Has your commercial lease been validly contracted out under the landlord and Tenant Act 1954?

In a recent case FS Stores Limited v The Designer Retail Outlet Centres (Mansfield) General Partners Limited and others [2019] the High Court considered whether six separate commercial leases had been validly contracted out of the Landlord and Tenant Act 1954. TFS Stores Limited (“TFS”) which trades as The Fragrance Shop is a large retail operator with over 200 stores nationwide. TFS claimed that six of its leases at a number of McArthur Glen outlet shopping centres had not been validy contracted out of the 1954 Act so that they were entitled to renew the leases at the end of the contractual term. The court was asked to consider 3 issues: Whether solicitors for the tenant, in the case of two of the tenancies, had authority in each case to accept service of the “warning…

The Tenant Fees Act 2019: what it means for landlords

From 1 June 2019 landlords and lettings agents are no longer able to require tenants to pay certain fees in relation to assured shorthold tenancy agreements, students lets or licences to occupy private residential housing. The Tenant Fees Act 2019 has introduced fundamental changes which ban all payments from a tenant unless they are expressly permitted. The Act applies to all new agreements entered into after 1 June 2019. For agreements entered into before 1 June, landlords will still be able to charge the fees and payments until 31 May 2020 but after that date the ban will apply. A landlord who fails to get it right now could face a financial penalty of £5,000 and may face criminal prosecution. Landlords need to take advice on the changes and ensure that tenancy agreements are compliant with the…

Short term lettings : avoiding the pitfalls

Empty property is bad news for landlords. It costs money in maintenance and rates, as well as being a possible target for vandals and squatters. To maximise income from property, landlords may wish to seize opportunities for short-term lettings to fill gaps between long-term arrangements. But as Andrew Little, commercial property expert with Pearsons & Ward Solicitors in Malton explains, it is vital to get the paperwork right. ‘If a potential tenant wants to get into your property and start trading and paying rent immediately, you may be tempted to skip the formal paperwork, but this can lead to real problems as business tenants can quickly acquire the right to stay on, which could get in the way of your long-term plans for the property’ explains Andrew. ‘The good news is that your solicitor can very…

Marrying things up to help your farm survive

Remarrying when you own or rent a farm can raise a number of issues that need to be addressed, particularly if your longer-term plan is to pass the farm onto your children or someone else within your immediate family.  In this article we explain the steps you can take to increase the likelihood of a farm surviving a second marriage. Be clear on your new spouse’s involvement and rights If your new spouse is likely to become involved in the farm business then it is important to make it clear in what capacity.  For example, will they be a paid employee with little or no input into the decision-making process or will they assume a more significant role entitling them to have their say and to share in the profits? If you are already running the farm…

Consent To Lease Assignment Quick Guide For Commercial Landlords

A sensible landlord will take great care when picking an initial tenant and should exercise the same caution when deciding whether that tenant should be allowed to assign their lease to someone else. The difficulty with an assignment is that the circumstances in which consent can be refused are restricted by law, making it crucial to seek early legal advice, as Simon Ellis, commercial property lawyer with Ware & Kay in Wetherby & York explains. 'Most commercial leases will include a provision which prohibits assignment without the landlord's consent, and will prescribe the process the tenant needs to go through to secure this', says Simon, 'but what some landlords do not realise is that they can only refuse consent if they have very good reasons.' Refusal must be reasonable You can only refuse consent to…

Commercial Rent Arrears Recovery

Landlords have for a long time used the common law remedy of distress, which enables them to seize the goods of their tenant at the leased premises and sell those goods at auction, in order to recover any rent arrears. However, distress for commercial rent arrears will be abolished by the Tribunals Courts and Enforcement Act 2007 via the Taking Control of Goods Regulations 2013, which were published last month. These reforms create a new process called Commercial Rent Arrears Recovery (CRAR) which landlords must abide by when seizing a tenant's goods for failure to pay rent. The changes are due to come into effect in April 2014. Executive summary Distress is an invaluable and frequently used remedy for the recovery of arrears. Its replacement by commercial rent arrears recovery ("CRAR") from 6 April 2014…

Service Charge Demands

Legislation protects residential tenants from excessive service charges. Before entering into contracts to provide services or carry out works relating to residential properties, you should consider whether you need to consult with your tenants. If you fail to consult when required, you will only be able to recoup the statutory maximum, unless you receive dispensation from the Leasehold Valuation Tribunal (LVT). What is a service charge? A service charge is an amount payable by your tenant as part of or in addition to their rent. Service charges may vary according to the costs or estimated costs incurred in connection with the matters for which the service charge is payable. Service charges must be reasonable You can request that your tenant pays you a service charge for costs you incur for: Services Repairs…

Break Clauses In Leases

A Court of Appeal decision highlights the risks for commercial tenants of failing to correctly exercise the break clause in their lease. In this case, the tenant failed to give vacant possession in accordance with the terms of the break clause in its lease. The tenant wanted to carry out repairs to the property to control costs and avoid a dilapidations claim for damages in excess of its own costs in doing the repairs. There was no obligation on the tenants to complete the works before vacating the property; they were only required to pay rent up to the break date and give vacant possession. By deciding to stay in the property to complete the repairs, the tenant failed to provide vacant possession and was, therefore, not entitled to terminate its lease. Fortunately, the tenant…

Tenancy Deposit Schemes

This checklist explains what a tenancy deposit scheme (TDS) is and what a landlord's obligations are under a TDS. What is a TDS? A landlord under an assured shorthold tenancy (AST) must protect a tenant's deposit by using an authorised tenancy deposit scheme (TDS) operated by an approved scheme administrator. A TDS has two main objectives: To ensure that, when a tenant pays a deposit, it will be protected and returned to the tenant at the end of the AST, except when the landlord has a legitimate claim on it. To resolve disputes between landlords and tenants using dispute resolution rather than via the courts. There are two types of TDS There are two types of TDS: A custodial TDS requires a landlord to pay its tenant's deposit to a scheme…