The Practical Lawyer

Landlord and tenant – commercial

RICS – code for leasing business premises

The RICS has launched the first edition of its Code for Leasing Business Premises which comes into force on 1 September 2020. It will replace the voluntary Code for Leasing Business Premises in England and Wales (2007).
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Lease to family – not a relevant disposal

Under s1(1) LTA 1987 L shall not make a ‘relevant disposal affecting any premises to which at the time of the disposal this Part applies’ unless it has previously served notice in accordance with s5 on ‘the qualifying tenants of the flats contained in those premises’ and the disposal is made in accordance with the requirements of ss6-10. The 1987 Act gives ‘leaseholders of residential flats in a block of flats improved rights to control the upkeep and maintenance of the block as a whole, by conferring on Ts a right of first refusal when L is proposing to dispose of his reversion’.
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CPSE.6 – updated

Property practitioners should note that CPSE.6 (version 1.3) (supplemental pre-contract enquiries for property subject to residential tenancies) has been updated.
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Relief against forfeiture – predictions

In the light of the above case, there is an interesting article analysing it which tried to predict how future cases might be decided.
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Relief against forfeiture – for a licence

 It has long been presumed that only Ts of leases could obtain relief from forfeiture and that a licensee is unable to seek such relief. The SC has just overturned this presumption.
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Agreement for lease – not personal

The HC has recently heard a case involving the restaurant chain Bella Italia. Bella entered into an agreement for lease for premises on a new retail site. An agreement for lease was signed which was subject to various pre-conditions such as planning and licensing. The agreement provided for Bella to lease the premises once constructed. During the construction process the original party to the agreement sold their freehold interest in the premises to another party. Bella purported to rescind the agreement on the grounds that it was entitled to refuse to accept a lease from the subsequent owner as they were not the original contracting party to the agreement for lease.
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L withholding consent to planning permission – reasonable

The SC has considered whether it was reasonable for L to withhold consent for T’s request to obtain planning permission to convert part of a commercial property into self-contained flats. As with many leases, the lease contained a provision that L could not unreasonably withhold consent to an application for planning permission.
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CVAs – guidance on use

We reported in our November 2019 edition (p20) on the recent HC case in which Debenhams successfully used a standard model retail CVA to compromise its future liability for rent and business rates. This has been followed up by an interesting article exploring the decision in more detail and the basis upon which a CVA may be challenged. The grounds of challenge are:
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L changing locks – an act of surrender?

There are various ways in which a leasehold estate in land may come to an end. One of these is surrender by operation of law. Sometimes the surrender of a lease does not take place by deed but is effected by operation of law ie as a result of the actions of the parties. Note that a surrender by operation of law does not take effect following action by T alone. HMLR PG 26 points out that examples of surrender by operation of law might be:
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CVA – use to reduce rent

 If a limited company is insolvent, it can use a CVA to pay creditors over a fixed period. If creditors agree, the limited company can continue trading. The CVA has been used by companies in the retail sector on the high street as a means to try to reduce the cost of expensive leases to enable them to continue trading. CVAs have been used to force a rent reduction, without similar cuts to other creditors. Debenhams attempted to compromise its liability for future rent and business rates using a standard model retail CVA – this was challenged by six of its Ls. They argued that the use of the CVA to effectively reduce rent was unfair and outside the jurisdiction of insolvency law. The HC rejected this view. It is thought that the failure of the challenge to the Debenhams CVAs may lead to an increase in their use in the retail sector.
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