I did not study collective enfranchisement on the LPC. I understand that the area is something of a speciality (perhaps even an acquired taste) for some property Lawyers. Nevertheless, the Supreme Court's decision in the case of Day v Hosebay (Hosebay), has caught my interest. Hosebay is a 2012 case.
The case concerns the right of Tenants to acquire the Freehold interest in their properties under the Leasehold Reform Act (the Act) 1967. The Tenant must certify certain criteria under the Act. In Hosebay, the court's decision focused on whether the property satisfied the definition of a House under s2 (1) of the Act. That is, whether it was a building 'designed or adapted for living in and reasonably so called.'
This case concerned three properties in Kensington. The properties were originally residential homes but were being used, at the time of the case, to provide holiday accommodation. The case reached the Supreme Court. It was held that the properties were in 100% commercial use. The Tenants did not satisfy s2 (1) of the Act (as above) and could not acquire the Freehold interest in their properties. It was necessary to look at the current nature of the property and whether or not it could be classified as a home and not just a house. The properties did not meet the definition of a 'house' under the Act. The Tenant's enfranchisement claim failed.
What does this mean for Landlords and Tenants? If the property is currently being used, for commercial purposes, any enfranchisement claim will fail.
However, the court did not address the definition of 'commercial use.' No doubt, there will be further cases involving mixed use property. The jury's out as to whether mixed use property will satisfy the provisions of the Act for a successful enfranchisement claim.
No doubt, there will continue to be a string of cases in this interesting area of law. It's funny how words seem to matter a great deal in law...
See my LinkedIn profile at: http://www.linkedin.com/profile/view?id=46743795&trk=tab_pro for further information on the author.
Friday, 1 February 2013
Planning for change
Well its the start of a new month and what better way to start than to discuss the current changes to make it easier to convert commercial into residential premises.
Just a bit of context- there is a housing shortage in this country. Local authorities are seeing their funding squeezed by central Government. Whilst statistics from the Government's Funding for Lending scheme (FL), have shown an improvement in lending, there still isn't enough money to go around. Whence the changes!
The current changes will mean that a change from class B1 (a) Office to Class C3 Residential will count as 'permitted development.' In other words, you will not need planning permission to convert an office building into a house.
Councils will only be able to resist a change in exceptional circumstances. They will have to show that a change of use would result in a detrimental loss of economic activity for the area and that the negatives far outweigh the positives (in changing from commercial to residential premises).
Thus, Lawyers should be aware of the change. Indeed, they should plan for it! (If you'll excuse the pun...).
In my opinion (which may not count for much in the grand scheme of things!) I think that the change should work both ways. If for whatever reason, there are empty residential premises, then it should be easier to convert them into offices without planning permission.
The Government frequently states that it wants as much flexibility in the planning system as possible. The powers that be have cut more than a few pages. They have made the above change. Now they could go a step further- make it easier to convert empty houses into offices. That would encourage businesses to expand. Business expansion= economic growth. Economic growth= a happy Government.
See my LinkedIn profile at: http://proplawyer.blogspot.co.uk/2013/02/collective-enfranchisement-hosebay-saga.html for further information on the author.
Just a bit of context- there is a housing shortage in this country. Local authorities are seeing their funding squeezed by central Government. Whilst statistics from the Government's Funding for Lending scheme (FL), have shown an improvement in lending, there still isn't enough money to go around. Whence the changes!
The current changes will mean that a change from class B1 (a) Office to Class C3 Residential will count as 'permitted development.' In other words, you will not need planning permission to convert an office building into a house.
Councils will only be able to resist a change in exceptional circumstances. They will have to show that a change of use would result in a detrimental loss of economic activity for the area and that the negatives far outweigh the positives (in changing from commercial to residential premises).
Thus, Lawyers should be aware of the change. Indeed, they should plan for it! (If you'll excuse the pun...).
In my opinion (which may not count for much in the grand scheme of things!) I think that the change should work both ways. If for whatever reason, there are empty residential premises, then it should be easier to convert them into offices without planning permission.
The Government frequently states that it wants as much flexibility in the planning system as possible. The powers that be have cut more than a few pages. They have made the above change. Now they could go a step further- make it easier to convert empty houses into offices. That would encourage businesses to expand. Business expansion= economic growth. Economic growth= a happy Government.
See my LinkedIn profile at: http://proplawyer.blogspot.co.uk/2013/02/collective-enfranchisement-hosebay-saga.html for further information on the author.
Thursday, 31 January 2013
Property Investment- student accommodation
This is my first post about Property Investment. I don't purport to know much about Investment but shall have a stab at it.
I was very interested to read this article at www.propertywire.com:
http://www.propertywire.com/news/global-news/student-accommodation-investment-property-201211077120.html
If I were looking to Invest, in the UK commercial property market, which factors would influence me?
