Commercial property. 2013

481 Pages·2013·3.48 MB·English

by  Anne Rodell, College of Law (England and Wales)

i
COMMERCIAL PROPERTY
ii Commercial Dispute Resolution
iii
COMMERCIAL PROPERTY
Editor
Anne Rodell MA (Cantab), Solicitor
Contributors
Simon Halliwell, Clare Harris, Sue Highmore, Leona Mason,
Stephanie McGuiness, Vanessa Ralph, Anne Rodell, Robert Tam
and Matthew White
iv Commercial Dispute Resolution
Published by
College of Law Publishing,
Braboeuf Manor, Portsmouth Road, St Catherines, Guildford GU3 1HA
© The College of Law 2013
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any way or
by any means, including photocopying or recording, without the written permission of the copyright holder, application for
which should be addressed to the publisher.
Crown copyright material is licensed under the Open Government Licence v1.0.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.
ISBN 978 1 909176 21 8
Typeset by Style Photosetting Ltd, Mayfield, East Sussex
Printed in Great Britain by Polestar Wheatons, Exeter
v
Preface
The aim of this book is to provide law students with a comprehensive introduction to the areas of property
law particularly relevant to commercial property.
Part I of the book deals with areas relevant to property acquisition and development. These include
structures for joint ownership, arrangements for funding, contractual arrangements with the seller, the
need for planning permission, environmental considerations, contractual arrangements with members of
the construction team and taxation. Part II takes the reader through the grant of a commercial lease, the
assignment of that lease and its termination. Part III deals with the law relating to property and insolvency.
Although we hope that this book will provide a useful guide to trainee solicitors and others involved in
commercial property work, it is primarily intended to complement the Stage 2 Advanced Property Law and
Practice elective on the Legal Practice Course. This elective is only undertaken once the Stage 1 Property
Law and Practice course has been completed. Apart from the matters specifically mentioned in Part I of
this book, the conveyancing process for the transfer and leasing of commercial property is as described in
the Legal Practice Guide entitled Property Law and Practice accompanying the Stage 1 course, so the
conveyancing process is not dealt with in this book.
The College of Law would like to thank the Practical Law Company for authorising the use of the following
documents in this book:
• Practice note on Overage Payments <http://uk.practicallaw.com/4-200-2514> (Chapter 3)
• Lease of floor(s) of an office block with guarantee and prescribed clauses <http://uk.practicallaw.com/
9-218-6006> (Appendix 4)
• Diagrams on procurement <http://uk.practicallaw.com/9-329-1308> and linked documents (Chapter 9)
The current team of authors would like to acknowledge the valuable contributions made by Paul Butt and
Neil Duckworth to earlier editions of this book. The current team of authors bears responsibility for any
failings in this edition.
The law is as stated as at 1 September 2012.
Anne Rodell
The College of Law
Guildford
vi Commercial Dispute Resolution
About the Contributors
Simon Halliwell specialises in non-contentious construction and projects transactions. He trained at
Linklaters LLP and qualified there as a solicitor in 2003, where he spent six years in the Real Estate
department, before moving to leading US law firm, King & Spalding International LLP, and then Herbert
Smith LLP. Simon has worked on complex and high-value transactions both domestically and
internationally, acting for major developers, investment banks, blue-chip commercial organisations and
governmental institutions.
Clare Harris is a Senior Lecturer at the College of Law. She qualified as a solicitor in 1994, working as a
commercial property lawyer for Edge Ellison (now Squire Sanders) and NatWest bank. In 2001 she moved
to the College of Law where she currently teaches property law and advanced property law. Clare is co-
author of Property Law in Practice.
Sue Highmore is an editor with PLC Property. She specialised in commercial real estate at Linklaters for
over 25 years and was appointed as its head of real estate knowhow and training in 2002. As Counsel there,
Sue was responsible for development and delivery of a wide range of professional and skills training for
real estate lawyers. She now writes for the Estates Gazette and Landlord & Tenant Review and lectures on topical
issues.
Leona Mason is a Senior Lecturer at the College of Law. She qualified as a solicitor in 1982 and was a
partner in Underwood Solicitors LLP until 2004, specialising in property finance and secured lending. At
the College, she teaches at the Moorgate Centre and has designed courses in Property Law & Practice and
Finance & Capital Markets.
Stephanie McGuiness has been a senior lecturer at the College of Law since 2006, having trained and
practised at Herbert Smith. She teaches at the Moorgate Centre on both the LPC (Property Law and
Practice) and GDL (Contract) programmes.
Vanessa Ralph is a senior associate at Herbert Smith Freehills LLP. She has considerable experience in
planning and major infrastructure development. She advises both promoters and objectors – and so has a
thorough understanding of the issues relevant to both – on environmental impact assessment,
consultation requirements, negotiations with third parties, inquiries and appeals, judicial review,
compulsory purchase, compensation and enforcement.
Anne Rodell is an Associate Professor at the College of Law. She qualified as a solicitor in 1989 and was an
assistant solicitor in the Real Estate Department of Linklaters LLP until 1998. At the College, she currently
designs courses in Property Law and Practice and Advanced Property.
Robert Tam is a lawyer, lecturer, and international development consultant. Robert qualified in 2001 with
Clifford Chance. He then spe cialised in environment law in Sydney and London, with Blake Dawson
Waldron and Travers Smith. He also taught the GDL, LPC and LLM at the College of Law. Robert is now a
project consultant with the Centre for International Legal Cooperation, and Carbon Leapfrog.
Matthew White is a partner at Herbert Smith Freehills LLP and is recognised as one of the United
Kingdom’s top planning solicitors. He works on large-scale commercial planning matters, with a focus on
nationally significant energy and infrastructure projects and complex mixed use masterplan
developments. Matthew has expertise in all elements of contentious and non-contentious planning,
including environmental impact assessment, compulsory purchase, planning inquiries and judicial review.
He has advised on many high-profile and politically sensitive projects in recent years.
Contents vii
Contents
PREFACE v
ABOUT THE CONTRIBUTORS vi
TABLE OF CASES xiii
TABLE OF STATUTES xix
TABLE OF SECONDARY LEGISLATION xxiii
LIST OF ABBREVIATIONS xxv
Part I SITE ACQUISITIONS 1
Chapter 1 THE COMMERCIAL CONTEXT Anne Rodell 3
1.1 What is commercial property? 3
1.2 Who buys commercial property? 4
1.3 Buying commercial property jointly 5
1.4 Methods of structuring a property joint venture 6
Review activity 8
Chapter 2 OBTAINING PROPERTY FINANCE Leona Mason 9
2.1 Methods of finance 9
2.2 Debt finance 10
Review activity 14
Chapter 3 MATTERS OF CONTRACT Anne Rodell 17
3.1 The contract of sale 17
3.2 Different types of contract 18
3.3 Overage 23
Review activity 26
Chapter 4 PLANNING CONTROL Matthew White & Vanessa Ralph 27
4.1 The planning system 27
4.2 When is planning permission needed? 31
4.3 Planning permission 38
4.4 Application to the local planning authority 44
4.5 Appeals against adverse planning determinations 48
Review activity 52
Chapter 5 PLANNING OBLIGATIONS AND COMMUNITY INFRASTRUCTURE LEVY

