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Commercial Property

Reasons to choose Wilson Browne

Wilson Browne act for landlords whose tenants are in the sector along with many businesses.

It’s going to be tough – find the latest updates to help see you through some challenging times ahead. Your business deserves all the help it needs.

10 July 2020 - Summer 2020 Economic Update

On 8 July 2020, the Chancellor of the Exchequer delivered the Summer 2020 Economic Update, which included the Plan for Jobs 2020.

In relation to planning reform, the government announced that it will introduce new legislation in summer 2020 to make it easier to “build better homes in the places people want to live”. New regulations will make it easier to convert buildings for different uses, including housing, without the need for planning permission.

In July 2020, the government will publish its long-awaited policy paper setting out the plan for a comprehensive reform of England’s planning system.

Read more here

10 July 2020 - Regulations enabling more venues to reopen in England from 4 July made

Whilst there were more announcements yesterday about businesses that can reopen shortly, on 3 July 2020, the Health Protection (Coronavirus, Restrictions) (No.2) (England) Regulations 2020 (SI 2020/684) (Regulations) were made. The Regulations revoke the Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 (SI 2020/350) (as amended) which had required most businesses and venues to close, and restricted individuals’ right of movement and assembly (see Legal update, Regulations restricting commercial activity and individuals’ rights of movement and assembly in England).

The main effect of the Regulations is that from 4 July, more businesses and venues can reopen provided they comply with the government’s COVID-19 Secure guidelines. The relaxation in restrictions affects hotels, places of worship, eateries (such as restaurants, cafes and pubs), hair salons, cinemas, museums and libraries. The list of businesses that must remain closed are listed in Schedule 2 of the Regulations and include dance halls, nightclubs, nail bars, casinos, certain indoor facilities (like gyms, play areas, skating rinks) and conference centres (unless the centre is used for events attended only by the centre’s employees).

The Regulations also prohibit all gatherings of more than 30 people, apart from some limited circumstances as set out in Regulation 5(3). For example, a larger gathering is permitted in a public outdoor place that is operated by (or part of premises used for the operation of) a business, a charitable, benevolent or philanthropic institution or public body as a visitor attraction, provided that the event organiser (which can be a business, charity, a public body or a political body) has carried out an appropriate risk assessment and takes all reasonable measures to limit the spread of the COVID-19 virus during the gathering.

The government has also published an series of FAQs called “What you can and can’t do after 4 July” which can be seen here

The guidelines can be viewed here

3 July 2020 - Government pledges to "build, build, build" and announces "Project Speed"

The government has committed to increasing its construction and infrastructure spending as a means of boosting the UK economy in the wake of the COVID-19 pandemic.

The government has announced £5 billion of capital investment for projects in England, including cash for the housing, education, prisons, justice, healthcare and transport sectors. It has also pledged to support infrastructure projects in Scotland, Northern Ireland and Wales, and work with the devolved administrations to that end.

Among other things, the government announced:

  • The formation of an Infrastructure Delivery Task Force, known informally as Project Speed, which will fast-track major building projects. The task force will be chaired by the Chancellor of the Exchequer, Rishi Sunak.
  • Publication of a revised national infrastructure strategy this autumn. Critics will note that this was originally promised by the end of 2019.
  • Changes to the planning regime, with legislation expected this September. Proposals include allowing vacant shops to be converted into homes without a planning application and allowing homeowners to build extensions “via a fast-track approval process”.

The government’s focus on infrastructure will be welcomed by the sector, although some commentators have questioned the true scale of the new funding. In that sense, the new Project Speed task force is perhaps just as important, because it suggests that key issues affecting the sector will be addressed swiftly at the highest level. However, the Prime Minister’s promise to “scythe through red tape” is nothing new, while his reference to “newt-counting delays in our system” will do nothing to assuage those with environmental concerns.

More information here 

 

26 June 2020 - Government relaunches consultation on Environmental Land Management Scheme (ELMS) policies

On 24 June 2020, the Department for Environment, Food and Rural Affairs (Defra) relaunched the online consultation on discussing the design and shape of a new Environmental Land Management scheme (ELMS), which was put on hold in April because of COVID-19. The new deadline to share views on the revised ELMS is 31 July 2020.

The consultation opened on 25 February 2020 and was scheduled to close on 5 May 2020.

Along with extending the consultation deadline, six webinars have been set up for farmers and land managers, to share their views and assist in designing the new ELMS. It will also discuss the impact of the proposals on the farmers, foresters and land managers.

Read more here

22 June 2020 - Government published a code of practice to help commercial landlords and tenants

On 19th June 2020, the Government published a code of practice to help commercial landlords and tenants map out plans for economic recovery during the coronavirus pandemic.

Developed in close collaboration between government and leaders from the sector, the code is designed to provide clarity for businesses when discussing rental payments and to encourage best practice so that every part of the chain is supported.

The code is voluntary in nature and is relevant for all commercial leases held by businesses in any sector which have been impacted by the coronavirus pandemic.

It encourages tenants to continue to pay their rent in full if they are in a position to do so and advises that others should pay what they can, whilst acknowledging that landlords should provide support to businesses if they too are able to do so.

