selling to a developer/sitting tennants

JQ.

I have no doubt that the lease the OP is talking about refers to the shop and is a commercial lease. Feel free to prove me wrong.

marliepanda

JQ. wrote: »

I have no doubt that the lease the OP is talking about refers to the shop and is a commercial lease. Feel free to prove me wrong.

So they live in and run the shop as well?

JQ.

marliepanda wrote: »

So they live in and run the shop as well?

I have no idea. But the property will be let under 2 circumstances :

1. The Shop and upper floors are let as under a single commercial lease and the tenant, either uses the upper floors themselves, has them vacant or sub-lets it on a AST.

2. The shop is let on a commercial lease and the upper floors are let on an AST by the OP.

Option 1 is by far the most common, because it makes life much easier for all concerned as option 2 requires the Landlord to run a Service Charge to pay for the maintenance and insurance of the property, which on a property worth £250k would be a PITA. Under option 1 the tenant is responsible for all repairs and maintenance to the property.

If the OP was concerned about a resi tenant I have no doubt they would have said so. The reason they have asked the question they have is because the majority of commercial leases have security of tenure. The only way security of tenure can be avoided is by both parties applying to court at the commencement of the lease to exclude it from the L&T Act 1954. The tenant will most likely therefore have an automatic right to renewal in 2014, however the Landlord has 8 grounds for opposition of the renewal, one of which is redevelopment, so the OP would be OK.

As I said earlier the OP requires professional advice and this thread will not be answered accurately by anyone as there are too many variables.

colinjc

the tenancy is under a single commercial lease, the tenant is responsible for all repairs and maintenance to the property.

and they are not allowed to sub let. the lease is for 20yrs ending Dec 2014

Benji

JQ. wrote: »

It's a commercial property and therefore none of the above applies.

Whilst post 15 proves you to be right, that was a dangerous assumption made with false certainty. In tenancy matters of any kind, assumptions are best avoided.

colinjc

what are my 8 options for opposing renewal

BitterAndTwisted

You are the landlord and I believe that you can decline to offer a renewal if you so choose.

I suggest you speak to a local firm of Surveyors who deal in commercial property and seek their advice. I wouldn't want to be losing a potential £100k in resale value.

I wonder how much it would cost to redevelop the site yourself and whether you could raise a mortgage in order to do it.

JQ.

Benji wrote: »

Whilst post 15 proves you to be right, that was a dangerous assumption made with false certainty. In tenancy matters of any kind, assumptions are best avoided.

Not really, the discussion is about a commercial property, to which the legal matters you raised were not relevant.

colinjc wrote: »

Hi i own a village shop with accomodation above.

It was you who assumed the upper floor accommodation was residential and further didn't claify that your comments only related to residential property and would have no relevance to any commercial lease.

BitterAndTwisted wrote: »

You are the landlord and I believe that you can decline to offer a renewal if you so choose.

No you can't, the tenant has a legal right to renew, as with all commercial leases, see my post above.

colinjc wrote: »

what are my 8 options for opposing renewal

• actual or intended redevelopment
• re-occupation (provided the landlord has owned the property for at least 5 years)
• breach of covenant such as failure to repair, non-payment of rent, etc;
• if the landlord has offered alternative premises, subject to criteria;
• if the tenancy was a sub-tenancy and the aggregate value of separate sub- lettings would be
substantially less than the rent obtainable on a letting or
• disposal of the property as a whole.

Depending upon the ground(s) and validity, compensation, based on Rateable Value, may be payable by the landlord in the event of non-renewal of the existing tenancy.

Hope that helps

colinjc

thanks you are being very helpful on point 1 would i need proof of finance to be able to redevelop or would PP be enough ? point2 i own my house so would i need to prove i would live at the shop ? what do you mean by disposal of the property as a whole ? i dont want to sell the shop and or accomodation seperately thanks again

JQ.

colinjc wrote: »

thanks you are being very helpful on point 1 would i need proof of finance to be able to redevelop or would PP be enough ? point2 i own my house so would i need to prove i would live at the shop ? what do you mean by disposal of the property as a whole ? i dont want to sell the shop and or accomodation seperately thanks again

You don't need proof of finance to develop, but if you don't have the cash to develop you'll struggle to raise finance. The banks are being forced to lend to homeowners by the Gov, they are not doing the same for commercial finance, and it is very very difficult to secure, particularly for speculative developement. If you need to borrow money to complete the development you'll really struggle, unless you have other assets the bank can take security over.

Opposing a lease renewal is a very serious matter and one that involves going to court - you would need legal representation. It's not something you can just fudge. To use "own Occupation" as a ground you would have to prove that you were intending to occupy the shop yourself and trade from there, and then actually do it. You would then also have to pay the tenant compansation.

Disposal of Property as a whole - I can't quite remember, but I think it's where you occupy part of the property and have let some of the accommodation to a 3rd party, but you then want to seel the property as a whole, vacant. You'd need to read up on that as I'm not 100% sure.

Do you know the intentions of the tenant? Do they want to stay or go? You need to start having discussions with them as early as possible, as things can go quite slowly and it's not something you want to leave to the last minute. They might be happy to leave in 2014, they might be happy to leave now, they might want another 20 year lease (possibly not bad thing).

Ultimately, how you proceed will depend on the tenant's intentions and also the various values of the property subject to the different conditions - tenanted, vacant, vacant with planning consent and the development value of the completed proposed development. And you'll only get those answers from local professional advice.