Commercial Tenant Guarantors – The Pitfalls

commercialproperty
For landlords letting commercial property, a solid guarantee is crucial; however, they can cause problems for the unwary. Julien Pritchard explains.

A solid guarantee is crucial to many commercial letting deals.  Landlords who might be reluctant to let to a little-known retailer or a start-up company into occupation of their property may agree if the tenant offers a guarantee from a stronger company or a director.  It is important that Landlords keep those guarantees in place and ensure nothing is done which may invalidate them.  The law holds traps for the unwary.

Julien Pritchard, commercial property solicitor and Partner at Pinney Talfourd highlights two areas where problems with commercial tenant guarantees can arise and explains how to avoid the pitfalls.


Variations and alterations

If your tenant’s compliance with the terms of a lease is guaranteed by a guarantor, care must be taken not to vary the lease without the guarantor’s agreement.  The 19th-century case of Holme v Brunskill makes it clear that if a lease is varied without the guarantor’s consent, they will be released from liability under the guarantee unless it is evident that the variation proposed will have no adverse effect on their interests.

Where the guarantor is willing to agree to a variation they should be asked to confirm this by formally being a party to any deed of variation. 

Unfortunately, a Landlord can unwitting agree to vary a lease informally which also has the effect of releasing any guarantor.  In the case of Topland v Smiths the landlord granted a licence allowing the tenant to alter and extend the premises it occupied even though the lease prohibited alterations.  The landlord intended this to be a one-off permission, but the tenant’s guarantor argued that the licence had varied the lease in a way that might increase the guarantor’s liability and, as it had not consented to the licence, the guarantor had been released from the guarantee.  The court agreed, leaving the landlord without the safety net of the guarantee to secure the tenant’s performance of its obligations under the lease.


Assignments

If a tenant requests consent to assigning a lease, you must check whether there is anything in the lease which requires them, and their guarantor, to guarantee the new tenants compliance with the lease.  The need to check arises because where you have a lease that was entered on or after 1 January 1996, the law states that if a tenant lawfully assigns the lease to a new tenant, the tenant making the assignment will automatically be released from their obligations under the lease, as will their guarantor.  Nearly all leases will contain such a provision.

This can cause problems where the original tenant is a subsidiary of a parent company which acts as the guarantor, and the parent company wants a provision included in the lease which allows the lease to be assigned to a different subsidiary company if this would better suit the parent company.


Example

Parent company owns subsidiary company A and subsidiary company B.  Parent company is very wealthy, companies A and B are not.  Initially, the Landlord agrees to lease property to company A on condition that the parent company acts as guarantor.  The Parent company agrees but wants to cater for the possibility that it might be more tax efficient for another one of its subsidiaries to be the tenant.  This being the case the Landlord agrees to make provision for this in the lease but only if parent company agrees to act as guarantor for any new tenant.

A term in the lease which purports to make the original tenant’s guarantor (the parent company in the example) responsible for ensuring that the new tenant complies with the terms of the lease will not be enforceable and neither will a voluntary offer by the guarantor to do this, made at the time of the assignment.  It is also not possible for the original tenant’s guarantor to agree to take the assignment themselves so that they become the new tenant.

These restrictions can cause difficulties for tenant companies who need the flexibility to reorganise themselves, often on a regular basis.

It is possible for landlords to get around the restrictions to some extent by including a provision in the lease that requires the original tenant to enter into what is known as an ‘authorised guarantee agreement’ in which they agree to guarantee the new tenant’s compliance with the terms of the lease.  The lease may also provide that if the original tenant enters an authorised guarantee agreement, their guarantor will guarantee compliance with the terms of the authorised guarantee. 

Conclusion

Commercial tenant guarantees are a complicated area and one which is constantly changing as a result of decisions being made by the courts.  It is vital to take legal advice at an early stage if you are considering using one.

If you require advice on commercial tenant guarantees or any other commercial property issue, please contact a member of our commercial property team.

This article was written by Julien Pritchard, Partner and Head of the Commercial Property Department at Pinney Talfourd Solicitors. This article is only intended to provide a general summary and does not constitute legal advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of February 2017. 
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In a spot of Big Bother - squatters and your rights

squatters
Tonight is the final episode of this year's Celebrity Big Brother, and once again we'll hear those infamous words - "who goes? You decide". But is it all that easy to evict when faced with 'real' squatters?
 
The annual finale of Celebrity Big Brother is imminent; this year, we have witnessed various large personalities pass through those infamous eye-adorned doors. And, as always, 80% of the housemates have been evicted as part of a UK-wide public voting system, leaving us with 7 for this series’ climax. The notorious catchphrase rings true - who goes? You decide.

Does this liberty of voting and evicting, however, translate when faced with real-world squatters in non-residential properties?

