Commercial Property

A recent High Court decision is likely to provide welcome relief to landlords that are being pursued by local authorities in respect of tenants that have failed to pay their council tax. The court decided that a landlord was not liable for council tax where the property was held not to be a house in multiple occupation (HMO).

What is an HMO for council tax purposes?

A property will be an HMO if it satisfies one of the following criteria:

In these difficult times Landlords are increasingly finding their Tenants are experiencing difficulties in paying their rent. Whilst it is always possible for a Landlord and a Tenant to agree a temporary reduction in rent or a change in frequency of rent payment (ie monthly rather than quarterly) in the hope of retaining the tenant this does not always produce the desired result and the Landlord could be left out of pocket.

The imminent election has forced the Government to drop planned tax rises on holiday lets and phonelines and to reverse the extra tax on cider as of the end of June.

Many tenants of commercial are likely to have been adversely affected by the economic downturn and may, as a consequence, be struggling to pay the rent due under the terms of their lease. Landlords should be aware of the following if a tenant fails to pay the rent due under the terms of a commercial lease:

In these difficult economic times Tenants of commercial premises are increasingly asking Landlords to permit them to pay rent monthly instead of quarterly to assist cash flow. If the Landlord’s property is in charge to a bank it is usual for the terms of lending to assume that rent will be paid quarterly. So, if a Landlord accepts monthly rent they could inadvertently commit a breach of the terms of their lending.

Stamp Duty Land Tax was introduced in December 2003 and land tax was based on the first 5 years rent. Consideration must now be given as to whether more tax is payable or if a rebate is due. However, be aware that the Inland Revenue will be looking at any anti-avoidance schemes where the rent was initially artificially low and on a review after 5 years the rent has increased by more than 20% per annum

Personal LicenceWhen purchasing a licensed premises you need to decide who will have the overall control over the sale and supply of alcohol. This person is called the Designated Premises Supervisor (‘DPS’). At least one of you needs to hold a Personal Licence and once they have a personal licence they can then apply to be the DPS on completion of the purchase. In order to obtain a personal licence you will need:   the National Certificate of Personal Licence Holders Certificate.

BUILDING OWNERS, LANDLORDS AND TENANTS From 1st October 2008 all Sellers of commercial building and Landlords will be required to provide an Energy Performance Certificate (“EPC”) for all buildings or parts of buildings when they are rented or sold. EPCs are already required for larger premises that are to be rented or sold (above 2,500 square meters). The EPC provides an energy efficiency A-G rating and recommendations for improvement.

ABOLITION OF NON DOMESTIC RATE RELIEF

Emma Reed, a partner in our Corporate/Commercial department, has just acted for the purchaser in an acquisition of the entire issued share capital of ACG Management Limited; the company which owns Ashley Manor Nursing Home in Liverpool. The nursing home currently has 72 full time residents and is a thriving business. The acquisition was completed on the 15th of June 2007 for £4.4m. Emma provides a full range of corporate services with particular expertise in the sale and acquisitions of nursing homes.