In 2012 the British government introduced a controversial law to protect residential property owners. The new law, Section 144 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, criminalises the act of squatting in a residential building and holds a financial penalty of up to £5,000 and up to a year in prison. Beforehand, it was only considered a criminal offence if criminal damage was caused within the residential property by the squatter.
However, this newly introduced law does not protect commercial property’s. While it is still considered illegal to cause criminal damage within a commercial property; it is not an illegal offence to squat in a property being used for commercial reasons.
However, the British government are now under growing pressure to expand the new law to protect commercial property’s as well as residential property’s. The reason? Many local authorities have seen a decrease in the number of squatters within residential buildings; however, the new law has also caused a increase in the number squatters within commercial property’s. Calling into question the overall success of this new law.
For clarification: it is illegal to squat in a residential property (with or without causing criminal damage). However, it is legal to squat within a commercial property (unless criminal damage is caused). Although, the current squatters rights and property owners rights are still taken into consideration.
When purchasing a property it can often be both time consuming and costly without any certain results. However, many property purchasers are now entering what is known as a Contract Race. A Contract Race is the process in which multiple people attempt to purchase the same house; and if the seller is keen to get the house off their hands they will often start a contract race and sell the property to the first to make a contract. However, with a Contract Race there are multiple pitfalls and perils which accompany it. You are not only taking the risk of being caught out by a faster opponent than yourself without knowing but also the terms of the Contract Race may not be as clear as originally thought. Below are more pitfalls to entering a contract race:
You have no guarantee of winning as you can be racing against a faster opponent without knowing their position.
You may incur costs without gaining ownership of the property.
You must use a solicitor who is used to winning Contract Races.
You must have a reliable and fast lender who can provide a Mortgage quickly so you need to get your proposed loan underwritten in advance so an offer can be issued as soon as the surveys are complete.
You need to act quickly when you are advised there is a Contract Race so all searches are carried out as soon as possible.
Meet your Solicitor so you know the property deeds etc. as soon as possible and do not scrimp to find a flexible Solicitor in terms of speed of actions – top of pile not bottom.
Always check the terms of race to ensure you’re aware of the things you need to do to win and weather its 1ts past the post wins.
Do not attempt to enter a Contract Race if you have a chain of sales – it never works as you need to be dependent on yourself and not others
Assuming the tenants are not in partnership or members of any form of legal entity, the starting point is that each tenant must provide a separate declaration or statutory declaration. However, Schedule 2 to the RRO 2003 provides that such declarations can be made by someone authorised by the tenant.
It is clear that the reason for this provision is that companies can only make such declarations through an authorised person. However, what is not so clear is whether a group of individual tenants could use the same process.
At the time of writing, we are not aware of any case law on this point. However, our interpretation of the legislation, is that it should be possible. With the caveat that if a landlord is to accept a statutory declaration made by only one tenant, the landlord should be satisfied that the tenant has done so with the proper authority of all the tenants i.e. by way of an express statement from the person making the statutory declaration.
In certain circumstances, the tenant may be entitled to compensation for failing to obtain a new tenancy where they are forced to leave the premises through no fault of their own, i.e. where the landlord serves a s 25 notice or counter-notice to a s 26 request stating one or more of the grounds of opposition, namely grounds (e), (f ) or (g).
The amount of compensation is the rateable value of the holding multiplied by the ‘appropriate multiplier’ which is a figure prescribed from time to time by the Secretary of State, and at the time of writing is 1. In some cases, the tenant will be entitled to double compensation. This happens when the tenant or his predecessors in the same business have been in occupation for at least 14 years prior to the termination of the current tenancy.
As the smoking ban and the fall in drinking in pubs bite, the pub chains are selling pubs not required in the future. Many are situated in areas suitable for alternative uses, subject to planning approval.
Our commercial property lawyers have experience of acting for buyers intending to use pubs for alternative uses such as for development for housing, day nurseries, restaurants, meeting rooms and take-aways. Many pubs have large car parks and good access making them perfect for other uses, subject to planning consent being obtained.
Breweries often demand a ‘quick sale’ and we are used to their deadlines and need for proactive client advice.
Finances must be in place and the VAT situation must be advised both on the price and on the stamp duty and whether reliefs can be obtained regarding the residential accommodation. Completions may be geared to other factors of the breweries such as vacant possession or the discharge of debenture and the situation regarding premises licences being transferred. Future uses and shuttering issues must also be addressed.
We have experience with all such matters and when the ‘beer runs dry’ Aston Bond can help with the new life emerging from the Old Pub.
Both a Landlord and a Tenant can oppose the renewal of a lease using the provisions of the Landlord and Tenant Act 1954 as amended by the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (RRO).
The process involved is very procedural and strict in relation to time limits and can cause issues when serving the relevant Notice.
If the Landlord issues a Section 25 Notice on the Tenant opposing the renewal of the tenancy, it must be served no more than 12 months and no less than 6 months from the Termination date. Care must be taken that the correct Section 25 Notice has been used.
The Notice to the Tenant must include the fact that the Landlord opposes a renewal of the Lease and that if the Tenant wishes to oppose the Section 25 Notice then he must do so before the Termination date and ask the court to grant a new lease. It must also advise the Tenant that it may ask the court to terminate the tenancy without granting a renewal and that the Landlord may have to pay compensation to the Tenant and that it can challenge the said application.
In order for the courts to grant the Landlords application to oppose the renewal of the lease and therefore dismiss any renewal it must be able to establish one of the grounds contained within Section 30 of the Landlord and Tenant Act 1954. If however, the Landlord cannot establish the grounds contained in section 30 the Courts are likely to grant a new lease.