Squatters and Their Rights

Up until recently, squatting in England and Wales was generally viewed as a civil, rather than criminal matter. In September 2012, a new piece of legislation made it a criminal offence to trespass in residential properties with the intention of living there. However, the legislation only covers residential properties, so what do you do if squatters gain access to a commercial or non-residential property?

Squatting in non-residential buildings is still regarded as a civil matter and resolution usually means resorting to the civil courts. In essence – it is not a criminal offence for someone to enter a non-residential property without the owner’s consent or authority.

The good news for property owners is that it is still not easy for a trespasser to acquire ownership of a property, or “squatter’s rights” as per common parlance. A squatter can only gain title to a property if the squatter has excluded the world at large from the property, including the owner, for a period of 10 years (12 years if dealing with unregistered land).

Squatters and Your Rights

As mentioned above, squatting in a non-residential property still isn’t looked upon as a criminal offence. The police take can action on your behalf if squatters commit other crimes when entering or residing in your property. These can include:

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Autumn 2016 Statement - Commercial updates

EdwardG
Edward Garston talks about the mixed business reaction to the Autumn Statement amongst the business community.

Although there was much from Chancellor Hammond’s first Autumn statement to offer the business community some festive cheer, there were equally plenty of measures which may not be so warmly received.

A headline grabbing £1.1bn investment into transport networks, including £220m for traffic easing measures on key roads will certainly be welcomed by all those struggling with delays and congestion. Other highlights include an extra £110m funding for rail, and a commitment for new road building in the Oxford to Cambridge corridor. Of particular benefit for the haulage industry, the Chancellor announced a freezing of fuel duty for the seventh consecutive year at a time when a fall in Sterling is already feeding through to higher pump prices.

Meanwhile, the country’s digital infrastructure is set to be enhanced by generous tax allowances on both 5G, the next generation of mobile communications, and a new fibre broadband infrastructure. With business increasingly moving online this move is set to reap rewards across all sectors and keep the UK attractive for overseas investment.

This was an autumn statement which clearly had one eye on the post-Brexit business environment. In view of this, the Chancellor attempted to dampen fears that a significant number of businesses will relocate by underlining the government’s commitment to cut corporation tax from 20% to 17%. It is hoped that keeping business taxation competitive will help the UK be seen as an attractive place for businesses to locate.

But there were also some less business friendly measures. The increase in the national living wage, estimated to be worth £500 to a full time worker, will increase costs for employers. This will have a wide ranging impact, but those sectors most likely to feel the effects range from catering and hospitality, through to the healthcare industry.

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Alterations to your property - what to do when you leave

AndreaH
How far can a commercial tenant alter a property? That depends on if it is classed as a fixture or a chattel?
 
A recent case has highlighted the need to ensure a distinction between alterations which are tenant’s fixtures and alterations which are tenant’s chattels.

The case involved partitioning which was installed by the tenant during initial fit out works in accordance with a licence to alter. Both the lease and the licence to alter required the Landlord to give notice of any reinstatement the Landlord reasonably required before the end of the term. The tenant exercised a break option with 2 pre-conditions: 6 months’ prior written notice and vacant possession.

The Landlord did not serve a notice of his requirement to reinstate the premises. The case turned upon whether the partitioning alteration was a fixture and therefore formed part of the premises.

The partitioning was not carried out in accordance with the specification attached to the licence to alter and therefore the partitioning was in breach of the licence. The validity of the licence was conditional upon compliance with the condition on which the licence was given. As the conditions were not met, the partitioning became unauthorised works and therefore should have been removed automatically by the tenant. This meant that even if the partitioning was not a tenant chattel, the tenant should have removed it and failure to do so meant vacant possession had not been given.

Based upon expert evidence it was found that the partitioning was demountable and therefore the tenant did not in fact give vacant possession.

On sending or receiving a break notice, parties to the lease should review the lease and all supplemental documents (including licences to alter) carefully.

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Airbnb – Brainwave or Breach of Covenant

airbnb
With the rise of short term room lets on sites such as Airbnb we look at the pitfalls of 'hosts' not doing their homework on covenants.
 
The success of companies like Airbnb rely heavily on the availability of local ‘hosts’ willing to allow short term lets of their properties, whether these are commercial or residential. Their website boasts over 2 million listings worldwide including 1400 castles!

Often the host will be staying in their property when their guests arrive.  Fundamentally the host makes money by letting spare room(s) and the occupation by guests is temporary and without exclusive possession so there is no question of a traditional landlord and tenant relationship being created.  Prior to the Deregulation Act 2015 the use of a property in any of the 32 London Boroughs as temporary sleeping accommodation required the owner to make an application for change of use planning permission.  The relaxation of this planning requirement enabled homeowners to advertise their properties for let on the internet or holiday home swap sites.  

When does it become a business?