One would assume that prime central London assets such as 'The Shard' or 'The Cheesegrater' etc would be the most attractive option. This article shows investment in student accommodation will continue to grow.
Well- that wasn't too hard!
I was very interested to read this article at www.propertywire.com:
http://www.propertywire.com/news/global-news/student-accommodation-investment-property-201211077120.html
If I were looking to Invest, in the UK commercial property market, which factors would influence me?
- An independent currency?
- Stable governance?
- A growing or at least sound economy?
- Assets which guarantee strong footfall and strong covenants?
- Shopping centres/ leisure & retail developments? Yes.
- Office blocks with reputable Tenants? Definitely.
- Student accommodation? Why not.
One would assume that prime central London assets such as 'The Shard' or 'The Cheesegrater' etc would be the most attractive option. This article shows investment in student accommodation will continue to grow.
Well- that wasn't too hard!
Squatters- they fought the law and won?
Today's post concerns something of great importance to Landlords and Tenants.
Last year, the law with regards to 'squatters rights' was changed. s144 of the Legal Aid and Punishment of Offenders Bill (LASPO) makes it a criminal offence for people to squat in residential property. If a person is found guilty of squatting in a residential property they may be liable for a fine of up to £5000 or six months imprisonment.
However, the law does not apply to commercial property. Squatting in commercial property remains a civil matter. The Landlord will have to apply to court for a possession order. The order must then be enforced by a court Enforcement Officer.
Why is this important? given the troubles on our high street many commercial properties are lying empty. There is a housing shortage in this country. The Landlord will not want to go to the expense of having to get a possession order from the court and waste time trying to remove the squatters.
This is no doubt a controversial matter which polarises opinion. To some, many in fact, the squatters are trespassing on private property. To others, they are merely making use of derelict property and it is the responsibility of government etc to provide adequate housing provision. Whatever view you take, the problem is a nuisance for your average commercial Landlord.
What can be done about it? In an ideal world, Landlords will have nice rent paying Tenants in their properties. However, this is not always possible. If the Landlord does have an empty property they should make sure it is securely locked. It may be wise to invest in an alarm system. The Landlord should visit the property regularly (at least once a week). The use of signs ('do not trespass- private property') may also be useful. The Landlord should therefore try to make the environment unappealing for potential squatters.
Until and unless the law is changed the commercial Landlord will have to remain vigilent. Squatters are a nuisance. Following the above steps will save the Landlord both time and money.
Please see my LinkedIn profile at: http://www.linkedin.com/profile/view?id=46743795&trk=tab_pro for further information on the author.
Last year, the law with regards to 'squatters rights' was changed. s144 of the Legal Aid and Punishment of Offenders Bill (LASPO) makes it a criminal offence for people to squat in residential property. If a person is found guilty of squatting in a residential property they may be liable for a fine of up to £5000 or six months imprisonment.
However, the law does not apply to commercial property. Squatting in commercial property remains a civil matter. The Landlord will have to apply to court for a possession order. The order must then be enforced by a court Enforcement Officer.
Why is this important? given the troubles on our high street many commercial properties are lying empty. There is a housing shortage in this country. The Landlord will not want to go to the expense of having to get a possession order from the court and waste time trying to remove the squatters.
This is no doubt a controversial matter which polarises opinion. To some, many in fact, the squatters are trespassing on private property. To others, they are merely making use of derelict property and it is the responsibility of government etc to provide adequate housing provision. Whatever view you take, the problem is a nuisance for your average commercial Landlord.
What can be done about it? In an ideal world, Landlords will have nice rent paying Tenants in their properties. However, this is not always possible. If the Landlord does have an empty property they should make sure it is securely locked. It may be wise to invest in an alarm system. The Landlord should visit the property regularly (at least once a week). The use of signs ('do not trespass- private property') may also be useful. The Landlord should therefore try to make the environment unappealing for potential squatters.
Until and unless the law is changed the commercial Landlord will have to remain vigilent. Squatters are a nuisance. Following the above steps will save the Landlord both time and money.
Please see my LinkedIn profile at: http://www.linkedin.com/profile/view?id=46743795&trk=tab_pro for further information on the author.
Wednesday, 30 January 2013
UK Property- a safe bet?
I was very interested to read this article on the PropertyWire website (http://www.propertywire.com/):
http://www.propertywire.com/news/europe/uk-commercial-real-estate-201210317098.html
The crux of the article states that the UK commercial property sector will not recover until 2023. This does somewhat contradict other articles I have read which argue that the UK's commercial Real Estate sector remains resilient due to the UK's perceived 'safe haven' status. There are clear reasons for this- an independent currency, stable governance, prime assets (particularly student accommodation and landmark skyscrapers) in the City of London. Undoubtedly, the market remains below pre-recession levels. Rents will probably continue to grow, in the London market, throughout 2013.