It will apply across the UK and encourages tenants and landlords to be transparent in their discussions and to act reasonably and responsibly whilst recognising the impact that coronavirus has had on businesses’ finances.

The code represents best practice within the sector for responding to Covid-19 and is endorsed by the leading representative bodies who formed the code’s steering group:

  • British Chambers of Commerce
  • British Property Federation
  • British Retail Consortium
  • Commercial Real Estate Finance Council Europe
  • Revo
  • Royal Institution for Chartered Surveyors
  • UKHospitality

To date, a number of other organisations have also endorsed the code:

  • Agricultural Law Association
  • Association of Convenience Stores
  • British Beer and Pubs Association
  • British Independent Retailers Association
  • Central Association of Agricultural Valuers
  • Country Land Association
  • Federation of Small Businesses
  • Property Owners Forum
  • Scottish Property Federation
  • Tenant Farmers Association and Tenant Farmers Association Cymru
  • UKActive
  • UK Major Ports Group

The steering group will continue to work with government to ensure the sector is supported over the coming weeks and welcome further endorsements from representative bodies.

19 June 2020 - Outdoor animal attractions including farms permitted to re-open

The government has recently updated its guidance to reflect the fact that outdoor animal attractions are now permitted to re-open. This includes zoos, safari parks, farms, wildlife centres and any place where animals are exhibited to the public as an attraction.

The guidance states that visitors must continue to social distance and that indoor attractions and activities where people come into contact with other people, surfaces or animals (for example, children’s play areas and petting farms) must stay closed.

Read more here

2 June 2020 - Government guidance on the phased opening-up of sport facilities and activities

The Department for Digital, Culture, Media & Sport (DCMS) has issued guidance on the phased opening-up of sport and recreation facilities and activities. These apply to providers of outdoor sport facilities, personal trainers and coaches, and those involved in “elite” sporting activities (as defined), as well as to the public. The guidance supplements the Health Protection (Coronavirus, Restrictions) (England) (Amendment) (No. 2) Regulations 2020 (SI 2020/500).

The guidance will be of interest to commercial practitioners advising individuals, companies and local authorities providing or responsible for services and facilities in the sports and recreation sector:

  • Outdoor sports facilities (such as basketball and tennis courts, bowling greens and golf courses) and facilities for other outdoor sporting activities are permitted to reopen if those responsible for them are ready to do so and they can do so safely, following public health guidance, in particular the rules relating to distancing and hygiene. Indoor facilities, such as clubhouses, should be kept closed, apart from toilets and through-ways. Clubhouse bars and restaurants can offer take-away services, but consumption must be off the premises.
  • Each venue, including council-owned sport facilities, should make their own decisions about when their facilities are ready to open and can be operated safely. It is a decision for facility managers whether or not they hire out equipment, but they must implement sensible precautions, and clean equipment in between users.
  • Outdoor gyms, playgrounds and outdoor swimming pools must remain closed due to the higher risk of close contact and touching surfaces. Indoor facilities (such as changing rooms) should be kept closed, apart from toilets and through-ways.
  • Personal trainers may work with more than one client outdoors in a single day, provided each session is on a one-to-one basis, and those involved are maintaining social distancing and hygiene measures.
  • Individuals are asked to use the nearest, local appropriate venue to reduce pressure on transport infrastructure, but the new rules permit travel to outdoor open spaces irrespective of distance. Members of the public should not travel if they or a member of their household are experiencing coronavirus symptoms.

The guidance can be viewed here

1 June 2020 - Government plans to publish a code of practice to assist discussions between high street businesses and landlords over rental payments

On 29 May 2020, the government announced that it has established a working group with the commercial rental sector to develop a code of practice. The government intends that the code will:

  • Encourage fair and transparent discussions between landlords and tenants over rental payments during the COVID-19 pandemic, provide guidance on rent arrear payments and the treatment of those that are sub-letting and suppliers.
  • Be published before the next quarterly rent payment date of 24 June 2020.
  • Be a temporary measure. However, the government will consider making the code mandatory if necessary.

The government has stated that it will engage with Devolved Administrations to ensure the code applies across the United Kingdom.

There has been some relief afforded by:

  • Section 82(1)-(12) of the Coronavirus Act 2020, which contains express protections for business tenancies that restrict the landlord’s ability to forfeit a lease during the relevant period and the new CPR Practice Direction 51Z, which came into force on 27 March 2020.
  • The Taking Control of Goods and Certification of Enforcement Agents (Amendment) (Coronavirus) Regulations 2020 (SI 2020/451), which came into effect on 25 April 2020, and impose temporary restrictions on enforcement by landlords.

The Corporate Insolvency and Governance Bill, which was published on 20 May 2020, contains further provisions which will affect how landlords deal with matters if it is enacted, such as temporarily banning the use of statutory demands. However, hopefully a code of practice will be useful in facilitating discussions between landlords and tenants to enable the high street to survive.

Source

22 May 2020 - Regulations Introduced which amend publicity requirements for certain applications

The Town and Country Planning (Development Management Procedure, Listed Buildings and Environmental Impact Assessment) (England) (Coronavirus) (Amendment) Regulations 2020 (SI 2020/505) (2020 Regulations) came into force on 14 May 2020.

