Commercial Lease Heads of Terms: what to look out for?

Commercial Lease Heads of Terms: what to look out for?
By the time solicitors are instructed on behalf of a tenant in relation to a new commercial lease, heads of terms have often been agreed between the parties. However, this means that they have missed a vital chance to negotiate specific terms within the lease which may be to their advantage. By seeking professional legal advice BEFORE agreeing term...
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How does Primark hold the key to retail rents?

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Last month our commercial property team looked at Arcadia's attempt to negotiate rent reductions with the help of CVAs. Since then, more high street retailers are following suit and we look at what the future holds for commercial leases. Our article in July 'Arcadia propose CVA to their landlord Intu' discussed the difficulties faced by Arcadi...
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352 Hits

Al fresco dining on the high street

Al fresco dining on the high street
Summer has finally arrived and restaurateurs with the benefit of a pavement licence are likely to see an increase in trade as they offer diners the opportunity to sit outside to enjoy the warmer weather. However, there are certain considerations to take note of when applying for any licence, including whether your property's lease actually allows f...
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142 Hits

“What actually amounts to Practical Completion?” Mears Ltd v Costplan Services (South East) Ltd

“What actually amounts to Practical Completion?” Mears Ltd v Costplan Services (South East) Ltd
If you take a lease of a 'work-in-progress' with no completion date, you may rely on 'practical completion'. But when a builder says that works are 'practically complete' and you disagree, it could end up in court... Mears Limited entered into an Agreement for Lease with Cost Plan Services (Southeast) Limited to take a 21-y...
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Practical Completion in Construction Contracts and their affect on Agreements for Lease

Practical Completion in Construction Contracts and their affect on Agreements for Lease
Practical completion is generally the point at which an 'expert' will confirm that a building project is complete, except for minor defects that can be put right without undue interference to an occupier. An Agreement for Lease will rely on this date and problems often arise when deadlines are not met or the level of acceptable 'minor defects' is d...
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298 Hits

Arcadia propose CVA to their landlord Intu

Arcadia
Despite describing themselves as a global fashion force, Arcadia, owned by Sir Philip Green, has approached its creditors, including Intu Properties plc, with company voluntary arrangements in a bid to stave off collapse. But what exactly is a CVA and what impact does it have on landlords and tenants?   Arcadia owns fashion retailers Tops...
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234 Hits

Business Rates - What’s the problem?

Business Rates - What’s the problem?
The subject of business rates has been a hot topic in the news recently, with PricewaterhouseCoopers reporting that 1,123 stores have vanished from Britain's top 500 high streets in the first six months of this year. As a result, a recent conference on business rates has called for a shake-up. But how?       What are business rates? ...
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209 Hits

The costs of commercial leases: is it up for negotiation?

The costs of commercial leases: is it up for negotiation?
The Tenant Fees Bill has shaken up the residential property market but the position is different in the world of commercial property.  So, who should pay the costs incurred in granting a lease? Residential tenants were liable for many fees until very recently and the answer used to also be the commercial tenant but customs have already changed...
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The Accidental Landlord

The Accidental Landlord
Stephen Eccles , our Litigation Partner, considers how a property owner can be caught by legislation relating to commercial property . ​ We have recently encountered a number of cases where a landlord has allowed a tenant into possession of commercial property in exchange for rent and has then been alleged to have created a 1954 Act Business Tenanc...
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1586 Hits

Client Spotlight: Celebrating 5 years with another property completion

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This week marks the fifth anniversary of Pinney Talfourd's appointment as solicitors for Sisu Advisors ; a commercial real estate investment company with an impressive portfolio of Grade A office buildings across the UK. ​ With a further completion this week, Vesa Poikonen, the founder and CEO of Sisu Advisors , visited the firm's office for a cele...
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523 Hits

Commercial Property, Frustration and Brexit

Commercial Property, Frustration and Brexit
The UK's return of a vote in favour of leave in the referendum on its future relationship with the European Union had an impact on the latter's decision as to where its European Medicines Agency should be based and, having entered into a lease for a property based in the United Kingdom some 21 months prior to the result, wished for it to be re...
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483 Hits

What can You do if your Commercial Tenant wants to Leave?

What can You do if your Commercial Tenant wants to Leave?
​ Your tenant approaches you with the news that they have found a new tenant for your property and that they wish to vacate – quickly. Their business is not going as well as anticipated and they express concerns about being able to continue to pay rent. The prospective tenant is keen to move in and your tenant obviously keen to move on, with one ey...
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Minimum Energy Efficiency Standards and Commercial Property

Minimum Energy Efficiency Standards and Commercial Property
Energy used to power non-domestic buildings in the UK accounts for 12% of the country's carbon emissions. It represents one of many challenges our government faces if we are to meet our legally binding carbon targets in 2025 and 2030 under the Paris agreement or, further, the government's previously pledged (but not yet binding) target to reduce ou...
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608 Hits

