original tenant or guarantor remained liable on the tenant covenants under a lease until the end of the lease term. The same was true of assignees, provided that there was a licence to assign containing appropriate covenants from the assignee.
Another land tax; another failure?
Now does not seem a good time to introduce a new and controversial land tax that may pull some funds into local infrastructure provision but will certainly add confusion and uncertainty at a time when the economic system is least able to absorb it.
Developer loses millions after failing to prove proprietary estoppel
A DEVELOPER THAT HAD OBTAINED, AT HIS OWN expense but without the security of a binding contract, planning permission for the development of a third-party-owned site has failed to persuade the House of Lords that he should have an interest in the site worth millions of pounds.
Disability discrimination: no longer an 'unjust regime' for landlords?
A landmark decision in the House of Lords concerning the meaning of ‘discrimination’ in the Disability Discrimination Act (DDA) 1995, not only has potential to revolutionise the application of the Act in employment law, but also relieves landlords of a very onerous restriction on their ability to take action in case of tenant default, where the tenant is disabled. Cases to date have concerned residential tenancies, but the law applies equally to business lettings.
Service charges: a procedural obstacle course?
It is one of the frustrations of the lawyer that, having drafted and negotiated the detail of a document such as a lease, all too often it then seems to be ignored by those who are supposed to be implementing its provisions. Nowhere is this more prevalent than in the area of service charges. As Leonora Investment Company Ltd v Mott Macdonald Ltd [2008] reminds us, this may ultimately affect the recoverability of expenditure, and attention should be paid to getting procedural matters right.
‘Proper’ and ‘reasonable’ use of a right of way
ANY OCCUPIER OF PROPERTY THAT BENEFITS FROM a right of way expressed in wide general terms will be relieved by the recent decision in Brooks v Young [2008], in which an attempt to give such a right a restrictive interpretation was defeated in the Court of Appeal. Although the case was concerned with residential property, the wording used would also be common in a grant of a right of way affecting commercial property.
New site waste management regulations: an overview
THE CONSTRUCTION INDUSTRY PLAYS A significant role in generating a large proportion of the UK’s total waste output. Consequently, the government has set a target of halving the volume of construction waste sent to landfill sites by 2012.
Rent review - fact and fiction
In rent reviews the courts are apt to fall back on the ‘assumption of reality', that is, the assumption that so far as possible the parties to a lease are taken to have intended that the tenant should pay for no more and no less than what they actually get. Not only does this tend to produce a fair outcome, it also tends to avoid the absurdities thrown up by the sort of rent review clauses that require the valuer to assume some or other fictitious set of circumstances. As a rule of thumb, the more a rent review clause departs from reality, the more contradictions it produces. A recent case illustrates this very well.
Side agreements: problems for tenants and successor landlords
Side agreements are often personal in nature, though this raises the question of which party they are personal to. In a recent case, a tenant successfully enforced a side agreement against its landlord, where the agreement had been entered into with the landlord's predecessor in title. The obvious lesson for investors is to look into any such arrangements closely before purchase, but the decision illustrates why they can be less than ideal from a tenant's point of view as well.
Shop with flat over... or flat with shop below?
As a lease approaches its end, a key issue is which (if any) security of tenure scheme applies. This is something that the parties should have been advised on when the lease was granted, but is it possible that during the life of the lease it could have moved out of one regime and into another? This would mean a great deal of uncertainty, but it is what was argued in two recent cases.
Arrears recovery - an unintended anomaly?
We have commented previously on the case of Scottish & Newcastle Plc v Raguz, which was concerned with the application of arrears recovery procedures in relation to a backdated rent review settlement. That decision has now been confirmed by the Court of Appeal, although at least one member of the Court regarded the result as an ‘unintended anomaly of the legislation'. Since the outcome has surprised many practitioners, and applies to a very commonplace situation, it is worth revisiting.
Landlords who won't re-let
A tenant who leaves the premises and stops paying rent before the end of the lease takes a risk. If they are lucky, the landlord may terminate the lease and re-let, in which case liability for rent ends at the date of termination. If not, the landlord can leave the premises vacant and simply collect rent from them throughout the full term of the lease. Reichmann and Dunn v Beveridge and Gauntlett underlines that this choice is completely up to the landlord, with no duty owed to the former tenant.
Commonhold - it's not just about flats
There is a widely-held view that the commonhold system is applicable only in the residential context, where it represents another attempt to deal with the perceived iniquity of leasehold tenure. While there is a measure of truth in this, commonhold is intended to be available in relation to all types of property. In the Australian and American systems on which it is based, commonhold (or its equivalent) is widely used in the commercial context. This article examines the pros and cons of doing so.
