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Commercial Property

Government extends commercial property evictions ban until March 2021

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Government extends commercial property evictions ban until March 2021

The Government has confirmed that the eviction ban for commercial tenants has been extended until 31 March 2021.

The ban was introduced to protect business owners affected by the coronavirus pandemic, to ensure the future relationship between commercial landlords and tenants and allow businesses to recover from the financial impact of the pandemic.

The Government has stated that it will be the ‘final extension’ to the legislation preventing evictions, giving landlords and tenants an additional three months to agree on any unpaid rent, stating that it is clear that where businesses can pay any or all of their rent, then they should do so.

The move is set to support businesses that have been the most affected by the pandemic, with those in the retail industry seeing reduced footfall and enforced closures, while the hospitality sector has seen further enforced closures during both the national lockdowns and local lockdowns that are now in force.

Robert Jenrick, the Housing Secretary, has also stated that the Commercial landlord and tenant legislation will be subject to review, to address concerns that the current framework doesn’t reflect the economic conditions that businesses are operating in.

Alok Sharma, Business Secretary, said: “Further guidance to support tenants and landlords to continue to work together to agree rent payment options where businesses are struggling will be published shortly.

“Additional guidance published early next year will sit alongside the government’s Code of Practice, published in June, to encourage all parties to work together to protect viable businesses and ensure a swift economic recovery.”

The Government has also stated that restrictions on landlords using Commercial Rent Arrears Recovery to recover unpaid rent will also be extended until the end of March, in line with the eviction ban extension.

For help and advice on all matters relating to commercial property, business debt or insolvency guidance, get in touch with our expert teams.

Commercial property market shows signs of recovery

Palmers Solicitors Article Right, Business News, Commercial Property, Library
Commercial property market shows signs of recovery

Latest figures have revealed that commercial investment in the UK rose by 42 per cent in June, with the commercial property yield remaining stable with signs of recovery in the market.

In total, commercial investment rose to £1.3 billion in June, up from £755 million in May, with experts stating that the yield on commercial properties may solidify in key areas, with this being a typical sign of recovery in the commercial property market, as investors return to key sectors.

The commercial property sector has been significantly impacted by the coronavirus pandemic, with just 48 per cent of retail rents being collected since the June rent quarter day, according to the latest findings.

The retail sector felt the impact of the lockdown measures, with many being forced to close in March, but with lockdown measures now easing, many are re-opening and beginning to assess how their business has been impacted by the pandemic.

However, office and industrial properties have shown an improvement in resilience, with 65 per cent of rent being collected since the June rent quarter day, with all sectors of the commercial property market now showing improvement since the March rent quarter day.

Tom Wallace, Chief Executive of Re-Leased, said: “The rate of rent collection for the June quarter has been steadily strengthening over the past three weeks and the latest data shows that it has stabilised when compared to the same point in the cycle for March. It is very encouraging to see all asset types are now trending upwards compared to the last quarter.

“The easing of lockdown has meant more people are spending on the high street and getting back to the office, and this has restored some confidence.”

Carey Jacobs, a Partner with Palmers and leading the Commercial Property team there, said: “These latest figures show the prospects of recovery for the sector after a number of testing months financially for both landlords and tenants.

“The last few months have seen many landlords and tenants changing and re-gearing their lease agreements for the preservation of their current and future business relationships and the coming months will inevitably see more of that.

“This time has been one of the most challenging for all of them.   It is important for both parties to seek expert legal advice right at the start of any renegotiation process to ensure that their best interests are protected.”

For help and advice on matters relating to the commercial property, please contact us.

Commercial property leases and rent payment difficulties – here’s what you need to know

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Commercial property leases and rent payment difficulties – here’s what you need to know

The commercial property industry has been drastically affected by the economic effects of the coronavirus pandemic.

The rules relating to commercial leases have changed temporarily, in a bid to support businesses that are struggling.

This, in turn creates uncertainties for commercial landlords and property management firms.

Here, Maisie Yau, an Associate Solicitor and Commercial Property expert, explains how the sector is affected and how the rules have changed in recent weeks.