However, the most important part of the article that struck me was the fact that:
'High vacancy rates are set to become a huge issue for the commercial real estate and construction industries as recovery remains elusive, threatening profits and presenting new risks associated with empty sites and buildings. Adequate security and regular checks are recommended for property owners in this situation to mitigate the increased risks of burglary, arson and water damage. However, despite vacancy issues and the growing trend of ‘mothballing' developments to save ongoing costs, there is still an appetite for the right kind of development. The City skyline is a prime example of that, with builds such as The Shard in London demonstrating that certain projects, particularly mixed use developments, are still going ahead.'
As explained before, empty properties are a nightmare for the commercial Landlord. They are sitting there- not making profit and attracting empty property and business rates. However, should the situation occur it would prudent for a Lawyer to advise their Landlord client to make sure their property is secured and is regularly checked. The Landlord should have an up to date Insurance policy. The property should have an alarm (ADT etc) and any front gates should be locked. The Landlord should visit the property at least once a week. If the Landlord client has an empty property, which is then burgled and damaged, this could result in extra expense. It is the Lawyer's job to save their Landlord clients a few pennies!
The article also shows the attractiveness of prime assets in the central London market- the Shard, the Cheesegrater, the Walkie Talkie etc. Whilst activity remains depressed, in other parts of the UK, central London will continue to see growth. A safe bet after all!
See my LinkedIn profile: http://www.linkedin.com/profile/view?id=46743795&trk=tab_pro
http://www.propertywire.com/news/europe/uk-commercial-real-estate-201210317098.html
The crux of the article states that the UK commercial property sector will not recover until 2023. This does somewhat contradict other articles I have read which argue that the UK's commercial Real Estate sector remains resilient due to the UK's perceived 'safe haven' status. There are clear reasons for this- an independent currency, stable governance, prime assets (particularly student accommodation and landmark skyscrapers) in the City of London. Undoubtedly, the market remains below pre-recession levels. Rents will probably continue to grow, in the London market, throughout 2013.
However, the most important part of the article that struck me was the fact that:
'High vacancy rates are set to become a huge issue for the commercial real estate and construction industries as recovery remains elusive, threatening profits and presenting new risks associated with empty sites and buildings. Adequate security and regular checks are recommended for property owners in this situation to mitigate the increased risks of burglary, arson and water damage. However, despite vacancy issues and the growing trend of ‘mothballing' developments to save ongoing costs, there is still an appetite for the right kind of development. The City skyline is a prime example of that, with builds such as The Shard in London demonstrating that certain projects, particularly mixed use developments, are still going ahead.'
As explained before, empty properties are a nightmare for the commercial Landlord. They are sitting there- not making profit and attracting empty property and business rates. However, should the situation occur it would prudent for a Lawyer to advise their Landlord client to make sure their property is secured and is regularly checked. The Landlord should have an up to date Insurance policy. The property should have an alarm (ADT etc) and any front gates should be locked. The Landlord should visit the property at least once a week. If the Landlord client has an empty property, which is then burgled and damaged, this could result in extra expense. It is the Lawyer's job to save their Landlord clients a few pennies!
The article also shows the attractiveness of prime assets in the central London market- the Shard, the Cheesegrater, the Walkie Talkie etc. Whilst activity remains depressed, in other parts of the UK, central London will continue to see growth. A safe bet after all!
See my LinkedIn profile: http://www.linkedin.com/profile/view?id=46743795&trk=tab_pro
Service charge drafting- wide off the mark
Today's post concerns something of crucial importance to Landlords and Tenants. It will review the case of Campbell v Daejan Properties Limited (Campbell). Campbell was a 2012 case. It illustrates the need for a well drafted service charge clause, at the outset, when the parties enter into a new Lease.
Campbell was the Tenant. Daejan was the Landlord. Campbell owned a Lease in a Maisonette in a 5 storey house. When Campbell entered into the original Lease, it was agreed that she would contribute 40% towards the maintenance costs of the 'premises.' This did not change when her Lease was renewed. Daejan later carried out some works to the property and stated that Campbell was liable to contribute 40% towards works carried out on the property as a whole and not just the Maisonette. Campbell argued that she was only liable in respect of works carried out on the Maisonette only and not the whole building.
The Court of Appeal eventually ruled that 'premises' meant the Maisonette and did not include the whole property. The court stated that the Lease should be taken as read and that the court would not interfere in what was, essentially, a private bargain made between contracting parties. The court would only intervene in circumstances where it was obvious that the parties had made a mistake. The court also ruled that Daejan could not recover their costs through the service charge.
What does this mean?