Residential tenancy deposit schemes: Q&A for landlords
On 6 April 2007 tenancy deposit schemes for assured shorthold tenancies will come into operation under the Housing Act 2004. Despite a long lead time and strict penalties for default, recent reports suggest that nearly a quarter of residential landlords are unaware of the requirements, while another half have heard of the legislation but do not know the details. This article answers some of the obvious questions that a landlord might ask.
Service charges – codes and cases
The RICS Code of Practice on ‘Service Charges in Commercial Property' (the Code) comes into effect on 1 April 2007, replacing the former Service Charge Guide. The Code describes best practice but is not intended to override existing leases. Where a lease is defective or ambiguous the Code cannot help, and it may not be possible to apply it. The recent case of St Modwen Developments (Edmonton) Ltd v Tesco Stores Ltd provides an interesting comparison between the approach of the courts and that adopted in the Code.
What is 'good estate management'?
It is not uncommon to see in leases an obligation to manage the property ‘in accordance with the principles of good estate management'. If this adverbial phrase means anything more than simply ‘well', it is perhaps that the company managing the property should have regard to more than just its own profit, but the phrase does not refer to any objective standard.
Contracting out of the 1954 Act: a simple notice and declaration?
When the procedure for renewing and terminating business tenancies under the Landlord and Tenant Act 1954 (the 1954 Act) was amended in 2004, the government undertook to review the impact of the reforms after one year. That review has now been carried out and a report made to Parliament.
Further illumination: rights of light again
Previously we commented on a short sequence of cases on rights of light, including Regan v Paul Properties Ltd and others. At the time of writing that article, the Court of Appeal had announced its decision to grant the appeal in that case, to impose an injunction requiring part of the offending building to be pulled down, in place of the previous award of damages. The full, reasoned judgment was not then available; now that it is, some further comment is possible.
Notice anything different?
Service of a notice is a common mechanism in all kinds of legal documents to give certainty to the way in which one party tells another what it intends. It should simplify matters rather than complicate them, but the ever-expanding volume of case law tells a different story. Peaceform Ltd v Cussens and others is the latest addition to the learning on this subject, and is a good example of how to get things wrong.
A revised dilapidations protocol
The Law Reform Committee has once more affirmed its commitment to adopt and encourage the use of protocols and forms of alternative dispute resolution (ADR) to resolve disputes, while avoiding litigation if possible.
Lessons on rights of light
The case of Regan v Paul Properties Ltd and others has put the issue of rights of light into the headlines, although it is an untypical decision. It is one of a short sequence of recent cases relating to rights of light, which have some lessons for developers and also for neighbouring landowners who may be contemplating a challenge to development.
Split repair liability can cause problems
Splitting responsibility for repair between landlord and tenant, so that the tenant is liable for the interior and the landlord for the exterior and structure, can give rise to problems in practice. A recent example, and a cautionary tale, is the case of Janet Reger International Ltd v Tiree Ltd.
Fire safety at work: tough new procedures in place
1 October 2006 saw the biggest reform of fire safety legislation in over 30 years, with the coming into force of the Regulatory Reform (Fire Safety) Order 2005. The intention is to simplify the law for thousands of businesses, and place a much greater emphasis on fire prevention. The burning question is: how does the new law work in practice?
Property purchases - you must complete on time
On the sale of a property, if completion does not take place on time, either party can serve a notice to complete, making time ‘of the essence'. That is, if completion does not take place by the new deadline, either party can terminate the contract. If it is the seller who does so, they can retain any deposit and accrued interest, resell the property and claim damages. In the case of Northstar Land Ltd v Maitland Brooks and another, the seller was entitled to do so despite some inconclusive exchanges concerning what was the due date for completion.
Distress for rent - and ancient remedy for a modern world
One of the most effective remedies available to a landlord when a tenant goes into arrears is levying distress for rent - in other words, sending in bailiffs to seize and sell goods in satisfaction of the arrears. Proposals recently published by the government seek to put it onto a statutory basis and, while the scope of the remedy will be somewhat narrower, it will still leave landlords in an advantageous position.
Car parking can be 'business occupation'
The Court of Appeal's judgment in Pointon York Group Plc v Poulton has provided further clarification on what constitutes ‘occupation' in order to qualify for security of tenure under the Landlord and Tenant Act 1954 (LTA). The right granted in a lease to use car parking spaces was held to constitute part of the ‘premises' themselves, and to be capable of ‘occupation' for the purposes of s23 of the LTA. Also, for these purposes, ‘occupation' of office premises did not in the circumstances have to be actual physical occupation.