The 2020 Regulations temporarily amend certain requirements placed on local planning authorities (LPAs) and applicants for environmental impact assessment (EIA) development regarding the publicity and inspection of documents where the authority or applicant is not able to comply with a particular requirement due to the effect of COVID-19.

The following statutory instruments have been amended:

  • The Town and Country Planning (Development Management Procedure) (England) Order 2015 (SI 2015/595).
  • The Planning (Listed Building and Conservation Areas) Regulations 1990 (SI 1990/1519).
  • The Town and Country Planning (Environmental Impact Assessment) Regulations 2017 (SI 2017/571).

These amendments expire on 31 December 2020.

The Regulations can be found here

18 May 2020 - Extended deadline for VAT option to tax for land and buildings

On 14 May 2020, HMRC published new guidance, and updated Notice 742A and  existing guidance, stating that the deadline for notifying it of an option to tax (option) over land and buildings has been temporarily extended to 90 days from the date that a decision to make the option is made. The normal time limit is 30 days. The extended time limit applies where the decision to opt is made between 15 February 2020 and 31 May 2020.

The guidance also provides that HMRC will accept electronic signatures on the option. Evidence must be submitted that the electronic signature is from a person authorised to make the option on behalf of the business and, if the option is notified by an agent, that the agent had authority to use the electronic signature. This evidence may be submitted by email with a copy of the form. Examples of suitable evidence include an email (or email chain) showing that the authorised signatory had given authority for the use of the electronic signature. If the business notifies the option to HMRC, suitable evidence may alternatively be provided by the authorised signatory emailing the notification and including its email sign-off.

Read the full guidance here

It is off course imperative that you take advice form your accountant on VAT options and implications

18 May 2020 - Law Society amended statement on virtual execution and e-signatures

The Law Society has published an amended version of its statement of position on the use of virtual execution and e-signatures during the COVID-19 pandemic, which was originally published on 7 May 2020.

The main change that has been made to the statement is the deletion of the top tips section, including the removal of the statement in relation to the witnessing that, while best practice advice remains that witnesses must be physically present when a deed is being executed, if this is not possible, practitioners should consider whether having clear evidence, such as a video recording, would be adequate to prove compliance with the law if a dispute arises.

Save for certain formatting and typographical changes, there have been no further amendments or updates to the Law Society’s practice note on the execution of a document using an electronic signature, which remains substantially in the form that was published on 7 May.

Source

15 May 2020 - Social Distancing and common areas of multi-let buildings

As the current lock down restrictions are gradually being eased businesses are beginning to return to work. Whilst the government may be providing advice to businesses on how they should manage the safety of their staff, questions are being raised by businesses in multi-let office buildings over safety in common areas, such as the reception areas, washrooms, kitchens, stairways, lifts etc.

Tenants of offices in multi let buildings may well be putting in place provisions to enable social distancing within their own office space, but have no control over such common areas.  They are reliant on measures taken by landlords and building management teams.

In many cases it will not be feasible for commercial property landlords to restrict entry to a building by having, for example, staff queuing outside, as we have seen with the supermarkets, to limit the number of people in a building at any one time. Whilst individual businesses may be able to phase the time of staff arriving or departing, this is unlikely to be practical in large multi-let offices.

Potential solutions may include requiring staff and visitors to wear face masks whilst in those common areas, together with social distancing measures, such as restrictions on lift users, cutting the capacity of particular rooms by removing chairs and signposting walking directions, and increasing cleaning regimes may need to be introduced. Temperature screening, allocating a separate isolation room for those with symptoms, disabling any touchscreens and removing any shared items frequently touched (like remote controls) are also options. Landlords may even wish to move to no/low-touch doors, switches and other fittings.

Any increased costs incurred by the landlord are likely to be passed on to tenants through the service charge, where possible.  Both landlords and tenants will need to reacquaint themselves with the service charge provisions in their leases to see what can and can’t be recovered.

These are yet more practical problems which will need to be addressed in order to get the workforce back to a “new normal”.

15 May 2020 - Ministerial written statement on extending construction site working hours

On 13 May 2020, Robert Jenrick, Secretary of State for the Ministry of Housing, Communities and Local Government (MHCLG), issued a written ministerial statement on the situations in which a local planning authority (LPA) in England should allow a construction site to extend its working hours.

Under the written statement, commencing immediately:

  • LPAs are expected to approve a request to extend construction working hours temporarily until 9.00 pm, Monday to Saturday, unless there are “very compelling reasons” against it. Reasons for refusing an application may include a significant impact on neighbouring businesses or uses that are particularly sensitive to noise, dust or vibration, which cannot be overcome through other mitigation, or where impacts on densely populated areas would be unreasonable.
  • Modest changes to working hours can be agreed informally, with the LPA simply confirming that it will take no enforcement action. Longer-term or more significant changes require a written application to temporarily amend a condition or a construction management plan.
  • LPAs are expected to include guidance on how to apply for extended working hours on their websites and to decide applications within ten working days.

While the written statement suggests that requests to extend working hours should be proportionate and should not involve working on Sundays or bank holidays, it also recognises that there may be situations in which working hours can be extended beyond 9.00 pm, Monday to Saturday. For example, it raises the possibility of 24-hour working in areas without residential properties.