Are tenants able to stop rent payments or opt to end their lease? 

Considering the extreme financial strain that many businesses are experiencing many tenants are beginning to refuse to pay rent, ask for a reduction in rent or are seeking to terminate their lease early.

Whether a tenant can do this and on what grounds will vary from one lease to the next, depending on what was agreed under the original terms of the lease.

Most leases provide for rent to be payable without deduction, meaning that tenants will not be able to withhold rent because of COVID-19, unless any specific lease provisions allow them to do so. Meanwhile, rent suspension clauses generally only relate to where a property is damaged or lost altogether due to destruction.

The common law doctrine of frustration may come in to play when it comes to terminating a lease. Tenants may try to prove that there is some form of illegality or failure of common purpose that renders performance of the lease/contract impossible or so radically different from the parties’ expectations and that termination is therefore justified.

This approach is yet to be thoroughly tested via the courts and it is not clear whether the narrow definition of frustration applies to a commercial lease. A court is not likely to relieve a tenant of their contractual obligations as the bar set for such a claim is very high.

Is it possible to evict a tenant who is no longer paying rent?

The Government’s Coronavirus Act 2020 (the Act), introduced new measures to protect commercial tenants. Section 82 of the Act bans the forfeiture of commercial leases until 30 June 2020 for non-payment of rent due to COVID-19, thus preventing evictions.

It is not yet clear whether the Government intends to extend this period further, but it has indicated it may depend on the requirements of the lockdown period.

Does this legislation also apply to squatters?

No, this legislation is designed solely for existing tenants. If you have trespassers or squatters in your property you can still undertake a repossession order under the existing rules.

Do rental arrears still need to be repaid?

Yes – despite the Government’s move to prevent evictions from commercial premises, rent arrears will still accrue and are expected to be repaid in future.  In some cases, this may be by agreement between a landlord and tenant, but in other cases, landlords may be required to seek debt recovery procedures to recover rent that is owed (be aware that some procedures have been temporarily banned). Before taking either step it is recommended that you seek legal advice.

What about debt recovery steps such as a statutory demand?

The Government has temporarily banned the use of statutory demands (made between 1 March 2020 and 30 June 2020) and winding up petitions presented from Monday 27 April, through to 30 June, where a company cannot pay its bills due to coronavirus. This will help ensure these companies do not fall into deeper financial difficulty.

The Government is also introducing new legislation to provide tenants with more breathing space to pay rent by preventing landlords using Commercial Rent Arrears Recovery (CRAR) unless they are owed 90 days of unpaid rent.

However, the Government has made it clear that tenants shouldn’t use this as an opportunity to avoid paying or delaying a rent payment if they are not significantly affected by COVID-19.

Most standard commercial leases include an obligation on the tenant to comply with all statutes and notices or orders made by competent authorities, which means that they would be in breach of that covenant if they fail to comply the Government’s current COVID-19 directions.

Landlords also must comply with this and it is why you should try to work with tenants to come to a suitable arrangement.

Therefore, in the first instance, it is advised that you seek legal advice before opening up a dialogue with your tenant. Once you have taken appropriate legal advice you may wish to come to an agreement with your tenant over current and future rent payments. Depending on your own needs it may be possible to agree on how the rent will be paid in future, including a method for making up rent arrears.

If you have any other questions regarding commercial property matters, please get in touch with our team.

What happens if I am caught up in a property dispute?

Palmers Solicitors Business News, Commercial Property, Library
What happens if I am caught up in a property dispute?

Whether you are a commercial landlord or tenant, being caught up in a property dispute can be a stressful and difficult time if you do not have the right advice to hand.

According to data published by The Property Ombudsmen earlier this year, disputes between landlords and tenants are slowly increasing all across the UK.

The most common reasons for complaints include ‘poor management’, ‘communication and record-keeping issues’ and ‘problems with tenancy agreements, inventories and deposits’.

Andrew Skinner, a Consultant with Palmers who specialises in property disputes, said that even very minor disagreements or disturbances between landlords and tenants, can quickly spiral out of control and leave people in awkward situations they are unable to resolve themselves.

