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Landlord and tenant – commercial

Leases – turnover rent

Under a typical turnover rent, T will pay whichever is the higher of a base rent (usually between 70% and 80% of the open market rent) and a turnover rent calculated by reference to an agreed percentage (commonly between 7% and 15%) of T’s turnover.

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EPC – emergency

An Energy Performance Certificate is now needed for virtually all commercial premises. Prior to 6 April it was only buildings with a total useful floor area of more than 10,000 sq m that were covered; in July that was reduced to 2,500 sq m, and as from 1 October all other commercial premises are now covered (other than those of less than 50 sq m).

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EPC – passing on the cost

Suppose that the T of a head-lease wants to assign his interest. Clearly, he cannot pass on the cost to the buyer/assignee since that is prohibited by the Regs. But can T pass the cost on as part of a service charge to sub-Ts?

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Business premises – occupation

A business T must be in ‘occupation’ to enjoy security of tenure under LTA 1954. Surprisingly, the word ‘occupation’ is not defined anywhere in the Act.

What happens if premises are closed for a period (eg for a particular season, or for holidays, or repairs)?

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Latent defects – liability

Earlier this year there was a case in which a residential lessee spent several thousand pounds repairing damage to his basement flat caused by leaks from some light wells. Those leaks occurred because the concrete surrounds had been laid defectively when the building was converted into flats before the date of the lease. The High Court decided that L was not liable for T’s repair costs because T had no contractual claim against L.

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Guarantor – contracting out

The contracting-out regime allows L and T to agree that T will not have security of tenure. The process was simplified in 2004 and there is no longer any need for a court order (under the new procedure, L serves a warning notice, with T then signing or swearing a declaration in response).

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Rent – monthly?

There has been much publicity about some retailers requesting monthly rather than quarterly, rent payments. Even if L is inclined to agree to this request there may well be documentation to be reviewed:

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SDLT – five-year period

SDLT was introduced in December 2003. With leases, the general scheme was that SDLT would be paid on the basis of the rents in the first five years. But, the fifth anniversary can give rise to further SDLT payments (or even repayments). Accordingly, as from December 2008, these become important concerns.

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Insolvency – pre-packs

Pre-packaged administration sales (pre-packs) have become controversial in recent times. In essence, a pre-pack is a sale of a company’s business and assets that is negotiated prior to the formal appointment of an administrator, with the idea that he then completes that sale immediately following his appointment.

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SDLT – five-year period

As we noted in last month’s issue (p22), when SDLT was first introduced in December 2003, the general scheme was that SDLT would be paid on the basis of the rents in the first five years of a lease. But, the fifth anniversary can give rise to further SDLT payments, and accordingly December 2008 means that these potential complications now arise.

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