Hedges Breakfast Briefing:Property and Business

2 June 2015

GPDO 2015; andBusiness Lease Renewal Update

Mark ReynoldsSolicitor, Commercial and Rural

Property

1. General Permitted Development Order 2015

2. Business Lease Renewal Update

• Town and Country Planning (General Permitted Development) (England) Order 2015

• Town and Country Planning (Development Management Procedure) (England) Order 2015

Both came into force on 15th April 2015

Development

What do the new regulations do?

They revise and consolidate the existing law on permitted development and the procedures to be followed by LPA’s when dealing with planning applications in England.

What is “permitted development”?

The right to carry out certain developments or changes of use without the need to obtain planning permission.

As well as consolidating the existing rules under one umbrella the 2015 GPDO introduces some new classes of permitted development.

Town and Country Planning (General Permitted Development) (England) Order 2015

Do you need planning permission?

Article 3 - Planning permission is granted for the classes of development described in Schedule 2. As mentioned, this schedule consolidates the existing rules and introduces some new changes. In the main these are:a. The date for expiry of time-limited developments for larger

home extensions has been extended from 30 May 2016 to 30 May 2019.

b. The previously time-limited permitted development rights for extensions to non-domestic premises have been made permanent

c. New permitted development rights for:

• The conversion of premises used as a shop, for financial and professional services, a betting office, pay day loan shop or a casino to a restaurant or café

• The conversion of premises used as a shop, for financial and professional services, a betting office, pay day loan shop or a casino to a restaurant or café

• The conversion of a shop, betting office or payday loan shop to premises providing financial and professional services – this is an extension of the previous right to turn a shop into a deposit taker; a specific type of financial service.

• The conversion of premises used as a shop, for financial and professional services, a betting office or pay day loan shop to assembly and leisure uses.

• The conversion of casinos or amusement arcades to dwellinghouses.

• The conversion of casinos or amusement arcades to dwellinghouses.

• The conversion of premises used for storage or as a distribution centre to dwellinghouses

d. The introduction of a new permitted development right for the temporary use of buildings and land for commercial film making.

e. The introduction of a new permitted development rights for works to non-domestic premises relating to:• The provision of collection facilities within a shop• Modifying shop loading bays• The extension or alteration of a building and the

installation or replacement plant or machinery on land used for a waste management facility

f. introduction of a new permitted development rights for the installation of solar photovoltaic (PV) panels (with a generating capacity of up to one megawatt in combination with any equipment installed under permitted development rights for solar microgeneration equipment) on the roof of non-domestic buildings.

Permitted Development – Prior Approval It is worth noting that prior approval of the local planning authority is required in a number of permitted developments including: • Retail to restaurants/cafes• Retail to assembly and leisure• Retail to dwellinghouses• Certain sui generis uses to dwellinghouses• Offices to dwellinghouses• Storage or distribution centres to dwellinghouses• Agricultural buildings to dwellinghouses• Agricultural buildings to various flexible uses

• Installation etc. of solar panels on roofs of non-domestic buildings providing up to 1 megawatt.

• The approval required is only in respect of certain elements of development e.g. noise impact, impacts on transport and highways, contaminations risk, increased use of services etc.

This Order prescribes procedures connected with planning applications, consultations in relation to planning applications, the determination of planning applications, appeals, local development orders, certificates of lawful use or development and the maintenance of registers of planning applications and related matters.

The Town and Country Planning (Development Management

Procedure) (England) Order 2015

Business Lease Renewal Update

The recent case of Hough V Greathall [2015] involved a commercial tenant’s application to Court for the grant of a new lease in circumstances where the Landlord sought repossession of the premises having served a section 25 notice.

The Landlord was seeking repossession of the premises on the basis :

“that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding;” (section 30(1)(f) of Landlord and Tenant Act 1954).

The Tenant argued that the Landlord must show that it had the necessary intention to redevelop at the time the section 25 notice was served and that in this case the Landlord had failed to show this. In reliance on an a 1959 House of Lords’ decision (Betty’s Cafes Ltd v Phillips Furnishing Stores Ltd [1959]) Croydon County Court rejected this argument and confirmed that the relevant date for ascertaining whether the Landlord had the necessary intention to redevelop was the date of the hearing and not date of service of the section 25 notice.