“Disputes all too frequently arise and can become a major drain on your time and resources unless handled quickly and efficiently. On top of this, a small disagreement can very quickly turn into a bitter legal battle if advice isn’t sought early on,” he said.

Andrew added that, depending on the nature of the dispute, it might not always be necessary – or sensible – to pursue a lengthy court battle in order to reach a resolution.

“Landlords and tenants should always consider alternative dispute resolution (ADR) and any other alternative options which might help them to bring a disagreement to an end in a speedier – and oftentimes less costly – manner,” he said.

At Palmers, we regularly advise landlords and tenants on how to resolve a range of issues including leasehold and rent disputes.

For more information about how Palmers can help, please contact us.

UK commercial property soars to top of investment barometer – survey suggests

Palmers Solicitors Business News, Commercial Property
UK commercial property soars to top of investment barometer – survey suggests

A new study claims that the UK remains the most attractive global market to invest in commercial property.

According to the BrickVest commercial property investment barometer, nearly one third (31 per cent) of investors selected the UK as their preferred location.

This compares with 24 per cent of investors who opted for Germany, 22 per cent whose first choice was the US, and 15 per cent who favoured France.

Despite Brexit negotiations and the recent general election, the appetite to invest remains as healthy as ever.

The figures show that average risk appetite for commercial real estate increased to 49 per cent, compared to 47 per cent last year. For UK investors, this increased from 49 per cent to 51 per cent.

The research further revealed that – despite Brexit – French, German, and US investors are more favourable towards the UK since June last year.

Around 24 per cent of French investors, 19 per cent of German investors, and 23 per cent of US investors suggest the UK as their preferred region for investment.

This is compared to 22 per cent, 18 per cent, and 20 per cent respectively.

Emmanuel Lumineau, Chief Executive of BrickVest, said: “Despite a series of significant events over the past 12 months including Brexit, our latest Barometer shows the UK remains the preferred location to invest in from our global investor base.

“Since the vote in June last year, we’ve seen a 72 per cent increase in the number of investors joining the platform and are seeing plenty of appetite from investors for property as an asset class.”

Maisie Yau, an Associate Solicitor and commercial property expert said: “This latest study suggests that, contrary to a number of recent gloomy headlines, commercial property in the UK continues to provide good investment opportunities which is certainly positive news for the sector.

“Regardless of whether you are buying a commercial property as part of an investment portfolio for the first time, you are considering new premises for your flourishing business or you are preparing to make a first time commercial purchase, preparation is the key to a smoother transaction, which will result in fewer nasty surprises and last-minute hitches.”

At Palmers, we have produced a Guide to help commercial property buyers.

For more information and advice on out complete range of commercial property legal services, please contact us.

Property tax changes could lead to more red tape for housebuilders and investors

Palmers Solicitors Business News, Commercial Property
Property tax changes could lead to more red tape for housebuilders and investors

Institutional investors and housebuilders with property portfolios across the UK could face increased administrative and compliance burdens as a result of a new property bill being introduced by the Welsh Assembly.

The new Land Transaction and Anti-Avoidance of Devolved Taxes Bill, which is due to be introduced in April 2018, will see Land Transaction Tax (LTT) replace Stamp Duty Land Tax (SDLT) in Wales.

The new Bill will have important implications for those buying or selling properties in Wales and will introduce separate and additional administration requirements for housebuilders and investors during cross jurisdictional transactions.

Maisie Yau, a commercial property specialist with Palmers, said: “The new tax, which will be collected by the Welsh Revenue Authority rather than HMRC, will be payable upon the purchase or lease of land or buildings. As yet full details, including the threshold at which this tax will become payable, have not been announced.

“A good commercial conveyancing solicitor will be able to provide advice on compliance issues and deal with much of the additional paperwork which LTT will create.”

The Welsh Government’s statement regarding the Land Transaction Tax and Anti-avoidance of Devolved Taxes Bill can be found here.

If your commercial property portfolio is likely to be affected by the new tax rules, or you need support with any aspect of property law or commercial conveyancing, please contact us.

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