It is important to note that the flexibility given to LPAs by the written statement covers only the planning system and extends only to 31 May 2021.

Sources:

Written Statement

MHCLG Guidance

15 May 2020 - Government sets out proposed changes to make the planning system easier to operate

On 13 May 2020, the government published a planning update setting out proposed changes to make the planning system easier to operate during the COVID-19 pandemic.

Highlights include:

  • Proposed temporary amendments to the Community Infrastructure Levy (CIL) Regulations 2010 (SI 2010/948) including deferring payment of CIL for developers with an annual turnover of less than £45 million.
  • Confirmation that there will be no changes to the determination timescales for planning applications.
  • Introduction of temporary Regulations in relation to publicity arrangements for planning applications, listed building consents and environmental statements for Environmental Impact Assessment (EIA) applications.
  • Encouragement of local planning authorities to hold virtual planning meetings.

Read the full guidance here 

1 May 2020 - HMLR & Mercury Signing

HM Land Registry (HMLR) has announced that it’ll accept the ‘Mercury’ signing approach for deeds from Monday 4 May.

It’s also introducing some changes to their requirements to make it easier to verify identity for land transactions.

These are all temporary measures to address the current highly unusual coronavirus (COVID-19) situation.

HMLR has made it clear that these changes are temporary and may be modified or withdrawn at short notice if, for example, they’re considered to increase the risk to the register.

The ‘Mercury’ signing approach – electronic signatures

HMLR has made some temporary changes to make it easier for customers to verify a person’s identity for land.

Full details on these changes, including the conditions that must be satisfied, will be available from 4 May in the new Practice Guide 67A.

HMLR will accept deeds that have been signed using the ‘Mercury’ signing method.

The aim is to reduce problems with post, paper and scanning.

You’ll be able to email the transfer and other deeds to your client, who then only needs to print, sign and witness the signature page and take a photo of that or scan it before returning it to you by email for completion.

Read HMLR’s announcement in full here 

1 May 2020 - Planning Inspectorate (PINS) schedules first digital hearing

On 28 April 2020, the Planning Inspectorate (PINS) published an update on how planning appeals are being progressed during the COVID-19 pandemic.

Physical site visits have been postponed until the middle of May, as well as most hearings and inquiries where these were due to be held in May.

PINS is progressing appeals where:

  • The physical event was concluded prior to lockdown restrictions.
  • No physical event is required to make a decision.
  • A physical event is further in the future and preparatory activity can continue (for example, via telephone case conferences).

New planning appeals are still being registered.

PINS has prioritised implementing digital events to progress appeals during this time. The first digital hearing is scheduled to take place on 11 May 2020. The number of cases to be processed digitally is expected to increase from June/July 2020.

Postponed appeals will be re-assessed to see whether a digital, traditional or a hybrid approach can be used.

PINS is also trialling virtual site visits.

1 May 2020 - Environment Agency publishes update on its operations during pandemic

On 24 April 2020, the Environment Agency (EA) published an update on its operations during the COVID-19 pandemic. The update states that the EA is fully operational, although all except four of its offices are closed and the majority of its staff are working from home. EA staff will continue to visit sites, where necessary, for priority issues such as flood risk and pollution where serious environmental harm could be caused. Regulatory visits to other sites will be reduced.

Compliance with social distancing restrictions means that completion dates for new flood defence projects will be delayed and other key activities may take place at less regular intervals. As a temporary measure, flood alerts will not be issued where there is a very low likelihood of flooding.

27 April 2020 - Commercial Lease Break clauses in the current climate

A break clause in a lease is a provision which enables either party, but most commonly the tenant, to end the lease early.

After the 2008 there were lots of court cases between landlords and tenants as to whether a break clause had been exercised validly and the tenant was therefore able to end its obligations part way through a lease.  Landlords wanted the courts to decide that break clauses were not valid so the tenant remained on the hook and the tenants wanted to be let out of rentals which were now far above current market rates (given how much the market had reduced since the leases were signed).

Break clauses which tenants could use in leases often used to be subject to conditions that were almost impossible for tenants to comply with, which meant the break clause was useless.  Over the past few years a few conditions have generally been acceptable:

  • Prior written notice – often 6 months
  • Payment of annual rent
  • Vacant possession or preferably from the tenant’s point of view, giving up occupation

Those three conditions used to be within the power and control of the tenant.  But what about at the present?  If a tenant served notice last year to terminate the lease on say 15th May – how practically does a tenant “give up occupation” if it cannot arrange to remove its equipment?  There is a significant risk for tenants that they will not be able to comply with that last condition and as a result lose the ability to end the lease early.

If you are a landlord or a tenant with a break clause coming up where notice has been served please seek advice as to what can be expected in the current circumstances.

27 April 2020 - Government publishes Building Regulations guidance

The government has published guidance on how building control bodies should apply the Building Regulations during the COVID-19 pandemic.