The Tenant appealed this decision to the Court of Appeal arguing that the correct date for ascertaining the Landlord’s intention to redevelop was the date of service of the notice.

The Tenant’s argument turned on the wording of section 25 of the Landlord and Tenant Act 1954. The current wording states that a section 25 notice “shall not have effect unless it also specifies one or more of the grounds specified in section 30(1) of this act as the ground or grounds for his opposition”. This current wording was introduced as a result of a change made in 2003. Prior to that amendment the previous wording of the section had required the Landlord to state whether it “would oppose” the grant of a new tenancy and the grounds on which it “would do so”.

The Court of Appeal upheld the County Court’s decision and confirmed that it was only necessary for the Landlord to prove its intention to redevelop at the date of a hearing. The amendments in the wording made to section 25 were a simple recognition of the fact that the Tenant no longer has to serve a counter notice indicating whether or not it would oppose the Landlord’s section 25 notice seeking repossession of the premises. Because of the removal of the requirement to serve a section 25 notice it was no longer necessary for the wording to require the Landlord to do something in the future which it could only do depending upon whether the Tenant served a counter notice.

Tenant appealed this decision to the Court of Appeal arguing that the correct date for ascertaining the Landlord’s intention to redevelop was the date of service of the notice. The Tenant’s argument turned on the wording of section 25 of the Landlord and Tenant Act 1954. The current wording states that a section 25 notice “shall not have effect unless it also specifies one or more of the grounds specified in section 30(1) of this act as the ground or grounds for his opposition”.

Residential Tenancy Update

Toby Walker Solicitor, Dispute Resolution

Possession of Residential Property

Commercial Landlords , Agents, Private B2L, Tenants

Tenant does not vacate property

No alternative property

Counterclaim / vendetta (!)

Aware of rights

Local Authority assistance - IH risk

X

Court order for possessionLandlord must not evict a tenant without obtaining a court order

(section 3, PEA 1977)

Potential for harassment, unlawful eviction claims – civil and possibly

criminal action

Notice to determine tenancyWithin the fixed term of the tenancy

agreement? – s8 Notice

Only if T in breach (usually rent)

Must be in ‘prescribed form’

S21 Notices

S 21(1) - dealing with ASTs on the expiry of the fixed term

S 21(4) - terminating ASTs where a periodic tenancy has arisen thereafter

21 Recovery of possession on expiry or termination of assured shorthold tenancy.

(1) Without prejudice to any right of the landlord under an assured shorthold tenancy to recover possession of the dwelling-house let on the tenancy in accordance with Chapter I above, on or after the coming to an

end of an assured shorthold tenancy which was a fixed term tenancy, a court shall make an order for possession of the dwelling-house if it is

satisfied— (a)that the assured shorthold tenancy has come to an end and no further

assured tenancy (whether shorthold or not) is for the time being in existence, other than an assured shorthold periodic tenancy (whether

statutory or not)]; and (b)the landlord or, in the case of joint landlords, at least one of them has given to the tenant not less than two months’ notice in writing] stating

that he requires possession of the dwelling-house.

A notice under section 21(1)(b) of the HA 1988:• Does not have to be in a prescribed form.• Does not have to expire on a particular day.• Can be served before the tenancy expires• Does not have to specify any grounds.

• No requirement to state it is a s21(1) notice

Nice and easy

Statutory periodic tenancies

A statutory periodic tenancy arises at the end of a fixed term tenancy

under section 5(2) of the HA 1988.

S 21(4) notice1. In writing

3. It must be the last day of a period of a tenancy

Saving formula:“OR the day on which a complete period of your tenancy expires after the end of two months from the service of this notice.”

2. At least two months after the notice is given

Spencer v Taylor [2013] EWCACoA held: LL can serve s 21(1) notice where a fixed term has expired and the tenant has remained in

occupation on a statutory periodic tenancy

“Conventional wisdom” as to section 21 incorrect

What does this mean for LLs?

section 21(4) and section 21(1) – not mutually exclusive

Remember - Tenancy Deposits – can still render s21 notice ineffective

Small Business, Enterprise & Employment Act 2015

David EngwellHead of Business Services

The first Act specifically for small business

• Intended to help entrepreneurs and start-ups.• Wide ranging.• Ensures that the United Kingdom is a safe and

helpful environment within which to conduct business.