A Tenant can also ask for the lease to be terminated by serving a Section 26 Notice on the Landlord. Please however, remember that once the Tenant has served the Section 26 Notice it has in effect terminated the original tenancy and immediately before the date specified in the notice the tenancy will come to an end subject to the rules of interim continuation by agreement.
If the Landlord opposes the Tenants request for a new Tenancy it must serve a Notice on the Tenant stating that it is in opposition to the grant of a new lease. This Notice must be served on the Tenant within two months of the Tenants Section 26 Notice to renew being served upon them. The Notice must set out which grounds of Section 30 it relies upon to oppose renewal. The Landlord may then make an application to Court opposing the renewal of the lease, this may only be done so long as the Tenant has not already made an application to Court for the renewal of the lease.
If the Landlord has already served a counter notice as above then the Tenant may not make an application to Court for 2 months after the service of the Section 26 Notice unless the Landlord has already served a Counter Notice.
These types of renewals can be a very tricky and costly exercise if not completed correctly. Both a Tenant and Landlord can initiate a lease renewal by serving the required notice on either party.
The Landlord may serve a section 25 Notice on the Tenant for renewal of the Lease stating that it is not opposed to the renewal and also setting out its proposals for the new lease. Timing is essential when serving the notice, if the notice is served too early or late it may be defective and therefore cannot be relied upon. It is critical the Notice is not served more than 12 months before the termination date and not less than 6 months before the said termination date. There is a prescribed form as stipulated by the Regulatory Reform Order relating to Business Tenancies that must be used in these matters as it provides the tenant with all relevant information relating to the notice.
It must also be remembered that the terms proposed by the Landlord under the Section 25 Notice are not binding and are for discussion purposes only; they can be negotiated by either side during the course of negotiations. The Section 25 Notice is designed to end a tenancy and therefore the Tenant needs to act very quickly to deal with the matter.
If a deal cannot be reached within the relevant time scale either party by consent can extend the time period to enable negotiations to continue between themselves, though it must be remembered that what ever rent is ultimately agreed or ordered by the court will apply to any period after the termination date of the lease if it continues past that date. This new rent will then apply to any period past the termination date and must be paid to the Landlord as rent. The normal rent will continue to be paid to the Landlord in accordance with the original lease until such time as the new lease is granted.
A Tenant may serve a Section 26 Notice on the Landlord to renew the lease no later than 6 months and no earlier than 12 months before the proposed commencement date of the new lease. Again, there is a prescribed format for the Notice that is similar to the Section 25 Notice. It is important that the Tenants proposals are either added to the Notice or at the very least annexed to it. If the Landlord is not opposed to the renewal then negotiations will happen in the usual way. If however, the Landlord is opposed to a new lease then it must serve a counter notice on the Tenant within 2 months of receiving the Section 26 Notice.
If negotiations are unsuccessful either party may apply to the court to determine the terms of the new lease. The Landlord may apply either if he opposes the lease or if it is unopposed, the latter is usual if negotiations are unsuccessful or unusually protracted. Once the Landlord has issued proceedings it cannot withdraw the application without the Tenant’s consent.
If the Tenant does not wish to renew the lease after the Landlord has issued proceedings it may be liable for the Landlords costs. It is also pertinent to remember that proceedings can only be bought before the expiration of the date given in the Section 25 Notice or the Section 26 Notice.
The court has limited powers of renewal of Business Tenancies; it is only able to renew a lease for up to 15 years and on terms similar to those already in the original lease. The Court will then Order a rental based upon open market rent for the premises. The Court can also Order that rent reviews are added to the lease depending upon the market norms.
It is clear from the outset that the procedure for renewal can be complex and it is important that the correct procedure is followed and that time limits are adhered to strictly as there is no room for error. The smallest oversight can have a major impact upon you and your business.
A tenant taking a commercial lease must ensure that the landlord has obtained consent to the lease from any person having a mortgage over the freehold otherwise the lease cannot be registered at H M Land Registry (if it is subject to 1st Registration) and also the lease would not be binding on the lender if they repossessed the freehold.
The landlord, by getting consent, will have to let the lender see a copy of the lease and the lender will see all of the terms and may not give consent if the terms are what the lender may perceive as not being in their commercial interest and prejudicial to their security if they had to repossess.
Sometimes a landlord may try and circumvent lenders consent to some terms in a lease by issuing a side letter, consenting to terms not in the lease as consented by the lender (i.e. rent free periods or other concessions). Such a side letter may not be binding on a lender if the landlord defaults on their loan and therefore such side letters should be resisted by a tenant to protect their position and ensure the lease has all clauses consented by the landlord’s lender and therefore be binding on the landlord’s lender in the event that the landlord defaults on the loan and the lender repossesses the property.
For a small to medium property developer, obtaining land to build houses on is not an easy task, due to the banks failure or refusal to lend money for development purposes.
The banks have in the past agreed to lend up to 70% for building projects but are now lending less than 50% – on a good day. This leaves property developers having to find the balance of the cost of building from their own resources, which is not easy. For the government to pretend that there is a pool of new houses being built in the Thames Valley is wrong.
Property developers are being forced to resort to more imaginative ways of producing land and finding development land, such as:
Entering into joint development agreements with existing property owners and building on gardens and side plots for which the owner receives a share of the profits when sold.
Joint developments with Local Authorities.
Building in phases so that profits from the last property built helps fund the next property.
Converting run down blocks of flats to provide refurbishments.
Refurbishment of old houses to produce a larger property with extensions.
Our commercial property solicitors have vast experience of development land and developments and can assist any would be property developer with imaginative projects.