Stamp Duty Land Tax

 (SDLT) is charged on land and property transactions in the UK where an transfer in the interest in the . The tax is charged at different rates and has different thresholds for different types of property and different values of transaction. The tax in mandatory and is paid by the purchaser. Other factors within a lease, such as rent free incentives, may have a bearing on the level of SDLT to be paid. Be aware of penalties for late payment!

Survey of the premises

RPS regularly recommends that a survey be undertaken prior to completing on the lease. This is to establish it’s structural integrity and the quality of the services and finishes that often leads to a better understanding of future property costs. This is especially true for longer leases where higher capital costs for plant replacement or roof replacement may be required. Being informed up front helps negotiations. This could lead onto a schedule of condition that will assist with dilapidations settlements.

Landlord’s approval for alterations

In a majority of cases, before a tenant may undertake any non-structural alterations to their leasehold property, they must receive formal consent from their landlord for such works and the mechanics for this will be set out in your lease. See our notes relating to qualified consents. Expect fees for both landlord’s approval and solicitor’s fees. In some cases the landlord may use a surveyor and consultants to consider your proposal and may not even entertain starting to review this before getting your undertaking to pay all reasonable costs.

Service charge increases.

Probably one of the more contentious occupancy costs as tenants often complain of seeing the charge but not the service. The landlord’s costs for running their property are not always fully recoverable from the tenants and we strongly recommend tenants keep a close watch of the charges raised and where they are spent.

Survey of the premises

RPS regularly recommends that a survey be undertaken prior to completing on the lease. This is to establish it’s structural integrity and the quality of the services and finishes that often leads to a better understanding of future property costs. This is especially true for longer leases where higher capital costs for plant replacement or roof replacement may be required. Being informed up front helps negotiations. This could lead onto a schedule of condition that will assist with dilapidations settlements.

Dilapidations

Simply this involves the tenant reinstating their office in to the same condition that it was in when the lease first completed. However in practice it is more complicated and understanding of the lease terms and the legal definitions is essential. You should factor dilapidations costs into your exit costs and we always suggest tenants start to consider their exit and dilapidations strategy a good 18 months prior to lease expiry.

Superior landlord’s consent to approve sub-letting or assignment

In a similar manner to consent for alterations landlords often wish to ensure that any subletting or assignment of a part or entire demise/lease will require their consent. Again, expect the landlord to seek your undertaking to pay these beforehand (even if the request is declined!).

Refurbishment / Fit out costs

Clearly these will be dependent on the level, quality and extent of the proposed works. However, even when the costs are clear, tenants often overlook the time taken to complete that eat into their ability to trade from the premises. Therefore RPS ensures that the best incentives are achieved and savings made where they can.

Business Rates increases

 As with Service Charges, business rates are another contentious charge for both occupiers and owners. See our previous notes for how they work. Rateable values are recalculated every 5 years and based on your rental valuations at the time of calculation. There are provisions for reducing your liability and we have previously issued guidance on this. See our blog summary.

Rent reviews

These are often a 5 yearly intervals and very much subject to market conditions. Even in a poor rental market it is just as important to complete the recording of a nil increase to close the matter.  Leases that extend beyond five years will usually be subject to a rent reviews and it is important to read and understand the lease terms that should set out the mechanics of the review that is strongly evidence based. This applies to both new leases and to subleases.

VAT

Is your property VAT applicable that will be attracted by the rent, service charge & rent deposit?

 Building’s and terrorism insurance 

It is often a landlord’s responsibility to insure the building but will recover the premiums from tenants ofen outside the service charge account. Again, check the lease for the provisions and recoverability.

Contents insurance 

Not often a landlord responsibility but is clearly another charge of occupation. Make sure you are sufficiently covered. That is not too much over and certainly not under insured! The test of a good insurer will be when it comes to making a claim and not necessarily on the premium level.

Solicitors’ & agents fees

When going through lease negotiation and drafting be clear as to how is paying the solicitors fees. RPS will argue that each party pay their own fees. Unless it suits our client otherwise of course!

Trespass to land occurs where a person directly enters upon another’s land without permission, or remains upon the land, or places or projects any object upon the land. Trespass is not currently a criminal act (legal duty owed to and enforceable by society as a whole (falls under the Law or Tort (legal duty owed by one person to another).

By contrast, nuisance is an indirect interference with another’s use and enjoyment of land, and normally requires proof of damage to be actionable

How can a trespass occur?

• Walking onto land without permission, or refusing to leave when permission has been withdrawn, or throwing objects onto land are all example of trespass to land.
• Trespass to airspace above the land can be committed. ie trespass by allowing an advertising board to project into property .(no action shall lie in nuisance or trespass by reason only of the flight of an aircraft over any property at a height above the ground which is reasonable).
• Trespass to the ground beneath the surface. This can be held to be trespass to the subsoil.

Does it matter who has possession of the land? YES.

This tort has developed to protect a person’s possession of land, and so only a person who has exclusive possession of land may sue. Thus, a landlord of leased premises does not have exclusive possession, nor does a lodger or a licensee. However, a tenant or subtenant does.

