In Brief - August 2005

In this edition:

• Housing Act 2004 implements new regime

• Upward-only rent reviews to stay

• The meaning of words change over time

Housing Act 2004

Commercial landlords should take note of new systems for assessing the fitness of housing which will be brought into play by the Housing Act 2004. These are based on the assessment of hazards. Serious hazards (‘category 1’) not dealt with by the landlord may lead to direct council action, which could include an order banning use of the property or even requiring its demolition.

Upward-only rent reviews to stay

Previous proposals that upward-only rent reviews would be outlawed in the next reform of landlord and tenant law have been dashed following a little-reported statement from the Office of the Deputy Prime Minister that despite continuing reservations about upward-only rent reviews, the Government ‘does not propose to legislate against upward-only rent review clauses at present’.

Meaning of Words changing over Time

Recently, the court was asked to rule whether a prohibition, in an archaically-worded lease, on running a ‘victuallers’ or a ‘coffee shop’ would prevent the opening of a branch of the Pret A Manger sandwich chain. The court decided that these terms, given the meaning current when the lease was drawn up, would not include a takeaway sandwich shop.

A recent case illustrates the risk in making assumptions about lease terms and more particularly of the pitfalls that can occur if the drafting of a lease is undertaken without sufficient care.

A lease contained two covenants relating to the condition of a let property after the tenant had ceased to occupy it. The first specified that the tenant would remove various fixtures and make the premises good. The second specified that the tenant would fit out the premises in accordance with a specification contained as a schedule to the lease.

The tenant believed the two covenants to be inconsistent and mutually exclusive and sought to have the first of them deemed to be void for uncertainty. The Court of Appeal decided that the clauses were not inconsistent and where any apparent inconsistency applied, the clause specifying the fitting out of the premises would take precedence.