But what of those hosts who let their whole properties for perhaps days or weeks at a time in return for payment from their guests who book through a sophisticated online booking system. Could this be considered a business?

It would appear so considering the usual meaning of the word – to carry out a commercial activity with a view to making a profit. 

Brainwave - If of course you have somewhere else to stay when a guest wants to pay to stay in your property. But have those hosts reviewed their title deeds?  A number of freehold titles contain restrictions on carrying on a business at the property and in commercial leases there is usually an absolute prohibition on the use of the premises to provide sleeping accommodation.  Restrictive Covenants attach to the land and not the owner so even a freehold owner of land could be stopped from using their property in this way if there is a beneficiary of the restrictive covenant who wants to enforce it. 

A recent case

The Upper Tribunal (Lands Chamber) recently heard an appeal from the tenant of a residential leasehold property held on a 99 year lease when the First Tier Tribunal allowed the Landlords application for determination of the lease on the basis of a breach of lease covenants because the owner had been advertising her property for short term letting on the internet.  The covenant to be observed by the tenant in the lease read “Not to use the Demised Premises or permit them to be used for any illegal or immoral purpose or for any purpose whatsoever other than as a private residence.” 

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Capital allowances Seminar - Monday 3 October

capitalallowances2
You are invited to a seminar on Capital Allowances and Tax Planning for Landlords on Monday 3 October, in collaboration with The Bailey Group.
Pinney Talfourd are pleased to announce that Andrew Shepherd of The Bailey Group will be presenting a seminar at our Brentwood office in October. We would be delighted if you could join us.

Capital Allowances and Tax Planning for Landlords

An overview of how to make a successful claim for commercial property owners. How to mitigate the effect of proposed changes to buy-to-let Landlords tax relief. Andrew has worked with some of our clients already and has assisted them by finding huge tax savings.
 
Capital Allowances are a niche tax specialism and many general accountancy firms will not have the in-depth knowledge, expertise, or experience and frequently overlook a wide range of commercial property fixture and fitting detail that can be pooled to make an often sizeable legitimate claim for tax relief.
 
In addition to this niche service The Bailey Group are looking at new ways in which Landlords of residential property may hold their investment property to combat the proposed changes to mortgage interest relief.  Likewise, there are new but proven ways in which Landlords can arrange their affairs that reliably reduce income tax,  mitigate CGT and stamp duty, whilst at the same time significantly reducing inheritance tax, all insofar as the law and HMRC practice allow.
 

Monday 3rd October

Seminar and Q&As 5 - 6pm
Followed by drinks and networking 6 - 6.30pm

Pinney Talfourd, New North House, 78 Ongar Road, Brentwood, CM15 9BB

 

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Free Business Legal Review Service

commercialreview
We are offering a free business legal review service to all Essex businesses to ensure your company is legally sound and resolve issues effectively.

We are delighted to announce that our Commercial Department has been recommended yet again by Legal 500 UK 2016. The Legal 500 rankings are carefully selected after rigorous assessment and provide a guide to the top legal providers across the UK. 

We would now like to give you the opportunity to find out why we have been recommended and how your company could benefit from our high quality legal support and advice.

  • Employment contracts and policies up to date?
  • Terms and conditions up to date?
  • Problems with unpaid bills?
  • Potential business disputes?
  • Considering expanding or moving premises?

Act now and take advantage of our free business legal review service. Simply call 01277 211 755 or email This email address is being protected from spambots. You need JavaScript enabled to view it. to arrange a review.

We can visit your premises or you can visit one of our offices to undertake a strings free review of your legal needs and requirements.

Our knowledgeable and efficient lawyers are always looking out for clients best interests and our large team of specialists work together to advise on all commercial matters including:

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Legal 500 UK recommends our commercial work

Legal 500 UK recommends our commercial work
Pinney Talfourd has been ranked by Legal 500 UK as a leading firm in the Corporate Commercial and Commercial Property categories.

We are delighted to announce that our Commercial Department has been recommended yet again by Legal 500 UK 2016 in the following rankings:

Legal 500 UK praised Partner and Head of Department Julien Pritchard, saying his team “gets the job done efficiently, no matter how complicated.’”

 

They highlighted a number of notable cases including:

  • Dismantling of a RITA scheme with complex SDLT issues, application of reliefs and multiple transfers with a value in excess of £30million.
  • Private equity purchase of £11 million commercial property and related landlord and tenant advice.
  • Corporate restructure of a significant and established local business including partnership to company transfer, sale of a commercial property and refinancing.
  • Advising in relation to the acquisition of a service provider including advice in relation to warranties, indemnities and employment related issues. Consideration payable for shares was circa £3million.
  • Advising in relation to the acquisition of an underwriting agency including consultation with the Takeover Panel, deferred payments, earn-out and employment related issues.

The Legal 500 rankings are carefully selected after rigorous assessment and provide a guide to the top legal providers in the UK.