For Landlords- there is no presumption that the Landlord will be able to recover 100% of their costs through the service charge. The court is unlikely to correct any drafting errors in order to support the Landlord's commercial intentions.
For Tenants- the Tenant should be equally cautious of any drafting errors, at the outset, when entering into a new Lease with the Landlord.
The conclusion is that Lawyers should go through the Lease thoroughly with their clients. The service charge clause should be precisely defined depending on the intentions of the respective parties. A failure to get this right could (as was the case in Campbell) result in Litigation- a waste of time and money for both the Landlord and Tenant.
Precise drafting and establishing the parties' intentions will prevent the Lease becoming wide off the mark! It will also save a few pennies in the long run!
Please also see my LinkedIn profile: http://www.linkedin.com/profile/view?id=46743795&trk=tab_pro
Campbell was the Tenant. Daejan was the Landlord. Campbell owned a Lease in a Maisonette in a 5 storey house. When Campbell entered into the original Lease, it was agreed that she would contribute 40% towards the maintenance costs of the 'premises.' This did not change when her Lease was renewed. Daejan later carried out some works to the property and stated that Campbell was liable to contribute 40% towards works carried out on the property as a whole and not just the Maisonette. Campbell argued that she was only liable in respect of works carried out on the Maisonette only and not the whole building.
The Court of Appeal eventually ruled that 'premises' meant the Maisonette and did not include the whole property. The court stated that the Lease should be taken as read and that the court would not interfere in what was, essentially, a private bargain made between contracting parties. The court would only intervene in circumstances where it was obvious that the parties had made a mistake. The court also ruled that Daejan could not recover their costs through the service charge.
What does this mean?
For Landlords- there is no presumption that the Landlord will be able to recover 100% of their costs through the service charge. The court is unlikely to correct any drafting errors in order to support the Landlord's commercial intentions.
For Tenants- the Tenant should be equally cautious of any drafting errors, at the outset, when entering into a new Lease with the Landlord.
The conclusion is that Lawyers should go through the Lease thoroughly with their clients. The service charge clause should be precisely defined depending on the intentions of the respective parties. A failure to get this right could (as was the case in Campbell) result in Litigation- a waste of time and money for both the Landlord and Tenant.
Precise drafting and establishing the parties' intentions will prevent the Lease becoming wide off the mark! It will also save a few pennies in the long run!
Please also see my LinkedIn profile: http://www.linkedin.com/profile/view?id=46743795&trk=tab_pro
Tuesday, 29 January 2013
British Land- every cloud has a silver lining
They say that every cloud has a silver lining. In the final quarter of last year the economy contracted by 0.3%. The services sector shrank. Consumer demand remains depressed as wages lag behind prices.
So what's that about good news? Well I was interested to note that British Land (BL) has posted strong growth in its recent Q3 management statement. BL's occupancy rate stood at 97%. This is important as Landlords do not want empty, unproductive, rates attracting property. Remember!
BL's Chief Executive, Chris Grigg, states that 'the business continues to perform well in markets which remain tough overall. We've continued to see good demand for our properties, which means our occupancy remains high and our developments are now significantly pre-let well ahead of completion. While we remain cautious about the near-term environment, we are confident that British Land is not only defensive in today's challenging markets but also well positioned to deliver future growth from existing and new investments.'
So no horsemen of the apocolypse yet. Let's hope that BL's bullish confidence can be maintained in the face of continuing economic uncertainty. However, for the smaller commercial Landlord the nightmare of business and empty property rates remains. Until and unless these problems, are resolved in a future budget (wishful thinking), some Landlords will see that silver cloud (and crucially that important pot of gold) sooner than others.
Please see my LinkedIn profile: http://www.linkedin.com/profile/view?id=46743795&trk=tab_pro
So what's that about good news? Well I was interested to note that British Land (BL) has posted strong growth in its recent Q3 management statement. BL's occupancy rate stood at 97%. This is important as Landlords do not want empty, unproductive, rates attracting property. Remember!
BL's Chief Executive, Chris Grigg, states that 'the business continues to perform well in markets which remain tough overall. We've continued to see good demand for our properties, which means our occupancy remains high and our developments are now significantly pre-let well ahead of completion. While we remain cautious about the near-term environment, we are confident that British Land is not only defensive in today's challenging markets but also well positioned to deliver future growth from existing and new investments.'
So no horsemen of the apocolypse yet. Let's hope that BL's bullish confidence can be maintained in the face of continuing economic uncertainty. However, for the smaller commercial Landlord the nightmare of business and empty property rates remains. Until and unless these problems, are resolved in a future budget (wishful thinking), some Landlords will see that silver cloud (and crucially that important pot of gold) sooner than others.
Please see my LinkedIn profile: http://www.linkedin.com/profile/view?id=46743795&trk=tab_pro
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