Property & Planning Law Bulletin - 2010 Issue 10
8 Mar 2010
Property and Planning Bulletin
2010 – Issue 10
Welcome to the latest edition of our Property & Planning Law Bulletin, a regular update containing legal news on commercial property, property disputes, planning law and residential property.
Select the links below to take you directly to the articles you are interested in reading.
In this month's Bulletin:
Property Disputes update
Planning update
Property Update
Property Disputes
Administrators paying rent
For some time it has been unclear whether or not, when a company goes into administration, the administrator should be liable to pay rent for any premises the company is occupying as an expense of the administration, like a liquidator has to when a company goes into liquidation. Landlords will clearly want to receive rent for premises that the tenant company continues to occupy.
In a recent case clarification was sought on this point. There were two points that the court needed to consider, the first, whether the rent was a ‘necessary expense’ and the second whether the rent was an ‘administration expense’ for the purposes of the relevant statutory provision. The court decided that the paying of the rent was a necessary expense and as such should continue to be payable. The question of whether rent was an administration expense was therefore not considered.
Whilst the decision that administrators should pay rent is a positive one for Landlords they should be aware that if a company has gone into administration they are probably facing significant financial difficulties. Whilst the aim of administration is to help the company get back on its feet and trade its way out of its debts, if it is unsuccessful, the rent may not be paid for long by the administrator, and the landlord’s options to recover rent are likely to be limited.
As with all insolvency issues facing tenant companies, landlords should be alive to their tenants’ financial circumstances and seek advice sooner rather than later.
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Recovering Possession from Persons Unknown
It is every landowner’s nightmare to find that their land or building has become occupied by trespassers or persons unknown. It is a significant problem and one that should not be underestimated. Whilst often possession can be quickly recovered, as the courts will deal with such matters on an urgent basis, it is important that the extent of the land to be repossessed is considered.
A recent Supreme Court case considered whether it is possible for a landowner to recover possession of multiple sites in an area where only one is occupied by the trespassers. This is an important point because the last thing a landowner wants is to obtain a possession order for one of its sites, only to find that the trespassers move straight onto a neighbouring site and the landowner has to start the process all over again. Unfortunately for landowners the Court considered that the order for possession itself obliges a defendant to give possession of land but a defendant could not be ordered to give possession of land that they were not yet occupying.
The court has considered the use of injunctions which would prevent parties from moving between sites. However, for this to be effective, you would need to know the names of the defendants you are dealing with or to have sufficient descriptions of them. The very nature of trespassers makes this difficult. The injunction may assist in specific circumstances but these are likely to be limited and in any event seeking an injunction is likely to increase costs considerably.
If, as a landowner, you own large areas of land which are registered under one title number, you may still be able to protect yourself against trespassers simply moving from one site to another. The difficulty will be if you own lots of smaller plots registered under separate titles. Keeping unoccupied land or buildings under regular review to prevent trespassers occupying your land in the first place is likely to be the best option
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Planning
News: Local Council’s Planning Policy Documents released for consultation
Reading Borough Council has released new planning policy documents for public consultation. The “Sites and Detailed Policies Document”(SDPD) identifies sites for development, protection, and other designations, as well as setting out detailed policies for deciding planning permissions.
Any comments on the draft planning policies must be received by the Reading Borough Council by 2 April 2010.
West Berkshire District Council has released its draft Core Strategy document which sets out the overall planning strategy for the area. The Core Strategy and Local Development Framework documents will replace the existing West Berkshire Local Plan and provide the basis for planning decisions within the district.
The draft West Berkshire Core Strategy has been published for a six week consultation period from 26 February until 9 April 2010.
If you require any assistance understanding how the policies and proposals may affect your property, or with preparing comments for submission to the Council, Blandy & Blandy’s Planning Team would be happy to help.
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New fees for extending your planning permission
Since October 2009 it has been possible to apply to extend the time limit for implementing an existing planning permission. However, until 26 February 2010 the application fee for such an application was the same as if it was a new application. The delay in reducing the fees has meant there has been little benefit to the property industry to date.
New legislation was approved by the House of Lords on Thursday 25 February and brought into force the following day. The application fees for a grant of replacement planning permission are now as follows:
• Householder application - £25
• Application for major development - £500
• In any other case - £170
The ability to apply to extend the time limits is only available for planning permissions that were extant on 1 October 2009 and at the date of the application, and have not yet commenced.
The measure is a temporary response to the difficult economic circumstances. Only one extension to each permission is possible.
The Department for Communities and Local Government published guidance in November 2009 which describes the measure in more detail. A copy of the guidance entitled ‘Greater flexibility for planning permissions’ can be found here [http://www.communities.gov.uk/publications/planningandbuilding/greaterflexibilityguidance ]
If you wish to apply to extend your planning permission or have any questions please contact the Planning Team at Blandy & Blandy.
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A well-trodden path
The High Court decision in the case of Herrick and another v Kidner and another this month required a property owner to remove gateposts erected at his Somerset property on the basis that they caused a “psychological” obstruction to a public right of way.
The judge considered the offending gateposts would give walkers a strong indication that they were entering a private property which may deter some from using the public right of way, and this was sufficient to warrant the removal of the gateposts.
This decision is a stark reminder to property owners that the existence of a public right of way limits their ability to use their own property. It is now more important than ever for property owners to take steps to prevent new public rights of way being created.