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Terminating a commercial lease

leasesign1
Getting ready to leave? We explain what should be done when preparing to leave a property once a commercial lease ends.
 
When a lease is nearing the end of its contractual term or a break clause is being exercised, the lease should be read and construed as a whole, particularly where clauses are interlinked e.g. alterations and yielding up.

A recent dilapidations case involved the yielding up of the premises by the tenant where carpet tiles had been replaced in strips rather than tiles. The tenant served a break notice but the landlord did not reply (there is no obligation for the landlord to do so).

After the lease had ended, the parties were unable to agree a figure for the dilapidations liability. Following a court hearing it was held that the re-carpeting works had not been carried out in accordance with the lease terms. On appeal, the tenant argued that the carpet tiles were a tenant’s fixture and the court agreed – carpet tiles were a fixture and the alteration was a permitted alteration. The new carpet was not out of repair at the end of the lease and any works would be carried out by the landlord once a replacement tenant had been found. The tenant should not need to finance any void period of the premises once compensation had been paid for the tenant’s breaches of covenant.

Some leases e.g. new or re-furbished premises have a specification attached. Clear wording in such a lease makes it easier to give advice and ensures that each party are clear about their obligations.

What does this mean?

If the parties had followed best practice on terminal dilapidations, discussions about the carpet would have taken place long before lease expiry. More importantly, a party who refuses to engage in the form of dilapidations protocol is running the risk of being penalised on costs.
 

More information

Contact our Commercial Property Department for further information on our services. Contact 01708 229444 or This email address is being protected from spambots. You need JavaScript enabled to view it. to speak to a member of the team at any of our offices in Brentwood, Hornchurch and Upminster. We are also able to see clients in Leigh on Sea.


The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at August 2016.

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Documenting a commercial tenancy

leasesign1
How important is it to document a commercial tenancy? The simple answer to this question is "very!" Keeley Miller explains why.


All of the fundamental terms of a commercial tenancy are contained in the document itself, unlike residential tenancies which have a range of legislation to protect the rights and well being of the Tenant, commercial Tenants are deemed to be capable of looking after themselves and much less protection is implied for the Tenant.

Heads of Terms

All of the agreed terms should be documented right at the outset in the Heads of Terms, even if the parties are not using land agents or professional consultants to broker the deal. A lease can take several weeks to conclude and it is often necessary to refer back to heads of terms to remind the parties what was agreed at the negotiation stage.

The lease, once drafted and entered into, will deal with a range of issues such as how much rent is paid, when, to who, can the rent be increased, who insures, who repairs etc. The lease will also cover a range of more unusual circumstances such as what happens if the building burns down or there are issues with the condition of the building. If you ever ask a solicitor what happens if… in relation to a commercial lease the answer will invariably be, what does your lease say?

It is often the case that the parties are keen for the lease to be completed as soon as possible after heads of terms are agreed. I have completed a lease of part of an office building in one week but that was an exception and not the norm! It is imperative that Landlords do not allow eager Tenants into occupation until a lease has been completed, or if they do want to allow a Tenant into occupation early it is essential that they instruct their solicitor to prepare a Tenancy at Will or a Licence to Occupy which will bridge the gap between agreeing heads of terms and completing a formal lease.

Licence to Occupy

A Licence to Occupy is simply a permission granted by the Landlord to the eager Tenant and it records the extent of the Tenant's rights in relation to their use of the property. In the event the lease negotiations fail, the Landlord can simply withdraw their permission and bring the Tenants occupation to an end with the minimum of fuss.

If, in the same scenario, there was occupation by a Tenant without a written licence or a written Tenancy at Will, the Landlord may have real difficulty recovering the property quickly. Depending how the long the status quo is allowed to continue the Landlord may even inadvertently create a protected tenancy which allows the Tenant to stay in the property.

More information

It is in the interest of all parties to have the benefit of a considerate, negotiated and properly drafted agreement which removes all doubt in the event there is an issue in the future.

The Commercial Property team at Pinney Talfourd Solicitors can assist with all aspects of commercial leases. Please contact any member of my team on 01708 229 444 and we will be happy to help. Alternatively, click here to find out more about our commercial property services.
 

This article was written by Keeley MillerCommercial Property expert at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter.
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Landlords - at your tenant's service?

propertyspotlight
What should a landlord do if faced with a tenant not paying his or her service charges?

The landlord may well think that if the tenant is not prepared to pay then why should he or she receive the service? However, landlords are advised to think again if considering cutting off services to their tenants.

A recent High Court case, Winchester Park Ltd v Sehayak, decided that a landlord was not entitled to shut down a lift service in a building because the tenant had failed to pay his service charges.

