National property law conference 2015 Commercial property update law and practice: Warren Gordon of Olswang LLP Friday 9 October 2015 Victoria Park

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1 National property law conference 2015 Commercial property update law and practice: Warren Gordon of Olswang LLP Friday 9 October 2015 Victoria Park Plaza, London

2 Topics to be covered Standard Commercial Property Conditions 3 rd edition. New Standard Commercial Lease and Enquiries. Replacement CON29 forms. Proposed Electronic Communications Code. Rights to light reform. Protocol for Applications for Consent to assign/sublet. Land Registry law and practice. Changes to RICS Code of Measuring Practice. Tenants running businesses from home. Important rates decision.

3 Standard Commercial Property Conditions 3 rd edition Current edition over 11 years old. Some updating and improvement required. Influence of 5 th edition of Standard Property Conditions. Reasonable balance between seller/buyer interests. Same structure of default Part 1 conditions and optional Part 2 conditions. Law Society/Oyez joint copyright.

4 Standard Commercial Conditions Value Added Tax Change in default position for VAT from exempt to standard rated. Reflects commercial reality. Transfer of a going concern conditions remain optional. If sale is exempt supply, expressly incorporate Part 2 condition. Updating of terminology.

5 Standard Commercial Conditions-Capital Allowances Update of conditions to reflect April 2014 changes. Buyer needs seller to pool plant and machinery. Seller should provide warranty that pooling requirement complied with. Where seller has claimed allowances. If seller is not entitled to claim allowances. Buyer needs contractual provision to ensure seller provides necessary assistance. See Condition B in Part 2.

6 Standard Commercial Conditions Formula for exchange box. Contents rather than chattels. Cannot serve by fax; specifically provide for service. Special condition dealing with representations Morgan v Pooley [2010] EWHC Special condition for alternative to 2pm as cut off point for deemed completion. Cannot serve notice to complete on morning of completion date.

7 Standard Commercial Conditions New definition of mortgage. Exclude Contracts (Rights of Third Parties) Act Deposit does not have to be paid in cleared funds (Condition in Part 1). Requirement for payment to come from conveyancer s account, subject to Special conditions. No retained land condition, but Special condition for transfer of part provisions. Title guarantee express modification for transfer of leases (7.6.3). Front page statement of full or limited title guarantee.

8 Standard Commercial Conditions New condition for pending lease renewals where seller is landlord (6.2). Rent reviews when other party s approval is needed (6.1.3). Changes to insurance condition (8) Cover for a contractual buyer s interest (8.2.2(d)). Where third party insures (8.2.5). Cover for loss of rent post completion (8.2.7). Buyer still not allowed to occupy between exchange and completion.

9 Standard Commercial Conditions Changes to apportionment condition (9.3). Distrain replaced by commercial rent arrears recovery (9.3.8(a)). Making deposit up to 10% following receipt of notice to complete (9.8.3). Clarification of condition for obtaining landlord s consent to selling or letting ( and ). Commonhold goes. An update and reflection of today s commercial contracts. Release date for publication to follow.

10 New Standard Commercial Lease and Enquiries Simpler solution to more straightforward leases. Standard short form commercial lease of whole and of part. Office and retail. Caters also for rent reviews. Model Commercial Leases inspiration - Avoiding unnecessary negotiations. Launch date to follow. Short form commercial property enquiries.

11 New CON29 local authority enquiries Reasons for launch delay. What should be raised in the meantime. Community infrastructure levy (CIL) Purpose What does it tax? Interaction with section 106 obligations. Is there a CIL charging schedule in place? CIL liability as a result of acquiring land.

12 New CON29 local authority enquiries Assets of community value Stopping the clock on certain sales and lettings. Giving community interest group time to bid. Delays to transactions. Check local land charges register. Prescribed information about maps and statements deposited to protect land from deemed dedication. Sustainable urban drainage systems Liability for surface water drainage charge. CON29 rather than CON29R.

13 Proposed Electronic Communications Code Criticism of existing Code. Government consultation - tation-on-reforming-the-electronic-communicationscode Improvement and reasonable balance struck. Changes to valuation of wayleave agreements. Overcomes awkward interaction with Landlord and Tenant Act Landlord and Tenant Act 1987 and land registration treatment. Wider operator rights to assign, share or upgrade.

14 Proposed Electronic Communications Code Greater certainty for landowner to end Code protected agreement if redevelopment. No equivalent to current paragraph 20. Impact of change in Code operator status. Restriction on contracting out of Code. Why should informed parties not be able to contract out? compare Landlord and Tenant Act Timeframe for rollout of Code.

15 Proposed rights to light reform Heaney decision threat of injunction. Coventry v Lawrence more flexible approach to Shelfer test for granting an injunction. Law Commission s report December Test of proportionality for award of an injunction. Notice of proposed obstruction procedure. Greater certainty for development, but protection for property owner s rights.

16 Protocol for Applications for Consent to assign/sublet Product of Hogan Lovells and Falcon Chambers. Protocol for Applications for Consent to Assign/Sublet. Improve communications. Avoid arguments as to information and time required. Alternative dispute resolution. Voluntary and setting down in print of the existing legal position. Too regimented for some.

17 Land Registry law and practice Illogical treatment of title plans for leasehold titles primacy of lease plan. Requirement of evidence of identity for attorneys (except for discharges). Protecting deed of release of right to light on register. Dangers of sending in original documentation. Clarifying practice of deeds retention.

18 Changes to RICS Code of Measuring Practice Commencing 1 January 2016, the Code of Measuring Practice will no longer apply to offices and will be replaced by Professional statement: office measurement, being Part 1 of RICS property measurement 1 st edition May The existing 6 th edition will continue to apply to residential, industrial, retail and mixed use. GEA, GIA and NIA will effectively disappear for the measurement of offices to be replaced by IPMS 1, IPMS 2-Office and IPMS 3-Office.

19 Tenants running business from home Government keen to encourage businesses to be carried out from home, including by tenants. Small Business, Enterprise and Employment Act Alleviating landlord s concern that the tenant may obtain security of tenure rights under Part 2 of the Landlord and Tenant Act Sale and consumption of alcohol on licensed premises excluded. New concept of the home business. Not yet in force.

20 Important rates decision The Supreme Court decision in Woolway v Mazars of 29 July Can two physically separate pieces of property, the second and sixth floors of an office building, be a single hereditament for rating purposes, because they are occupied by, and let to, the same person in connection with the same business? Principles as to whether distinct spaces under common occupation form a single hereditament. Implications for ratepayers with more than one floor in a building, whether contiguous or not.