Case History
04/Jan/2012 14:48 Topics Rent Review | Case History for Tenants
Acting for the tenant of a small restaurant with a self-contained flat in West Kensington, London W14, the rent proposed up to £27,250 pa from £9500 pa, argument centred on 1) failure by the tenant to obtain landlord’s consent for alterations, 2), whether the works were, in compliance with statutory requirements, obligation to the landlord, 3) the value of the flat.
Following my involvement, the landlord’s surveyor reduced the proposal to £20,000 pa, and threatened referral to an independent expert if my Client would not agree. I recommended my Client to not agree. We appointed an Independent Expert by choice, requesting a reasoned determination. The expert accepted that, whereas the tenant had not obtained consent for alterations and the lease prohibited alterations, the landlord could be said to have acquiesced; also the works were voluntary. A premium rent for the A3 use was rejected since the clause stated any use within Class A. My approach to valuing the flat achieved 60% discount. The outcome was £13,740 pa and a delighted Client.
Before letting me handle the instruction my way, the tenant urged me to promote the sympathetic line, plying the landlord with information I should never have disclosed. People often judge my character wrongly. I am not noted for my positive style so sometimes clients want to take charge of the negotiations without understanding that their approach would likely fail. Perhaps a reflection of popular opinion amongst many tenants that reasonable people should be able to reach an acceptable outcome, without involving surveyors. Affable overly perhaps, but landlords are not necessarily reasonable.
To ignore the lease and focus on rent departs from how reviews are done and often exposes the tenant to unnecessary compromise. A review is not about give and take, but quantification of what is written. The onus is on the landlord’s side to draft, the tenant’s side to approve the lease. A landlord cannot have it both ways, but a tenant can. If the landlord manages the relationship casually or the lease contains points prejudicial to investment, then tough. The advantage of referral is to circumvent the opponent’s stance and focus on lease analysis and valuation. Provided reasoning is unemotional, a technical presentation to expert or arbitrator can be a better bet. In this case, the extra total cost to the tenant, including my fees, was approximately 20% of the saving; a small price to pay for enhancing the marketability of the business.
Following my involvement, the landlord’s surveyor reduced the proposal to £20,000 pa, and threatened referral to an independent expert if my Client would not agree. I recommended my Client to not agree. We appointed an Independent Expert by choice, requesting a reasoned determination. The expert accepted that, whereas the tenant had not obtained consent for alterations and the lease prohibited alterations, the landlord could be said to have acquiesced; also the works were voluntary. A premium rent for the A3 use was rejected since the clause stated any use within Class A. My approach to valuing the flat achieved 60% discount. The outcome was £13,740 pa and a delighted Client.
Before letting me handle the instruction my way, the tenant urged me to promote the sympathetic line, plying the landlord with information I should never have disclosed. People often judge my character wrongly. I am not noted for my positive style so sometimes clients want to take charge of the negotiations without understanding that their approach would likely fail. Perhaps a reflection of popular opinion amongst many tenants that reasonable people should be able to reach an acceptable outcome, without involving surveyors. Affable overly perhaps, but landlords are not necessarily reasonable.
To ignore the lease and focus on rent departs from how reviews are done and often exposes the tenant to unnecessary compromise. A review is not about give and take, but quantification of what is written. The onus is on the landlord’s side to draft, the tenant’s side to approve the lease. A landlord cannot have it both ways, but a tenant can. If the landlord manages the relationship casually or the lease contains points prejudicial to investment, then tough. The advantage of referral is to circumvent the opponent’s stance and focus on lease analysis and valuation. Provided reasoning is unemotional, a technical presentation to expert or arbitrator can be a better bet. In this case, the extra total cost to the tenant, including my fees, was approximately 20% of the saving; a small price to pay for enhancing the marketability of the business.
Stock Market
18/Aug/2011 11:30 Topics Investment | Stock Market
People talk about the peak of the market and how prices now are low or good value in comparison, but the peak can only be pin-pointed long after it has been passed and each peak is a consequence of how things were before the market reached that stage.
As to whether prices now are low surely depends upon whether the higher prices could return. There is no reason to think they won't, conversely none to think they have to. Interesting whenever the FTSE gets to 6,000 or more it takes a tumble; suggesting that anything much above is pushing it beyond its comfort zone. In July 2007, FTSE was about 6700, by March 2009 it was about 3500.