Property owners often tolerate the use of their property by the public as an informal footpath due to the impracticalities and cost of erecting barriers. However, just tolerating this use could result in the establishment of a legal public right of way, and so could prohibit future development, and substantially reduce the value of the property.
There is, however, a simple and well-established way for property owners to ensure that new public rights of way are not created on their property, without having to go to the cost of erecting and maintaining fences or signs.
Property owners are entitled to deposit a statement and plan with the relevant Highway Authority to confirm there is no intention for any rights of way to be created across their property. If a statement is deposited every ten years, then this will ensure that no new rights of way can be claimed by virtue of the public using informal footpaths (although it would not prevent rights of way which are already in existence being recorded by the Highways Authority). There is no fee payable to the Highways Authority for depositing this statement.
This simple process should be considered by all property owners, however advice should be sought before a statement or plan is deposited as specific statutory requirements must be met to ensure the statement is effective.
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Property
What is the CRC and how will it affect you?
The CRC Energy Efficiency Scheme is a UK-wide mandatory emissions trading scheme. It applies to large businesses and large public sector organisations and aims to make large organisations more energy efficient and to encourage them to reduce their CO2 emissions with the objective of the UK reducing its greenhouse gas emissions.
The CRC will come into force on 1 April 2010 and will be divided into seven phases over a number of years. It is expected to apply to about 5,000 organisations, whose annual electricity bills are approximately £500,000.00 or over based on prices in the year 2008. Qualifying organisations will be required to buy allowances (tonnes of CO2) which will initially be priced at £12.00 per tonne. It will be possible to auction or trade allowances on a secondary market. Allowances will be bought or surrendered annually depending on consumption.
Participants will be required to submit a footprint report, an annual report and an evidence pack and to buy enough allowances to cover the amount of CO2 consumed each year. Participants will be rewarded with incentives by way of recycling payments whose energy efficiency improves. Penalties will be levied on those participants whose efficiency deteriorates. Results will be published in league tables.
In the case of large corporate groups, all parent and subsidiary companies will be grouped together for the purposes of determining whether the various companies fall within the CRC regime. The highest legal entity within the group will be legally responsible. There are additional requirements for principal subsidiaries (entities that would have qualified in their own right). Overseas entities will not be treated differently, and the highest global parent company will be required to nominate a UK-based group member.
There are likely to be difficulties that arise between landlords and tenants. Which party should be responsible? Can landlords pass on the costs of complying with its CRC obligations onto tenants by way of service charge? What happens in the case of existing leases drafted without the CRC in mind in the first place? Green leases (designed to encourage the parties to carry out their roles in a more sustainable way) are likely to work best by way of common understanding between the parties rather than by imposing onerous lease clauses on tenants.
The CRC will be regulated by the Environment Agency. Breaches of the CRC are likely to result in a civil penalty, usually by way of fine. In certain circumstances, there may be criminal sanctions (for example in the case of false or misleading statements).
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Changes in the rules on opting to tax
EU VAT law allows member states to set their own rules as to whether taxpayers should be able to convert exempt supplies into taxable ones. In the UK, the rules are set out in Schedule 10 of the Value Added Tax Act 1994.
A prospective seller/landlord of land may decide to opt to tax to enable it to recover from the purchaser/tenant VAT paid out by the seller/landlord when acquiring the asset. So doing will convert an exempt supply into a taxable supply and will allow the seller/landlord to add VAT onto the sale price or rent.
An option to tax takes effect on the day it was made (or from a subsequent date if one is specified). HM Revenue & Customs must be notified within 30 days of the option being exercised. An option to tax usually only affects the party that makes it, but where a member of a VAT group opts to tax, the option will affect all relevant associates.
Options to tax are not relevant to dwellings as they are exempt or zero rated. Even where a property is not used as a dwelling, an option to tax may not always be effective (for example if it is the intention to use the property as a dwelling in the future). Where a property is mixed use, the option will generally not apply to the residential part.
An option to tax over land applies to all buildings constructed on it. With effect from 1 June 2008, an option to tax applies to any building constructed on the land in the future (unless notice is given to HMRC that the building in question is to be excluded).
The concept of a real estate election was introduced in the year 2009. It allows for property owners to opt to tax in relation to several properties without having to identify them individually. Each property is treated as having been individually opted, subject to the ability to revoke the option within 6 months of it becoming effective (provided the property has not been used and no VAT input tax has been reclaimed). A party can also revoke an option to tax after 20 years of the option being made.
The VAT rules take no account of whether an intended use is permitted under planning law.
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We hope you found this edition of interest. If you would like to discuss any of the matters raised in more detail or if you have any other property related queries, please contact the following:
Commercial Property – Jane Gunnell - comprop@blandy.co.uk
Property Disputes – Jessica Irwin - dispute@blandy.co.uk
Planning & Environment – Simon Dimmick or Karen Jones – planning@blandy.co.uk
Residential Property –Julie Strudwick - resprop@blandy.co.uk
Or phone us on 0118 951 6800
Details of our extensive property, planning and environmental services can be found on our website at www.blandy.co.uk Blandy & Blandy LLP does not assume legal responsibility for the accuracy of any particular statement contained in this bulletin. We recommend that professional advice be sought for any specific issues you might be facing.
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