Among other things, the guidance:

  • Addresses temporary healthcare buildings and related facilities, stating that the government does not currently intend to relax the Building Regulations’ requirements. However, it suggests that building control bodies take account of the exceptional circumstances in which work is taking place when determining what constitutes “reasonable provision” to meet the requirements of Schedule 1 to the Building Regulations, which sets out what work is required. (It is worth noting that local authorities themselves have the power to dispense with or relax Building Regulations requirements under section 8(2) of the Building Act 1984 and regulation 11 of the Building Regulations 2010 (SI 2010/2214).)
  • Gives general guidance on how building control bodies can cater for the COVID-19 pandemic. It suggests allowing a building owner to occupy a partially completed building where work has stopped, subject to certain safeguards. It also recognises that remote or virtual inspections of construction work may be appropriate, but stresses that they should not normally be the sole method of assessing compliance. (In this context, it is interesting to note that the Health and Safety Executive (HSE) has suspended its targeted inspection activity for the construction sector.)
  • Reflects previous government guidance, by repeating that remediation work on high-rise buildings with unsafe cladding should continue where it is safe to do so.

The guidance neither amends the Building Regulations nor extends a building control body or approved inspector’s existing powers. In fact, much of it reflects contingencies already developed by local authorities over the past month while waiting for government guidance. Despite this, it provides welcome confirmation of best practice and should aid consistency of application across the country.

 

27 April 2020 - RPI reform consultation deadline for responses extended to 21 August 2020

On 16 April 2020 the UK Statistics Authority (UKSA) and HM Treasury announced that they would be extending the time period for responses to the consultation of the reform of the Retail Prices Index (RPI) methodology to 21 August 2020 due to the Covid-19 pandemic.

HM Treasury had announced the launch of the joint consultation between the government and the UKSA on the latter’s proposed change on 11 March 2020. The consultation is seeking views on whether the proposed change to the RPI methodology should be made before 2030, and if so when between 2025 and 2030. The consultation document also proposes an approach to ensure a smooth transition between the existing and new methodology.

The consultation was originally due to close on 22 April 2020.

Source: Office for National Statistics: Consultation on the Reform to Retail Prices Index Methodology (updated 16 April 2020).

14 April 2020 - 5 Things For Commercial Landlords To Consider

We are all aware of the problems of carrying on as normal and how difficult it must be for many tenants to carry on trading and have sufficient cashflow to pay their rent.  However many commercial landlords may not be in a position to be magnanimous – they may have borrowings and obligations of their own and don’t wish to see their debt increase, even if a lender is not going to take any immediate action.  What things should a landlord look at and consider if their tenant is not able to pay the rent:

  1. Was there any guarantor provided by the tenant? Or does a former tenant remain liable under an Authorised Guarantee Agreement?  If so, and the rent arrears start to stack up, landlords must remember to serve a formal notice on the previous tenant within 6 months of the rent becoming due or with a standard lease guarantor, include them in any negotiations regarding rental payments.
  2. Are there any under-tenants? If the primary tenant has not paid the rent but the under-tenant has funds the landlord can direct the under-tenant to pay them directly.
  3. Rent Deposits – if a rent deposit was provided at the time the lease was granted, check the terms to see how and when a landlord can withdraw from the rent deposit. Landlords should also consider whether to vary the obligation in the rent deposit requiring the tenant to top up the deposit after withdrawal – it may be appropriate to give the tenant longer to do so, but again, if there is a guarantor, include the guarantor in those discussions.
  4. Change the frequency of the rental payments – many leases provide for rent to be paid quarterly. It could ease a tenant’s cashflow if that were changed to monthly but landlords should remember to change their invoicing so they are not liable for a full quarter’s VAT on the rent if they have only received one month’s worth.
  5. Ask the tenant for full information as to what government assistance is available for their business so landlords can assess the seriousness of any tenant requests for rent reductions.

These are unprecedented times and all parties involved will be looking for a way to preserve their business and find a way through until normality can return.

07 April 2020 - Construction Sites and Covid-19

The recent social distancing guidelines put in place by the Government have undoubtedly affected the way all industries are now working. One industry in particular has raised numerous questions and uncertainties about how future work and contracts will be affected.

As offices around the country close their doors and their employees move to remote working, many construction sites remain open for business as usual. This means that pressure is being placed on companies who find themselves torn between adhering to the government instructions and fulfilling their contracts with larger contractors.

The question that many UK businesses now face is ‘will I be subject to a claim for breach of contract and damages if we choose to stop work in light of the pandemic?’. Unfortunately the answer is not a straightforward one.

While many companies are taking a commercial view on contracts already entered in to in light of the climate we now find ourselves in, many businesses now face the threat of legal action, damages for breach of contract and the legal costs that are involved with it.

Every contract is different, the specific terms of the contract entered in to will be vital to ascertain your business’s position. It is therefore critical that you obtain the right commercially effective advice for your business, especially in the uncertain times we find ourselves in.

6 April - New regulations for Takeaway Opportunities for Restaurants and Pubs

The necessary regulations have now been made by the Government to introduce a permitted development right to allow restaurants, cafes and pubs to operate as hot-food takeaways as a way of continuing business during the Coronavirus crisis.  The Town and Country Planning (General Permitted Development) (England) (Amendment) Order 2020 came into force on 24 March.