It is also likely that where prices are now could be considered a peak in their own right. I am looking forward to the FTSE dropping to around 4500 possibly lower later this year. The current yield of about 3% is not, imo, pricing in enough risk: there is no reason why yield should not be around 5% or so.
Break clause
24/Jun/2011 19:22 Topics Investment | Break Clause
Per NYK Logistics (UK) Ltd v Ibrend Estates BV [2011] the Court of Appeal has held that a tenant failed to give vacant possession pursuance to the terms of the break clause in its lease.
The tenant did not have to carry out repairs as a condition of the exercise of the break clause, but wanted to do them to control costs and quality and avoid a dilapidations claim for damages in excess of its own costs in doing the repairs. The tenant had not finished its repairs by the break date. Although the tenant had tried to contact the landlord to agree an extension of time to continue the repairs, the landlord had failed to respond. Workmen (employed by the tenant) remained in the property following the break date to finish off the outstanding repairs. The tenant also continued to employ a security guard for a further week following the break date because of concerns that the property would be vandalised.
The Court of Appeal held that the tenant should have moved everyone out of the property by midnight on the break date, including its security guard. The tenant should have contacted the landlord's agent on the break date to explain it was vacating and agreed to deliver the keys that same day. The tenant could then have contacted the landlord on the next working day and asked the landlord whether it would permit the tenant to return to the property, as its licensee, to complete the outstanding works. The tenant also failed on its subsidiary argument that the landlord had waived performance of the requirement to provide vacant possession.
The tenant did not have to carry out repairs as a condition of the exercise of the break clause, but wanted to do them to control costs and quality and avoid a dilapidations claim for damages in excess of its own costs in doing the repairs. The tenant had not finished its repairs by the break date. Although the tenant had tried to contact the landlord to agree an extension of time to continue the repairs, the landlord had failed to respond. Workmen (employed by the tenant) remained in the property following the break date to finish off the outstanding repairs. The tenant also continued to employ a security guard for a further week following the break date because of concerns that the property would be vandalised.
The Court of Appeal held that the tenant should have moved everyone out of the property by midnight on the break date, including its security guard. The tenant should have contacted the landlord's agent on the break date to explain it was vacating and agreed to deliver the keys that same day. The tenant could then have contacted the landlord on the next working day and asked the landlord whether it would permit the tenant to return to the property, as its licensee, to complete the outstanding works. The tenant also failed on its subsidiary argument that the landlord had waived performance of the requirement to provide vacant possession.
Buyers of property to let less deserving of protection
21/Jun/2011 14:16 Topics Investment | Valuation
Per Scullion v Bank of Scotland plc (t/a Colleys) [2011] the Court of Appeal has overturned the High Court decision that for buy-to-let residential property the valuer was liable to the purchaser.
The CA held that although the valuer had been negligent and the purchaser had relied upon the valuer’s report (amongst other advice) when deciding to proceed, the purchaser did not establish foreseeability of damage or a sufficient degree of proximity between himself and the valuer.
Nor did the purchaser show that it would be "fair, just and reasonable" to impose (on the valuer) a duty of care to the purchaser. The Court held there were important distinctions to be made between valuations for buy-to-let purposes and those made for home buyers.
The court commented that those buying properties to let, were less "deserving of protection by the common law against the risk of negligence than those buying to occupy as their residence."
The CA held that although the valuer had been negligent and the purchaser had relied upon the valuer’s report (amongst other advice) when deciding to proceed, the purchaser did not establish foreseeability of damage or a sufficient degree of proximity between himself and the valuer.
Nor did the purchaser show that it would be "fair, just and reasonable" to impose (on the valuer) a duty of care to the purchaser. The Court held there were important distinctions to be made between valuations for buy-to-let purposes and those made for home buyers.
The court commented that those buying properties to let, were less "deserving of protection by the common law against the risk of negligence than those buying to occupy as their residence."
Listed Buildings
01/Jun/2011 09:42 Topics News | Investment
English Heritage has created a searchable database of all nationally designated heritage assets including Listed Buildings, Scheduled Monuments, Registered Parks and Gardens, Registered Battlefields and Protected Wreck Sites.
http://list.english-heritage.org.uk/
http://list.english-heritage.org.uk/