We have Squatters, what do I do?

Squatting is when someone occupies an empty or abandoned property without the owner’s permission, often without his knowledge and without any normal legal right to do so. Fly-traders and squatters in residential and commercial premises and on vacant land are a continuing problem to property agents, landlords and local authorities. Genuine squatters cannot be forcibly moved without a court order. Squatters cannot be legally evicted from premises without a court possession order, unless they leave voluntarily or the owner secures peacable re-entry.

Guide to Removing Squatters

If you discover trespassers or squatters in your property you should be able to remove them quite legally within a two-week period, providing you go about the process correctly:

• Do not try to use force to remove the squatters yourself – you could find yourself accused of a criminal act under the Protection from Eviction Act 1977.
• However, peaceable re-entry is legal and acceptable.
• Try to persuade the squatters to leave voluntarily, failing which:
• Try the police – they may be willing to assist particularly if occupation is recent and there is evidence of forced entry.
• Try to get evidence to prove to the court that there are unauthorised persons in your property – names of trespassers if possible and statements from other residents and neighbours, and photographs will all be very useful.
• Get together evidence of your own ownership – Land Registry documents, title deeds, tenancy surrender documents etc.
• Contact bailiffs or a solicitor or start proceedings yourself.
• Visit your County Court or the Court Service web site – see below.
• The process can start through the court within 2 days.
• Once the correct notices are issued, the court should allocate an early hearing date.
• Squatters must be given five clear days’ notice and notices must be served on them personally, or, failing that, a notice fixed to the door of the property.
• The hearing is usually informal. The squatters may turn up and challenge but they must have evidence of a legal interest in the land (e.g., a tenancy) otherwise there is no defence to their claim for possession and the court should issue an Order for Possession.
• With a Possession Order the landlord can ask the squatters to leave. If they refuse he will need to instruct the court bailiff to evict, with police assistance if necessary.
• Once possession is regained, the locks should be changed and the premises properly secured

The RPS Guide to Preventing Squatters

Landlords would obviously wish to avoid occupation by squatters in the first place. Sensible precautions would be:

• Keeping properties securely looked when unoccupied. Security is a landlords’ concern not only when their properties are vacant.
• Maintain adequate security both when let and when vacant – local police will advise. Landlords can in theory be held responsible for a residential tenant’s losses if properties are vulnerable to burglaries etc. therefore it is in the landlord’s interest to do this.
• Vacant premises attract higher insurance premiums for landlords, so you should consult your insurers about measures they require you to take when your properties are vacant.
• Giving the appearance of occupation. Have curtains or blinds in place and perhaps have a neighbour or cleaners make regular visits. Leave radios switched on, and lights on timers.
• Commercial premises can often be occupied on a temporary trading basis, on short-term agreements (up to 6 months), particularly shops.
• Fence off or adequately barricade areas of vacant land.
• Provide regular security patrols if necessary.
• There are companies who specialise in providing temporary occupiers for vacant commercial and residential premises
• Make regular visits to premises and vacant land and monitor the situation carefully.
• Do not leave premises unoccupied for long periods. Most landlords do not do this as they want to avoid vacant periods. However, there are many instances where properties or land are left vacant for many years.
• If you find anyone occupying your property without your consent contact the police immediately. They may be able to act without reference to the courts, though they sometimes need some persuasion to do this.
• Try to be present when the police attend as you as owner can advise on the true situation and you want to avoid further damage to the premises.
• If the police are unable or not willing to assist, start legal proceedings for an Interim Possession Order immediately.

Useful Websites;

Criminal Justice and Public Order Act 1994

Land Registration Act 2002

Contracts are an important part of business life. They establish agreements between you and your employees, landlords or tenants, suppliers, customers and with other businesses.

‘subject to Contract’ words are often used on documents exchanged by parties during contract negotiations. They intend to denote that the document is not an offer or acceptance and negotiations are ongoing. Often the expression without prejudice is used when subject to contract is meant.

However informal consent can arise for example where a landlord agreed in a letter to the ‘principle of a grant of a licence subject to contract’. Here the courts held that that consent had been granted and that the letter amounted to consent. Similarly ‘Subject to the Usual Formalities’ was construed as consent for assignment.

Key Points

·         Despite the words ‘subject to contract’ parties may, in certain circumstances, be bound by terms agree without formalisation of the agreement.

·         Intention and actions of the parties may justify the view that the ‘subject to contract’ banner has been impliedly lifted, as in ‘Contract by Performance’.

·         Commercial parties and legal advisers should consider the intended effect of each e-mail or discussion and not assume that the ‘subject to contract’ wording offers fail-safe protection.

·         Scope for this approach to apply to negotiation of general commercial contracts, as well as settlement negotiations.

WHAT TO DO?

 Any letter or communication issued prior to full documents being issued should make it clear that no grant is issued until the execution of a licence or such other pre-condition(s). Previously approved wording to consider; ‘For the avoidance of any doubt we stress that this letter forms no consent in itself, and no consent will be granted until the execution of a formal licence to assign / sublet / alterations……’