The regulations have introduced a new class of permitted development, Class DA. This permits the change of use of premises falling in use Classes A3, A4 and mixed use  A3/A4, or drinking establishments offering an expanded food provision (Class AA) to be used for the provision of takeaway food. The permitted use includes uses within Class A5 as well as any other use for the provision of hot or cold food for collection or delivery for consumption off the premises. The right is temporary and will be in force from 24 March 2020 to 23 March 2021.

The permitted development right is subject to a condition requiring that the Local Planning Authority is notified of the change of use.  It is therefore important for anyone wishing to take advantage of this change to notify the Planning Authority before commencing such use. Following either the expiration of the temporary right, or (if earlier) the point at which a premises ceases to provide takeaway food the lawful use of the premises will revert to its previous lawful use.

Businesses looking to rely on this change should however bear in mind that there may be other restrictions affecting the property.  For example there maybe specific planning conditions, in which case they should liaise with the Planning Authority before making the change.  Furthermore, there may be restrictions within the title documents, such as covenants restricting use.  This can be of particular importance to tenants of rented properties, as they will need to obtain their landlord’s consent to the change.

6 April 2020- COVID-19: Guidance On Energy Performance Certificates (EPCs)

On 2 April 2020, the Ministry of Housing, Communities and Local Government published guidance on meeting the regulatory requirement to secure a valid energy performance certificate (EPC) when marketing a property during the COVID-19 outbreak.

The guidance states that:

If a property is vacant, an EPC can be carried out. If a property is occupied, parties must endeavour to agree that the transaction can be delayed so that an EPC assessment can proceed when stay-at-home measures are no longer in place. No assessments should take place if any person in the property is showing symptoms, self-isolating or being shielded.

Source: https://www.gov.uk/guidance/coronavirus-covid-19-energy-performance-certificates

19 March 2020 - Government lists Farmers and Food Production workers as "Key Workers"

On 19 March 2020, the government has listed farmers and food production workers as “key workers”, and critical to 2019 novel coronavirus (COVID-19) response. Schools, and all childcare providers, being asked to continue to provide care for a limited number of as children whose parents are key workers and cannot be safely cared for at home.
Source: Gov.uk: Guidance for schools, childcare providers, colleges and local authorities in England on maintaining educational provision (19 March 2020).

Advice for Landlords and Tenants

Commercial Leases & the impact of COVID-19

(Originally published 19th March, updated 24th March)

There are lots of considerations and concerns that both Landlords and Tenants will have in relation to commercial leases as a result of the Corona virus outbreak.

We have set out below some considerations for both Landlords and Tenants which are by no means intended to be an exhaustive list but are there to give a few pointers as to the initial concerns each party may have.

It goes without saying that if you have any queries as to how your Lease is drafted and to be interpreted then you should speak in the first instance, with the lawyer who drafted the same for you.

Considerations for Landlords

1. Is my Tenant entitled to stop paying rent or apply a rent reduction?

We originally stated that “The Tenant will not automatically be entitled to stop paying rent or to apply a rent reduction.

There will no doubt be provisions in your lease to allow for collecting interest on unpaid rent or imposing forfeiture (ie. bringing the lease to an end). However, in these uncertain times it would be sensible to have open conversations with your Tenant.

If you were, for example, to forfeit the lease for non-payment of rent, would you be immediately able to source a new Tenant?

If you were to bring an action for the rent arrears in the current climate would your Tenant have the resource to pay in any event?

That is not to say that any reductions or payment holidays need be agreed but it would be very sensible to have open and transparent conversations with your Tenant at an early stage.”

The government has subsequently issued guidance stating that commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction, initially for 3 months (source)

The government has said that as commercial tenants will still be liable for the rent after this period, the Government is also actively monitoring the impact on commercial landlords’ cash flow and continues to be in dialogue with them.

It is therefore imperative to follow and keep uptodate with the latest government guidance.

2. Do I owe any duties to my Tenant?

This will depend upon the wording of the Lease. If there is a service charge then there will be duties upon you as a Landlord to provide services. You will remain liable for providing such services, although if it is not possible to provide them (for example where materials or labour are not available) then there will more than likely be provisions in your Lease to say that you are not obliged to provide services where you are prevented from doing so due to reasons beyond your control.

It may well be that as a Landlord you need to provide more services at this time such as increased cleaning, or deep cleaning and inspections etc. which inevitably will lead to additional cost, although that would more than likely be recoverable under the service charge provisions.

3. I’ve read the above, but my Tenant says coronavirus is a force majeure

Commercial Leases do not, as a general rule, contain force majeure provisions, so the Tenant will not be able to argue that their obligations under the Lease are suspended because of the Corona virus. Nor though, will you be able to use that argument either.

Whilst the Government are making daily announcements and introducing new legislation to cope with the Corona virus crisis, there is nothing at present to suggest that the Courts would imply a force majeure provision into a Lease.

That being said it is of course imperative that you keep up to date with the latest Government announcements etc. as can be seen with the latest announcement that commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction, initially for 3 months (source)

4. Regardless of force majeure, my Tenant has said the Lease is frustrated

There has been recent Case Law relating to arguments of frustration of Leases and the most recent one being a case arguing that Brexit would frustrate a Lease if the Tenant was forced to relocate to another member state.

