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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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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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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 Miller, Commercial 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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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.
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.
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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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.
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.
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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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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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.
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.
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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