Matthew White & Vanessa Ralph 53
5.1 Introduction 53
5.2 Planning obligations 54
5.3 Government policy 55
5.4 Unilateral undertakings 56
5.5 Modification and discharge of planning obligations 56
5.6 Community Infrastructure Levy 57
5.7 CIL and planning obligations 61
5.8 Practical points 62
Review activity 63
Chapter 6 ENFORCEMENT OF PLANNING CONTROL Matthew White & Vanessa Ralph 65
6.1 Introduction 65
6.2 Definitions and time limits 65
6.3 Certificates of lawful use or development (ss191–192) 66
viii Commercial Property
6.4 Right of entry for enforcement purposes (ss196A–196C) 67
6.5 Planning contravention notice (ss171C–171D) 68
6.6 Breach of condition notice (s187A) 69
6.7 Enforcement notice (ss172–182) 70
6.8 Stop notice and temporary stop notice (ss183–187 and ss171E–171G) 73
6.9 Injunctions (s187B) 75
6.10 Appeals against enforcement notices (ss174–177) 75
Review activity 77
Chapter 7 ENVIRONMENTAL ISSUES Robert Tam 79
7.1 Introduction to environmental law 79
7.2 Environmental risk management 81
7.3 Contaminated land 83
7.4 Nuisance 91
7.5 Environmental Damage Regulations 93
7.6 Environmental permitting and regulation 94
7.7 Climate change law and energy performance 97
7.8 Regulatory Enforcement and Sanctions Act 2008 103
7.9 Asbestos 103
7.10 Japanese knotweed 105
7.11 Environment Tribunal 105
Review activity 105
Chapter 8 SEARCHES AND ENQUIRIES Anne Rodell 107
8.1 Local search and enquiries 107
8.2 Planning matters 107
8.3 Drainage 108
8.4 Highways 108
8.5 Contaminated land 108
8.6 Commons registration 108
8.7 Enquiries of the seller 108
8.8 Flood searches 109
8.9 Survey and inspection 109
8.10 Investigation of title 109
Review activity 110
Chapter 9 CONSTRUCTION PROJECTS Simon Halliwell 111
9.1 Introduction 111
9.2 Who will be involved? The design and construction team 111
9.3 Different forms of procurement 114
9.4 Duties owed to third parties 121
9.5 Protecting third parties 124
9.6 Dispute resolution 128
Review activity 129