In that case the High Court did not agree and whilst this is a very different situation, it is hard to foresee at this stage a scenario where the Courts would say that the Lease had become frustrated.

That being said it is of course imperative that you keep up to date with the latest Government announcements etc. as can be seen with the latest announcement that commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction, initially for 3 months (source)

5. Can I vary the opening hours for my Tenant?

It will depend very much on the wording of the Lease. If it is a retail Lease then it may well give the Landlord the right to change the opening hours of the property where it is reasonable to do so. So, for example, if the Government issues guidelines about acceptable trading hours then it would be reasonable for the Landlord to vary those.

6. An employee of the Tenant has coronavirus can I insist they shut?

The Lease will have a quiet enjoyment provision meaning that as a general rule you cannot prevent the Tenants from accessing or occupying their premises during the term of the Lease. However, please do see bullet point 7 below.

7. What about closing for heath & safety grounds?

Where you as a Landlord have let parts of a property and retained control of common areas or other parts of the property then you may need to take action either resulting from your obligations as an employer of staff or generally under Health & Safety obligations.

There is likely to be provision within the lease to allow you to imply reasonable regulations for the management of the building which could include limiting access to common parts to stop the spread of any virus, but again, you need to be careful as to how that impacts on the tenant’s right for quiet enjoyment and clear access to their Property.

As mentioned above, it is for these reasons that we strongly advise you have a clear line of communication with your Tenant in order to work through potential scenarios in good faith.

Considerations for Tenants

1. Can I stop paying my rent?

When we first published this article we said “In short the answer is No. The Lease will set out the days upon which rent is to be paid and the only possible suspension of rent provisions are likely to relate to damage to the building in certain circumstances.”

It remains the case that rent will be owed during the lease term and does not simply fall away, but the government has subsequently issued guidance stating that commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction, initially for 3 months. (source)

The Coronavirus Bill is still passing through parliament and so it is imperative that you keep up-to-date with the government guidance pages in this regard as the situation is ever-developing. Any protection from eviction does not negate the rent, and any interest, becoming due.

2. If I can’t stop paying then am I at least entitled to a reduction in my rent?

Any protection from eviction does not negate the rent, and any interest, becoming due and again there will be nothing in your lease to allow a reduction in rent.  Regardless of the Lease wording and the ever-developing government advice, what may be beneficial is to have an early and open communication channel with your landlord to discuss this.

Whilst you may not be able to insist upon it under the terms of the Lease, the Landlord may be agreeable to discussions relating to this and it may be possible to vary the Lease or otherwise issue a side letter to cover some short term arrangement here.

3. Aside from rent are there any other duties I owe to the Landlord if I have to vacate for self-isolation / home-working etc.?

It will very much depend on your Lease, but quite possibly yes. There are likely to be other obligations in your Lease, such as notifying the Landlord if the property would be left unoccupied for a certain period of time, possibly putting appropriate security arrangements in place if that is the case.

As a general rule all of your obligations under the Lease will continue to apply and the Landlord has no duty to offer any concessions to you in respect of those obligations. However, if you are likely to encounter difficulties then it will be worth speaking with the landlord at an early stage.

4. Will my insurance cover me?

It will very much depend on the terms of your policy and in particular the business interruption section and whether you have opted to cover loss arising from infectious diseases. However, even if you have done that, the policy will set out which diseases are covered and how a new disease would or would not be covered.

It is important that you review your policy at your earliest opportunity and if in doubt speak with your mortgage broker/adviser as soon as possible.

5. Can I close the premises?

Again, it will depend on the wording of the Lease but as a general rule most Leases do not oblige Tenants to remain in physical occupation and in the absence of such a clause the Landlord would not have a right to insist you remain in occupation and trading.

That being said, as outlined at bullet point 3 above, there may be obligations to notify the Landlord of any long term absence from the premises.

Ok, so you’ve listed the considerations for Landlords and Tenants above, but what practical steps can parties be taking?

These are very much unprecedented times, for which commercial leases do not cater.

It is imperative that people communicate. Landlords and Tenants are going to have to work together to find a mutually workable solution. Leases are not generally drawn up to deal with this specific type of scenario and there are likely to be provisions for both Landlord and Tenant that each party will have difficulty complying with at some point during the Corona virus outbreak.

It is important for both parties to be aware of what clauses they can and cannot rely on, but realistically you will probably only want to look at that in detail and consider any actions if relations between Landlord and Tenant become strained.

Open communication and an intention to work together in good faith have got to be a priority here. Landlords who do not give tenants some leeway, are likely to find tenants in financial difficulties which will then have an impact on their rental stream.

All parties should keep up to date with the latest Government announcements  and any changes in legislation that come and to keep an open dialogue. Naturally, if you have any concerns whatsoever, we are happy to talk to you about this.