• Promotes transparency.

Timetable

• Received Royal Assent on 26 March 2015.

• Phased introduction over the next year or so, commencing on 26 May 2015.

Transparency of Management

• Directors’ duties will apply to shadow directors (consequences for investors and their appointed board members).

• Directors will no longer be required to signify their consent to act on Form AP01. If a director has not consented to act he may apply to Companies House to have his name removed from the Register.

• Companies House will contact the director to notify him of his directors’ duties and to confirm his willingness to act.

Company Directors

• Corporate directors prohibited from October 2015, with 12 months to remove.

• Makes it easier to identify who is running the company.

• Has the effect of removing limited liability for directors.

• Directors should ensure that Directors and Officers insurance is in place, or there are suitable indemnities for acting.

Transparency on Ownership: People with significant control

• From April 2016, unquoted companies must keep a public register of people with significant control:– Ultimate shareholding in excess of 25%– Exercises control over management of the company.

• If the person with significant control fails to disclose his identity then the company may impose sanctions such as suspending voting rights.

People with significant control

• Companies will have a duty to investigate, maintain information and ensure that information is kept up to date.

• Criminal penalties for companies and individuals for failing to supply information.

Bearer Shares

• Prohibited with effect from 26 May 2015.• 9 month transitional period for existing bearer

shares.• Ensures Companies House will have details of

all shareholders.

Annual Return

• From April 2016, the Annual Return will be replaced by an Annual Confirmation Statement.

• Opportunity to align the Annual Confirmation Statement with the filing of the Company’s statutory accounts.

Statutory Registers

• Private companies will be able to keep their statutory registers at Companies House.

Companies House

• Companies House online facilities being improved

• Free of charge service• Free documents

Transparency on Payments

• Companies will be compelled to publish their practices and policies for paying suppliers.

Access to finance

• Banks will have to disclose details of companies that they have turned down for loans to online platforms.

• Secretary of State permitted to nullify clauses in business contracts that prohibit a company from selling invoices to a third party finance provider.

A Round Up: other interesting developments from the world of

property!

Vicky HernandezHead of Property

Assignment of Commercial Leases: landlords should get proper advice!

Singh v. Dhanji

The facts

• Assignment prohibited without consent (NTBUW)

• Consent refused – alterations carried out in breach

• Court of Appeal: Insufficient evidence; and• Immaterial breach• Damages: £214k plus £31k interest

A reminder: landlord’s duties

• To give consent. “Except where it is reasonable not to do so.”

• To give consent within a reasonable time

When is it reasonable to refuse consent?

• Not on grounds that have nothing to do with the landlord and tenant relationship in connection with the lease

• Fact based decision depending on all circumstances

• Reasonable conduct as opposed to right or justifiable conduct

Singh v. Dhanji

• Just because there are breaches of covenant by the tenant does not mean that it is reasonable to refuse consent.

• It is necessary to consider the nature and gravity of the breaches, and whether the landlord's position would be prejudiced by an assignment .

Small Business, Enterprise and Employment Act 2015

• Changes made to LTA 1954: exclusion of residential properties used as business premises from the security of tenure provisions of the LTA 1954

• A "home business" is "a business of a kind which might reasonably be carried on at home"

Public Rights of Way

Ali v Secretary of State for Environment, Food and Rural Affairs

• Dedication as a highway: 20 years rule

• Landowner can defeat the claim if sufficient evidence of lack of intention

• Overt acts required

• Previous case law: locking a gate once a year could amount to sufficient interruption to a right to defeat highway designation

• In this case locking the door over Christmas 2011 was ineffective in rebutting the presumption of dedication

EPCs

Minimum Energy Efficiency Standard Regulations

• 1st April 2016

• Domestic and non-domestic property

• Two deadlines:

– 1st April 2018 - new leases

– From 1 April 2023 - continuing leases

• Penalties for non-compliance: based on rateable values for commercial property capped at £150k

• Very limited exemptions:– short/long leases– No EPC required– Not cost effective (7 year payback rule)– Unable to obtain third party consents

Lease Issues

Works may be carried out now to improve energy efficiency. Main considerations:

• Disruption/rights of entry

• Cost – service charge recoverability?

This weekend: Hedges - our sanity in question….