Village green registration: clarity for developers
A developer who stumbles across a village green when investigating a site generally feels as pleased about it as a hay fever sufferer in the middle of summer. If an area of land is potentially registrable as a village green, not only does that raise the possibility of third-party rights over the land, but, worse still, there are stringent restrictions on the owner's ability to use (and hence develop) the land.
Dutton v Davis: when a mortgage is not a mortgage
There may be occasions when registration, regulatory requirements or other factors prompt attempts to disguise the true nature of a transaction by dressing it up as something else. The case of Dutton and another v Davis and another illustrates the dangers of this approach.
Protection from eviction extended to mixed-use tenants
The Court of Appeal has recently ruled that legislation protecting residential tenants from eviction extends to tenants holding a lease of mixed business and residential premises.
Draft Rented Homes Bill: tenants' rights secured?
The Law Commission's final report on rented housing and the draft Rented Homes Bill were published in May. If enacted, the Bill will implement some of the most radical changes ever to the rented housing sector.
A warning on settlement agreements and the meaning of vacant possession
The High Court has considered the meaning of vacant possession in the context of a settlement agreement in Legal & General Assurance Society Ltd v Expeditors International (UK) Ltd.
CA’s decision in Estate Aquisition: tenants licensed to abscond?
If a tenant disappears from a property for a period of six years, paying no rent or service charge, and making no arrangement for forwarding mail or for contact with the managing agent or landlord, surely they can have no reason for complaint if the lease is terminated? Not according to the Court of Appeal in Estate Acquisition and Development Ltd v Wiltshire and another.
Net internal area: when is an area usable or not?
Parties to property transactions often incorporate reference to the RICS Code of Measuring Practice (the Code), to achieve certainty when assessing the size of premises that are yet to be built. A recent case provides some guidance as to how it may be interpreted by the courts.
Landlord's ability to regulate car parking clarified by Court of Appeal
A right to park in communal areas of a development will commonly be subject to compliance with the landlord's regulations. A recent Court of Appeal case, Montrose Court Holdings Ltd and another v Shamash and others, has clarified the extent of a landlord's ability to regulate car parking, and upheld restrictions by reference to duration of parking and number of vehicles.
New technicality in recovering reviewed rent from former tenants
Rent reviews often result in a backdated rent increase. As a result of a recent case, if there is a risk that the present tenant will not be able to pay, the landlord may need to give notice of the potential claim to any former tenant, even before any actual default.
Opposed lease renewal: can statutory compensation be avoided?
A recent attempt to avoid liability for statutory compensation under the Landlord and Tenant Act 1954 (LTA) has failed, but demonstrates the continued scope for ingenious manipulation of the LTA's procedures.
Set-off and successor landlords
The Court of Appeal has rejected an attempt by a tenant to set off, against rent owed to its present landlord, a claim for damages for defective construction works by the former landlord.
Restrictive covenants: a bar to development?
The Lands Tribunal's jurisdiction to modify restrictive covenants may be of particular use to developers. A recent Court of Appeal case, Shephard and others v Turner and another, examined the exercise of that jurisdiction. In addition, the case throws doubt on the usefulness of a covenant not to cause nuisance as a protection against construction disturbance.
The leisure industry – up in smoke?
Smoking will be banned from all enclosed workplaces in England from summer 2007, including all pubs, clubs and restaurants. Some of the likely consequences for owners and operators of leisure premises can be anticipated now, although more will doubtless emerge.
Problems for lenders exercising power of sale
The abolition of cautions under the Land Registration Act 2002 has put obstacles in the way of the sale of registered property by a chargee, apparently inadvertently.
Powerhouse: CVA threat to lease guarantees
The terms of a company voluntary arrangement (CVA), recently approved by a multiple retailer's creditors, threaten to have a dramatic impact upon the effectiveness of guarantees given to secure performance of a tenant's obligations. Although the courts have yet to decide on the matter, this has become a hot topic of conversation among landlords, and may affect decisions being taken now as to what form of security to require.
Tenant's break clause effective despite disrepair
The High Court has finally upheld a tenant's exercise of a conditional break clause, despite some breaches of repairing obligations.
Chancel repair liability: a potential time bomb for property buyers
Liability for chancel repairs is becoming an ever bigger headache for property buyers, as the Church of England gears up to register the liability where possible, in advance of the 2013 deadline.
Release from covenants following London Diocesan Fund: are landlords off the hook?
Usually, when a landlord grants a lease, and in so doing takes on obligations to its tenant, the
Draft Construction (Design and Management) Regulations 2006: industry voices concerns
The Construction (Design and Management) Regulations 1994 (the 1994 Regulations) came into force in March 1995. Fundamentally, they were about improving the management and co-ordination of health, safety and welfare issues on construction projects throughout all stages of construction and subsequent maintenance.