The Henry Stewart Annual Lease Renewal Conference, Monday 15 May 2000

Property Management

ISSN: 0263-7472

Article publication date: 1 December 2000

Citation

Cottrell, P. (2000), "The Henry Stewart Annual Lease Renewal Conference, Monday 15 May 2000", Property Management, Vol. 18 No. 5. https://doi.org/10.1108/pm.2000.11318eac.001

Publisher

:

Emerald Group Publishing Limited

Copyright © 2000, MCB UP Limited


The Henry Stewart Annual Lease Renewal Conference, Monday 15 May 2000

The Henry Stewart Annual Lease Renewal Conference, Monday 15 May 2000

This was an annual conference by Henry Stewart with the day devoted to an examination of current issues, problems and solutions. The speakers were an interesting mix of an academic and practitioners from the legal and surveying professions. The panel comprised Michael Driscoll QC, Professor Del Williams, Graham Fife (Solicitor) and Simon Curtis (Chartered Surveyor and Arbitrator).

The session covered a number of relevant topics:

  • Avoiding the Act.

  • Procedures post WooIf.

  • Renewals of part only – what is possible?

  • Compensation and the rating revolution.

  • Interim rents in the current market.

  • Possession for redevelopment.

  • Problems with notices.

  • Current issues.

Avoiding the 1954 Act

The need to include this session seemed to imply that it was either topical (recent cases) or perhaps that plenty of landlords are actively managing their portfolios. The statutory context was reviewed highlighting some of the latest Civil Procedure Rules requirements. The principal means of avoiding the Act included Tenancies at Will, Leases not exceeding six months and Licences. Street v. Mountford, lest we forget, held that where residential accommodation was granted with exclusive possession for a term at a rent (the landlord providing neither attendance nor services), the result was a tenancy, not a licence. Later cases however have confirmed that the Street case applies also to commercial property.

Procedures post WooIf

This was an interesting talk, reviewing the existing legislative framework discussing landlord and tenant tactics. A tenant for example will be well advised to serve his s26 request as late as possible but still before his landlord serves a s25 notice. This is based on the reasoning that the tenant will make his own notice a longer 12 month notice thereby extending the old lease (on old rental terms) for the maximum possible time. Conversely a tenant may become aware that a landlord will seek repossession but may not yet be able to show sufficient intention. He will therefore seek an early hearing to embarrass the landlord. All may not be lost for the landlord however, as he may well obtain a break clause in any renewed lease.

The point was made that it can be frustrating for both parties to have a County Court Judge, more experienced at sending criminals to prison, decide what a commercial rent might be! Current proceedings are also subject to delay and unacceptable expense. It can still take a year or more for proceedings to be settled. An application to Court may require services of both a solicitor and surveyor, which increases costs. Any need for counsel will add to those costs. While the alternatives to litigation, namely arbitration, expert determination or mediation may be both quicker and cheaper, at least the judge is free!

The new rules of civil procedure became effective from 26 April 1999. One thing is clear, the new system "front loads" the expense for the tenant compared to the old system.

The new rules were intended to simplify the procedure but were a shambles at first and it still remains to be seen if they will be effective. The new rules are designed to avoid opportunities for delaying tactics and give judges more leeway. Judges are expected to "encourage" parties to settle disputes using ADR (Alternative Dispute Resolution) methods such as PACT (Professional Arbitration on Court Terms). But there is no compulsion. PACT was reviewed at some length, concluding that it has not so far proved to be popular. Where however, rent was the only issue between the parties, PACT would be of benefit to both.

Renewals of part only – what is possible?

Studying cases on renewal, the speaker began, is about as "fruitful as breeding rocking horses". They are not a perfect guide for the professional advisor. The talk started with a review of the O'May principles. And whilst most practitioners know that the terms need to be fixed before the rental can be calculated, in reality it is done the other way round. Consideration as to how long the new tenancy should be, related instead, to how short it should be. The tenant's wishes are likely to be met on the basis that the purpose of the 1954 Act is to protect the tenant's security of tenure and no more. A number of cases from the 1990s were reviewed on this topic.

Renewals of part is relevant for many businesses wishing to downsize and some useful practical points were made. Finally, a real case study was examined. This involved a recovery of sublet space. The points were well made and it was well received by delegates.

The afternoon session considered a number of lease renewal matters including compensation and the rating revolution. It was noted that City office rents for example, have increased by 175 per cent since the last rating list came into force. Disturbance compensation is based on a multiple of the rateable value. The relationship between the dates of the landlord's s25 or s26 counter notice and the current antecedent date of 1 April 2000 is therefore hugely significant.

Interim rents, repossession problems and validity of notices were all revisited. The leading case on imperfect notices of Mannai Investment Co. Ltd v. Eagle Star Life Assurance Co. Ltd was explored in detail. The significance of this House of Lords case was particularly relevant to those delegates of a legal background.

The day finished with a session using a question and answer style, which was a welcome diversion. How does a 1954 Act renewal for example affect the tenant's liability on the repairing covenants under his current tenancy? A total of 16 such questions were posed and answered in addition to delegates' questions at the end.

Paul CottrellUniversity of Glamorgan