The tenant was a leaseholder in a fairly upmarket block of flats. A dispute had arisen over the service charges and this had rumbled on for some time. The tenant was refusing to pay the service charges. The landlord thought it would be a great wheeze to “convince” the tenant to pay by shutting down the lifts which serviced the tenant’s flat. The landlord clearly believed that the prospect of climbing the stairs would be sufficient to persuade the tenant to pay.

However, the tenant had other ideas. So, eschewing the health benefits of the increased exercise he would receive from using the stairs, the tenant applied to Court for an injunction. The injunction was dealt with prior to the hearing because the landlord restored the service, but the Court still needed to decide whether the landlord was entitled to take that action in settling the issue of who paid the costs. The Court found against the landlord and determined that the landlord was wrong to stop providing the lift service.

The law in this area is complicated and even if your lease makes the provision of services conditional on payment of service charges by the tenant you may still be legally required to provide services even if the tenant doesn’t pay. It is important for landlords to seek legal advice before taking any step to cut off services to your tenant because you could end up with a significant costs order against you.


More information

The Dispute Resolution Team at Pinney Talfourd Solicitors in Essex can assist with all aspects of property litigation work. If you have any queries relating to a property litigation please contact any member of my team on 01708 229 444 and we will be happy to help. Alternatively, click here to find out more about our services.
 

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter.
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Brexit and the Property Market

brexit
The EU referendum is fast approaching with the vote due to take place on 23rd June 2016. Julien Pritchard considers what potential effect the vote will have on the property market.
 
Unless you do actually live in a cave it is reasonably hard to avoid this topic at present with many arguments being put forward by both the remain and leave camps.

Before we get started please let me state categorically that this article is not a statement either in support or against the “Brexit”. I am afraid you will have to form your own opinions on that particular issue. However, I am willing to consider the potential effect of the vote on the property market.

The simple fact is that the property market in the UK likes one thing and that is stability. The reality is that whether we as a nation vote to remain or leave we are in a period of instability. Many large organisations have considered this issue in great detail. For example, a KPMG poll of 25 global real estate investors with assets under management of over $400bn has revealed that two thirds believe a Brexit would result in less inward investment into UK property and property companies.

The estate agency Savills has warned that the UK residential and commercial investment markets are “subdued”. The Royal Institution of Chartered Surveyors has voiced a similar opinion stating that the current vote could result in “a degree of uncertainty for buyers that may negatively affect some elements of the market”.

It is recognised that general elections tend to paralyse house sales and recent research from Hamptons International and Jefferies demonstrated that property transactions tend to slow ahead of a general election. There is no reason not to think that a vote on an issue as large as Brexit will have similar effect.

Whatever the outcome of the referendum we are entering a period of uncertainty and that cannot be good for the property market. If we do leave then that period of uncertainty may be extended, however, only time will ultimately tell what the long term implications are and whether any potential short term loss is offset by a future gain.


More information

The Commercial Property Team at Pinney Talfourd Solicitors in Essex can assist with all aspects of commercial property work including refinance, sales, purchases, lettings and licences for alteration, assignment etc. If you have any queries relating to a commercial property please contact any member of my team on 01708 229 444 and we will be happy to help. Alternatively, click here to find out more about our services.
 

This article was written by Julien Pritchard, Head of the Commercial Property Department at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter.
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Frankies Wine Bar is under new ownership

frankieslogoweb
Frankie’s Wine Bar in Hornchurch is under new management thanks to our commercial team and business is booming already.

Spring is in the air and with more opportunities for socialising on the horizon, this month we take the opportunity to shine the spotlight on Frankie’s Wine Bar, an established wine bar in Hornchurch town centre.

Running a successful wine bar is not easy – most of us have been to one but not everyone knows how to keep their customers happy. Frankie’s new owner Paul Elbourne knew just what to do though, after working for a number of years as a member of staff at the popular local venue.

The previous owner had mentioned that she wanted to retire from the business and so Paul decided to purchase the business lock stock (and barrel!).  The Commercial Department at Pinney Talfourd were delighted to provide legal advice and assistance to Paul to achieve his ambition.

The Legal Work

The commercial property team and company commercial team worked together advising Paul upon a new lease and on the purchase of the business. He had two options; either to assign the lease, or the landlord could surrender the current lease and grant a new one to Paul. We also dealt with the purchase of the new business simultaneously.

This was done without a hitch and Paul’s hard work and perseverance has turned his vision into reality and, following completion of the matter in November last year, he plans to expand the existing business by offering the venue for private hire including lunches, seminars and parties.  He has also launched a website to keep clients up to date with activities; www.frankieswinebar.com

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SDLT on commercial property changes in the budget

Julien-Pritchard
Surprise new SDLT rate changes for commercial property announced in 2016 budget. Julien Pritchard reviews today's announcement.
It came as a complete surprise to all property professionals that George Osborne announced a change to the rates of Stamp Duty Land Tax (SDLT) for commercial property in the 2016 budget on 16 March 2016.