Landlord & Tenant considerations for new leases

Where Landlords & Tenants are negotiating new leases now they should be considering:

  • Whether there should be the inclusion of a force majeure clause
  • Whether the rent suspension clauses or possibly even break clauses should also cover scenarios not linked to damage or destruction to the property, perhaps not as specific as to mention Coronavirus, but for example if the government imposes self-isolation measures or if a certain proportion of the workforce is ill and unable to operate, or where there is a national impact on supply of goods and materials depending on the type of business operating from the premises.
  • Situations where a landlord may need to impact the quiet enjoyment

If you are negotiating a new lease, speak to your agent and solicitor at an early stage to assist with these considerations.

 

 

Commercial Tenant Protection from Eviction for 3 Months

Guidance published 23rd March 2020

Government announces that no commercial tenant is to be evicted if they cannot pay their rent because of coronavirus over the next three months.

The Government has announced that commercial tenants who cannot pay their rent because of coronavirus will be protected from eviction.  This follows similar provisions for residential tenancies announced last week.

These measures, included in the emergency Coronavirus Bill currently going through Parliament, will mean no business will be forced out of their premises if they miss a payment in the next three months.

As commercial tenants will still be liable for the rent after this period, the Government is also actively monitoring the impact on commercial landlords’ cash flow and continues to be in dialogue with them.

The change will come into force when the Coronavirus Bill receives Royal Assent. It will last until 30 June, with an option for the government to extend if needed.

Communities Secretary, Rt Hon Robert Jenrick MP, said:

“We are protecting both people and their businesses by providing the urgent support they need.

“We know many commercial landlords are already setting a great example by working closely with tenants and offering rent deferrals or holidays.

“However, these new measures will provide reassurance to businesses struggling with cashflows and ensure no commercial tenant is evicted if they cannot pay their rent because of coronavirus over the next three months.”

The Chancellor of the Exchequer, Rishi Sunak MP, said:

“We are taking unprecedented action and doing so at unprecedented speed, because we know that businesses and their employees need help now.

“That is why we are taking steps to change the law so that no company can be forced out of its premises due to loss of income. Alongside our support for workers and £330 billion of business loans and guarantees, this will help make a real difference to firms across the country trying to protect jobs.”

Business Secretary, Alok Sharma MP said:

“This measure will provide companies with an essential safeguard in these highly unusual times as they deal with the impact of coronavirus.

“This is part of the unprecedented package of support we have put in place to protect jobs and livelihoods right across the country.”

Mike Cherry, Federation of Small Businesses National Chairman, said:

“Small businesses will wholeheartedly welcome the decision to ban evictions for commercial tenants for three months.

“This will give piece of mind to millions of small businesses who are desperately struggling with their cash flow.

“We know sensible conversations between landlords and commercial tenants are taking place – but having this legislative backstop to prevent evictions during the worst of the crisis will provide much needed peace of mind for many small businesses.”

The Coronavirus Bill also includes new measures to ensure that Business Improvement  Districts (BID) are equipped to continue their vital role in managing the impact of the crisis on local economies and helping town centres and high streets recover.

To ensure no area loses its Business Improvement District at this critical time, emergency legislation will allow a delay to ballots between now and 31 December 2020 until March 2021. This will ensure that they are conducted in a safe and effective way.

Simon Quin, High Streets Task Force Executive Director, said:

“These are important steps that will strengthen town centres and commercial areas as they prepare for the future.

“They will encourage retention of occupancy and ensure Business Improvement Districts can focus on support for their local areas through the emergency and into recovery. This will make places more resilient.”

Source

Help for the Hospitality Sector

The government has announced a number of measures to assist businesses in the retail, hospitality and leisure businesses in England in light of the current Covid 19 crisis.

There will be a business rates retail holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.

Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Guidance for local authorities on the business rates holiday will be published by 20 March.

The government will provide additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR). This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs.

If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply.

Funding for the scheme will be provided to local authorities by government in early April. Guidance for local authorities on the scheme will be provided shortly.

Wilson Browne act for many businesses operating in this sector, along with landlords whose tenants are in the sector, so any steps which can assist the continuation of these businesses through this difficult time are welcomed.

There are also new measures for loan facilities for businesses generally.

Source:

Pubs and Restaurants to be used as Takeaways

The government has announced that in the midst of the Covid 19 crisis planning rules will be relaxed so pubs and restaurants can operate as hot food takeaways during the outbreak.

Currently, planning permission is required for businesses to carry out a change of use to a hot food takeaway. The government has confirmed regulations will be relaxed to enable businesses to deliver this service without a planning application.

Communities Secretary Rt Hon Robert Jenrick MP said:
“We are committed to doing everything we can to tackle the pandemic and support people, businesses and communities through this difficult time.
“These changes will provide vital flexibility to pubs and restaurants and will ensure people are able to safely stay at home while still supporting some of the great local businesses across this country.”

The government has confirmed the relaxations to planning rules will be put in place as soon as possible to provide reassurance to businesses and enable them to start providing takeaways to people quickly.

The measures will apply to hot food and drinks. Serving of alcoholic drinks will continue to be subject to existing licensing laws.

The government will introduce a time limited permitted development right through secondary legislation to allow the temporary change of use of a pub (A4 – drinking establishment) and a restaurant (A3 – restaurants and cafes) to a hot-food take away for a period of up to 12 months only.

Businesses will be required to tell the local planning authority when the new use begins and ends.

Source: