Buildings generate almost half of the United Kingdom's carbon dioxide emissions. Any attempt to reduce emissions must deal with retrofitting commercial buildings, but no effective tax incentives are available for improving the energy efficiency of existing commercial stock. However, it is understood that the government intends to launch a major consultation on sustainability and existing property.
The Court of Appeal described its own decision in Scottish & Newcastle plc v Raguz as "an uncommercial burden for landlords, without any real compensating benefit to former tenants". However, the House of Lords has established that a landlord need not serve a protective nil notice on a former tenant (or the latter’s guarantor) if there is an outstanding rent review or service charge reconciliation.
For the next year at least, rents are likely to fall and tenants will face difficult trading conditions which will affect the lettings market. One way in which landlords will be affected is in relation to a tenant’s lease renewal strategy. If more tenants are willing to delay negotiations or fight lease renewals to trial in order to achieve better terms and lower rents, landlords may need to adopt a new approach.
Empty properties are a growing concern for landlords. The potential tax burden on owners has risen and in a downturn the potential for disputes is greater. Some landlords are starting to consider extreme steps to minimize their liability, but a number of possible mitigation strategies can be applied.
Stamp duty land tax (SDLT) came into force on December 1 2003. Many leases granted on or after that date that work on a five-year cycle will shortly have their first rent review. If a tenant under such a lease suffers a substantial rent increase on review, the increase is now subject to an SDLT charge as a result of the introduction of new provisions relating to abnormal rent increases.
The government is increasingly expecting the real estate sector to play its part in the battle against climate change and put sustainability at the heart of the leasing process. However, before entering into a lease with environmental obligations, landlords and tenants should consider the practical implications of their green commitments.
Following the first negative property returns for 15 years in 2007, difficult economic conditions are putting pressure on all sectors of the UK property market to secure rental income to offset falls in capital value. Asset managers should examine two fundamental legal areas: streamlining the letting process and minimizing the damage on tenant default and insolvency.
The government has published draft amendments to Planning Policy Statement 6: Planning for Town Centres. The proposals are likely to be welcomed by developers seeking consent for edge-of-centre or out-of-centre proposals, but may cause concern to investors in town centres, particularly as the credit crunch has already affected the delivery and value of complex town-centre regeneration projects.
The regime for UK real estate investment trusts (REITs) has been operational since January 2007 and 18 listed UK property companies, including many of the largest companies in the industry, have converted to or listed with UK REIT status. This update considers the conditions and operation of the regime.
Rent review clauses may require the valuation to be conducted on the assumption that the use of the hypothetical subject premises differs substantially from the actual use of the premises under the lease - a useful assumption where few tenants in the market would wish to use the premises in their current state or for their current use. However, such clauses need careful drafting to avoid problems later.
If a landlord intends to carry out works to residential premises and wants to recover the cost under service charge provisions, the law requires the landlord to consult in advance with tenants of the premises about the proposed works. Failure to follow the consultation procedure may mean that the landlord is unable to recover the full costs of the works.
An energy performance certificate contains information about the energy efficiency of a building that is constructed, rented or sold; the first deadline for certificates applies to properties of over 10,000 square metres. A building's assessor will consider factors such as lighting, insulation, heating, air quality and carbon dioxide emissions.
The mayor of London will soon have the power to determine planning applications of potential strategic importance in Greater London. How the mayor uses this power could have a significant impact on London's built - and political - environment over the next four years.
The government's consultation paper on a new planning policy statement heralds a more positive and constructive approach. Typical of this is a more flexible approach to schemes which are sensible and beneficial in planning terms, but do not have specific support from an adopted development plan.
Many property-owning companies and institutions would like to improve the carbon footprint of their buildings and portfolios. This raises questions about incorporating sustainability provisions into leases without adversely affecting value.