Entire Agreement Clauses and Misrepresentation

Entire Agreement Clauses and Misrepresentation
On 20 March 2017, Michael Brindle QC gave a judgement in the High Court Chancery Division in the case First Tower Trustees Ltd and another v CDS ( Superstores International ) Ltd concerning entire agreement clauses, common in both commercial property contracts and commercial leases. It related to a failure by the landlord to update tenant on the po...
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465 Hits

CPSEs and Failure to Communicate

CPSEs and Failure to Communicate
Many landlords view Commercial Property Standard Enquiries with a sense of dread. However, they are integral and failure to keep them updated can cause issues. It can appear unreasonable for the landlord to have to complete lengthy replies to enquiries for a simple lease transaction. Many solicitors, including ourselves, regularly assist landlords ...
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916 Hits

HMO Landlords in Havering Beware

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From March 2018, there will be additional requirements which you need to be aware of if you are letting a House in Multiple Occupation (HMO) in the Havering borough.

Some of you may be wondering what an HMO is? Put simply, your home is a standard HMO if both of the following points apply:

  • At least 3 tenants live there, forming more than 1 household
  • You share toilet, bathroom or kitchen facilities with other tenants

Furthermore, your home will be classed as a large HMO if all of the following elements apply:

  • The house is at least 3 storeys high
  • At least 5 tenants live there, forming more than 1 household
  • You share toilet, bathroom or kitchen facilities with other tenants

For clarity, a household is either a single person or members of the same family who live together. A family includes people who are:

  • Married or living together - including people in same-sex relationships
  • Relatives or half-relatives - for example, grandparents, aunts, uncles, siblings
  • Step-parents and step-children

HMOs are an attractive proposition for residential landlords as the yield is generally higher than that which can be realised on properties in single occupation. However, there is additional administration which must be adhered to fully.

If you do let an HMO, under current rules and regulations there is a mandatory need for a licence for large HMOs. As of 1 March 2018, there will also be an additional licensing requirement for standard HMOs. This additional licence will only apply in the following Havering wards: Brooklands, Elm Park, Gooshays, Harold Wood, Havering Park, Heaton, Mawneys, Pettits, Rainham and Wennington, Romford Town, South Hornchurch and Squirrels Heath.

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2151 Hits

Changes to Commercial Property Conditions of Sale

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Latest changes made to the Standard Commercial Property Conditions are reflecting a variation in the VAT trend. Commercial Solicitor Keeley Miller explains.

The Standard Commercial Property Conditions (SCPC) are incorporated into the majority of commercial property contracts for sale. Historically, the SCPC required parties to opt to apply Part 2 of the conditions if the seller had exercised the option to tax the property.  This was reflective of the VAT treatment of most commercial property transactions at the time the second edition of the SCPC were published. 

The Law Society has now reversed this default position.  In the new third edition of the SCPC, the sale of commercial property will be a standard rated taxable supply and the sale not being a standard rated supply is now the optional part of the conditions. 

Sellers who opt into the VAT system generally do so in order to recover any VAT associated with maintaining and developing their commercial property during their ownership.  Not all commercial property owners will opt into the VAT system if they are looking to attract SME tenants who may not be registered for VAT themselves and would find the additional charge for VAT in addition to their rent prohibitive. 

When purchasing a commercial property over which a seller has exercised their option to tax, the buyer must fund the 20% charge for VAT in addition to the purchase price. After completion of the sale, the buyer will include the input tax on their next VAT return, giving rise to a VAT recovery. However, they could wait anywhere between 28 and 150 days for that rebate. 

Buyers of property elected for VAT have to pay stamp duty calculated on the total consideration paid for the property – the VAT element on a commercial property can sometimes push the price over £150,000.  Buyers are not able to recover Stamp Duty Land Tax attributable to the part paid due to VAT being charged on the purchase price.

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Brexit Boom for Commercial Property

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Since the vote for Brexit, the commercial property market has been braced for a recession. However, it looks like things are bouncing back. Our Partner Julien Pritchard explains more.

Ever since the UK voted to leave Europe, the majority of commercial property professionals have been bracing themselves for a substantial slump in the commercial property sector; it was certainly noted that immediately after the vote the London market came to a standstill overnight. However, the month after the Brexit vote over a million square feet of commercial property was let in the city – confidence was truly restored.

This nod of assurance appears to have continued into 2017 as purchases by investors hit a nine-year high of 127,280 in 2016/17, up six percent from 119,920 in 2015/16 according to Lendy, Europe’s leading peer-to-peer secured lending platform.

The significant rise in commercial property transactions demonstrates the continuing attractiveness of UK commercial property to both domestic and overseas investors.

Lendy explains that the UK property market is the most fluid in Europe and has a number of features - such as upward-only rent reviews and long leases - that are absent in other overseas commercial property markets.

The fall in the value of sterling since the Brexit vote in June 2016 has made the UK property market more attractive to foreign property buyers who are hungry for yield in a low-interest-rate environment.

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