The measure will have effect on and after 17 March 2016. Where contracts have been exchanged but transactions have not completed before 17 March 2016 purchasers will have a choice of whether the old or new structure and rates apply.

This measure does not apply in Scotland as SDLT was devolved to Scotland on 1st April 2015. This measure will apply in Wales until 1 April 2018, when SDLT will be devolved to Wales.

The measure changes the rules for calculating SDLT charged on purchases of non-residential properties and transactions involving a mixture of residential and non-residential properties. At present, for purchases of freehold, the assignment of an existing lease and for the upfront payment (premium) on a new leasehold transaction, SDLT is charged at a single percentage of the price paid for the property, depending on the rate band within which the purchase price falls.

On and after 17 March 2016, SDLT will be charged at each rate on the portion of the purchase price which falls within each rate band. The new rates and thresholds for freehold purchases and leases premiums are:

Transaction Value Band RatePercentage
£0 - £150,0000%
£150,001 - £250,0002%
£250,000 +5%


The measure may actually be good news for smaller commercial property transactions, However, it will prove more costly for larger transactions and rents, particularly in the city. The longer term impact of the measure will have to be assessed further down the line.

One commercial property client, Sisu Properties, would have been affected by the changes had it not been for the quick reaction to the news by his solicitor Keeley Miller on the day of the announcement. The CEO commented "I am so impressed that you were able to react quickly to the surprise announcement in the budget yesterday and pleased to save £40k in tax for the company." 

 

Find out more

For advice on the implications these changes may have on your commercial property transaction contact Julien Pritchard on 01708 229444 who will be happy to explain the changes in more detail.


This article was written by Julien Pritchard, Head of our Commercial Property Department at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at March 2016.

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2016 and the commercial property market

Julien-Pritchard
Head of Commercial Property, Julien Pritchard, provides a snapshot of what lies ahead for commercial property clients.


A look back at 2015

2015 was, by all accounts, a good year for commercial property with a good level of recovery in the rental market.

Unsurprisingly central London offices have led the upswing. However, several areas including Brighton, Bristol, Cambridge, Manchester, Leeds and Oxford have also seen a healthy increase in office rents. Industrial rents have also risen in many locations, fuelled in part by growing demand from online retailers and parcel couriers. Retail has not fared as well. Again London and popular tourist locations continue to perform but outside of those hotspots the retail world is still adjusting to a shift in consumer spending habits.

2016 looks positive for the commercial property market

There is a general feeling of optimism for the coming year. There is a consensus that UK GDP will grow by 2.25 to 2.5% through 2016 to 2017 and this can only be good for the markets. It is still far from simple to obtain finance on commercial development sites and with many sites being snapped up for residential development the supply of new commercial sites may decrease which should increase the demand/ rental costs for existing commercial units.

The mantra “location location location” is as true for commercial property as it is for the residential sector and the right space, in the right place with the right infrastructure and services should garner good returns for commercial property investors. Prudent landlords may well consider spending their hard earned money on refurbishing existing space to make it more attractive to tenants and securing a higher income per unit rather than investing in additional secondary or tertiary space.

Are you moving in 2016?

The Commercial Property Team at Pinney Talfourd Solicitors in Essex can assist with all aspects of commercial property work including refinance, sales, purchases, lettings and licences for alteration, assignment etc. If you have any queries relating to a commercial property please contact any member of my team on 01708 229 444 and we will be happy to help. Alternatively, click here to find out more about our services.
 


This article was written by Julien Pritchard, Head of the Commercial Property Department at Pinney Talfourd Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at January 2015.
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Legal 500 UK 2015 Results

Pinney Talfourd have been recommended in an outstanding eight categories by the Legal 500 UK 2015.
Pinney Talfourd LLP Solicitors have been recommended yet again when the Legal 500 UK results were published this week. These lists are carefully selected after rigorous assessment and provide a guide to the top providers in each region.



Pinney Talfourd is now recommended for excellence in the South East/ Essex area for:
Partner Stephen Eccles is praised for his ‘ability to grasp the key issues in complex cases’. His team is adept at handling shareholder, partnership, banking and director disqualification cases. The firm is also described as ‘streets ahead in terms of customer service’.

The firm is also described as ‘a reliable and proactive outfit’ that acts for small private owner-managed businesses through to large plc companies. Julien Pritchard is described as ‘an asset to have on side’.

Managing Partner, Philip Cockram said: "We are delighted that our hard work has been recognised yet again in such a prestigious listing. I am very proud of the team here and the fact that individuals have been singled out for their excellent work just goes to show that we are meeting our objectives of a first class service with first class results.”

If you would like to find out more about Legal 500 UK please This email address is being protected from spambots. You need JavaScript enabled to view it. or click on any of the listed categories to find out more about the teams.
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Case Study: Poppetts Day Nursery expansion

poppetts
We showcase our property work for one of our clients operating in the education sector.
 
September is the start of a new school year and this month we take the opportunity to shine the spotlight on Poppetts Day Nursery.

Poppetts Day Nursery is an independent pre-school situated within the grounds of the Long Ridings Country Primary School, Brentwood.

Running a nursery is anything but child’s play; careful consideration must be given to compliance with Ofsted regulations, financial management, staff training and retention, safe-guarding and child protection as well as providing a range of resources for children to play with 'whilst making the child's day educational yet fun!!

Poppetts Ltd owners, Jessica Bonnett and Karen Gilkes, have been so successful in running their business that they were in a position to consider expansion of their setting. We were delighted to provide legal advice and assistance to the company to achieve their ambitions and we entered into negotiations with the local authority Landlord for a building lease and temporary licence to enable the business to continue to offer outstanding care to their existing children and their parents' whilst a new building was constructed on a larger site within the school grounds.

We worked closely with our client’s architects, the Landlords legal team and their agents and even contacted the Department for Education as their consent was required to the grant of the new lease even though the new building is on the same land (albeit a slightly larger parcel of land) as the old building.

Our client’s hard work and perseverance has turned their vision into reality and in October this year they plan to open their new building which will increase their intake by 50%. We wish Poppetts Ltd every success with the operation of their business.

If you are considering expansion or relocating your business please contact our Commercial Property Department to find out how we can help you. Call 01708 229 444 or click here to visit their contact page.


This article was written by Keeley Miller, an Associate Solicitor in our Commercial Property Department at Pinney Talfourd Solicitors. This article is only intended to provide a general summary and does not constitute legal advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at September 2015. 
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1661 Hits

Walking out of a commercial lease

leasekeys
Make sure you get advice before signing on the dotted line - walking out of a lease may not be as easy as you think.
As a tenant, there are many reasons why you might wish to terminate a commercial lease. Your business may not be performing as well as expected, your circumstances may have changed or new opportunities may be presented to you. Hopefully the reason you need to leave is that your business has done so well the leased premises are too small and you need to expand! The question then becomes is there anything you can legally do to get out of your existing lease?


Before you sign your lease

Ideally your planning should start before you ever sign a lease. You should factor an "early exit" into your lease negotiations and have provisions inserted that allow you to walk away on set anniversaries or in the event that certain circumstances come to pass.

Alternatively you may be wise to take a short term lease for one or two years with an option to renew or with the protection of the Landlord and Tenant Act 1954 (which gives statutory rights to renew).

The important point is that the options work in your favour and you have been fully advised on the terms of any breaks or options to renew to ensure they can be validly exercised because whether a tenant has complied with the terms of break clause is often litigated.


Getting out of your lease early

Let's assume you want to get out of your lease before the term expires and you have no provisos for early termination.

One choice is to simply ask your landlord to terminate your lease. They might be willing to do so if the rental market is good and the space can be easily relet, perhaps for a higher rent. If that's the case, good for you. But that probably won't happen.

Another possibility is to approach your landlord about a buy-out. While it's true that if your lease still has a long time to run, a buy-out may be difficult to negotiate. If your landlord believes he'll be able to re-let your space without too much trouble, he may agree to let you out of the lease if you pay some consideration. Or you could offer to let him keep part or all of your security deposit in exchange for letting you out of your lease.

In the event the Landlord does let you go either by agreement or for a fee you ought to have put in place a properly drafted deed of surrender, you may not be released from the lease covenants unless this aspect of the transaction is dealt with. You should also bear in mind that you will be liable for the rates until the lease is properly surrendered and you can prove that fact to the local authority.

You could just walk away from the lease, but if you do that, the tenant who signed the lease (most likely you) and any guarantor would be liable for the rent for the rest of the lease or until the landlord finds a new tenant. You would also be liable for any want of repair and the cost of getting the property into marketable decorative order and this can prove very costly. If you did want to walk away, then you should attempt to hand the keys back to the Landlord and make it unequivocal that you are handing possession back to the Landlord. The likelihood is your Landlord would not accept possession if it is savvy, but there is a chance that the Landlord could accept such a surrender of the property.


Get your lease reviewed

When it comes to leasing space, the smartest thing you can do is to make sure you've got your bases covered before you sign on the dotted line. That way, you've got contingency plans in place no matter how successful your business  is.

Pinney Talfourd's commercial property solicitors can advise and review your lease before you commit, ensuring that you don't get caught out. Contact the team for more information.


This article was written by Julien Pritchard, Partner and Head of the Commercial Property Department at Pinney Talfourd Solicitors. This article is only intended to provide a general summary and does not constitute legal advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at July 2015.
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741 Hits

New leases; things to consider

leasesign1
It’s that time of year when the issue of moving to new premises may come to the fore. We consider some headline issues on new commercial leases.
 