Chapter 10 AN OUTLINE OF TAXATION OF COMMERCIAL PROPERTIES Anne Rodell 131
10.1 Value added tax 131
10.2 Stamp duty land tax on leases 137
Review activity 137
Part II COMMERCIAL LEASES 139
Chapter 11 LANDLORD AND TENANT LAW Stephanie McGuiness 141
11.1 Introduction 141
11.2 Lease/licence distinction 141
11.3 Security of tenure 142
11.4 Liability of the parties on the covenants in the lease 142
Review activity 143
Contents ix
Chapter 12 AGREEMENTS FOR LEASE Stephanie McGuiness 145
12.1 Introduction 145
12.2 A typical agreement 145
Review activity 149
Chapter 13 LEASE CONTENTS Stephanie McGuiness 151
13.1 Introduction 151
13.2 The 2007 Code for Leasing Business Premises in England and Wales 151
13.3 Drafting leases 152
13.4 Prescribed clauses leases 153
13.5 The structure of the lease 154
Review activity 158
Chapter 14 THE PARTIES TO THE LEASE AND THEIR LIABILITIES Clare Harris 159
14.1 Introduction 159
14.2 The landlord 159
14.3 The tenant 161
14.4 The guarantor 164
Review activity 169
Chapter 15 THE PARCELS CLAUSE Anne Rodell 171
15.1 Purpose 171
15.2 Airspace and underground 171
15.3 Fixtures 171
15.4 Rights to be granted and reserved 172
Review activity 173
Chapter 16 TERM Anne Rodell 175
16.1 Introduction 175
16.2 Break clauses 176
16.3 Options to renew 177
16.4 Impact of SDLT 177
Review activity 177
Chapter 17 RENT Anne Rodell 179
17.1 Introduction 179
17.2 Amount 180
17.3 Time for payment 180
17.4 Other payments reserved as rent 180
17.5 Suspension of rent 180
17.6 Interest 180
17.7 VAT 181
Review activity 181
Chapter 18 THE REN T REVIEW CLAUSE Clare Harris 183
18.1 The need for review 183
18.2 Types of rent review clause 183
18.3 The dates for review 185
18.4 Working out the open market rent 186
18.5 The assumptions 187
18.6 The disregards 193
18.7 The mechanism for determining the rent 195
18.8 The late review 196
18.9 Recording the review 196
Review activity 197
Chapter 19 REPAIR Stephanie McGuiness 199
19.1 Introduction 199
19.2 Tenant’s covenant to repair 200