Summer’s officially here and things are starting to finally heat up. You may want to move premises, but when there is the business to take care of, the finer detail of entering into a new lease is the least of your concerns.

You have found the ideal premises in the ideal sunny location but before you sign on the dotted line, take a few minutes to cool down and consider some headline issues which often arise and will affect your occupation of the premises, such as:

 

  • “Contracting out of the 1954 Act” – The Landlord and Tenant Act 1954 gives the tenant a right at the end of their lease to renew. If you are “contracted out” you will not have an automatic right to renew your lease when it expires.
  • “Alienation” – This is a general term allowing the tenant to dispose of or sell their interest either in part or whole. Generally speaking, there are two main ways: by assigning a lease to a new tenant i.e. transferring the lease, or by sub-leasing i.e. creating a new lease for a term shorter than the original lease.
  • “Repairs” – Commonly, the tenant will be responsible for internal repairs. However, if there are any problems before the start of the lease, you will need to agree who is going to deal with the works and how. The cost of repairs can run into thousands of pounds and if you don’t comply the landlord can sue the tenant for damages. Most tenants think they are responsible for maintaining the premises in the condition it was at the start of the lease. More often than not a tenant is responsible for keeping and handing back the premises in good condition regardless of the condition at the start of the lease. This may lead to an agreed “Schedule of Condition”
  • “Schedule of Condition” – Frequently, a tenant wishes to improve the premises and may want a schedule of condition. This is a report, prepared by the tenant but agreed with the landlord to show the condition of the premises at the start of the lease. It is included as part of the lease to ensure that the tenant is only obliged to maintain the property in the condition it was at the start of the lease
  • “Service charges” – These cover anything from utilities, insurance, the cost of maintenance of shared areas e.g. toilets/kitchens of a building, to accessways/hallways/outside space and other common parts of a shopping centre or an industrial estate. A tenant should negotiate service charge obligations which are appropriate to the term of the lease and, significantly, the condition of the premises
  • “Stamp Duty Land Tax (SDLT)” Lastly, be mindful that Stamp Duty may well be applicable depending upon the rent payable and the term of the lease. 
The above is only a very general summary of some of the fundamental terms of a lease. Please contact our Commercial Property Department for specific advice.


This article was written by Andrea Harley, Associate Solicitor in the Commercial Property Department at Pinney Talfourd Solicitors. This article is only intended to provide a general summary and does not constitute legal advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at June 2015. 

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478 Hits

Commercial Property in the General Election

propertyspotlight
The promise of betterment appears as a general manifesto pledge for each of the political parties. We take a look in more detail.
 
How would their policies affect property investors and commercial tenants if the policies were implemented as the candidates would have us believe?

There is a chronic shortage of housing stock in the south east which has had the effect of inflating property prices beyond the reach of the average house-buyer. Investors with residential property portfolios are finding it harder to buy property due to the lack of supply whilst at the same time rental income from such portfolios has soared.


What are the parties promising?

All of the parties pledge to introduce policies to alleviate the problem of house buying for the ordinary buyer. We have a quick look at the main parties' promises:
  • The Conservative Party propose to extend the right to buy to housing association tenants, to continue offering funding with the Help to Buy scheme and a new ISA for first time buyers with a contribution to the fund from central government
  • The Labour Party intends to legislate to prevent excessive rent rises and support builders in their goal to provide 200,000 new homes a year by 2020 and they have announced the intention to scrap SDLT for first time buyers up to a value of £300,000 until 2018 (although whether this will in the short term slow down the housing market remains to be seen)
  • The Liberal Democrats set an ambitious goal of 300,000 new homes a year delivered through prioritising planning applications for brownfield sites.



What does the industry think?

The British Property Federation has updated its 3R’s manifesto promoting the commercial property industry. The 3R’s represent Regeneration, Real Estate Investment Trusts and Reasonable Tax and Regulation and these basic 3R’s are still key to their 2015 manifesto.


The BPF calls upon the next government to:

  • reduce bureaucracy to enable regeneration initiatives to be realised
  • establish a cross departmental strategy for the private rented sector to realise the potential of the contribution which the private rented sector can make to solving the shortage in housing supply
  • to review council tax
  • to review business rates
  • to review the Community Infrastructure Levy.  

The next government has a lot of work to do to improve the housing market and the built environment to ensure that real estate continues to contribute to economic growth in the UK.


Your property portfolio

Please contact us on 01708 229 444 for more information on any of the new policies that come into place. Visit the Commercial Property page to find out more about our services.


This article was written by Keeley Miller, Associate Solicitor in the Commercial Property Department at Pinney Talfourd Solicitors. This article is only intended to provide a general summary and does not constitute legal advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at May 2015.
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