Temporary letting of space is becoming ever more popular in the retail market. Pop up shops in particular have a variety of benefits including the relatively low cost associated with securing and opening them. By their very nature, they are almost tailor made for the sale of seasonal products, such as those associated with halloween and Christmas. They can also be a great way for new retailers to test the water in the market place and for established companies to try out a new location. They generate awareness of the brand as they are usually located in areas with high footfall.
They also appeal to landlords keen to avoid having empty units in their schemes or on their high streets. In what is a tricky time for retail generally, many will consider offering short term leases to fill voids and encourage growth.
Depending on the bargaining powers of those involved, tenants looking at taking space on a temporary basis may want to think about the following when negotiating heads of terms:
The term of such a letting is typically between 3 and 6 months. However, anything up to 12-24 months would still be a short-term letting. If a longer term is agreed, the tenant may also need to consider the option of determining the lease before the end of the fixed term.
Rents based on turnover. If the unit is a success, the retailer pays more, but if not they pays less.
Capping service charges or fixed rents inclusive of service charges
Limiting the usual repairing obligations to hand back the premises in the same condition as they were in when taken – by reference to a photographic schedule of condition.
When it comes to documenting a temporary letting, the leases are usually short and simple with fewer obligations on the parties. If the rents are low and the term short, then stamp duty land tax and registration at the land registry are generally not relevant. Given the nature of the letting, property searches and extensive due diligence can usually be dispensed with. This means a less expensive conveyancing process as well as a low-cost set-up.
In short, no. Whilst a significant proportion of the UK’s employment law comes from the EU, it might surprise you that the following (and a few other) employment rights originated here in the UK:
Statutory redundancy pay
Shared parental leave
Right to request flexible working
Further, as we discuss below, some UK employment rights are more generous than their EU equivalents.
In broad terms, how might Brexit affect employment rights?
Workers may fear that leaving the EU will harm their rights at work, whilst employers may hope for a relaxation in those rights. However, if or when Brexit does eventually happen, we consider it unlikely that employment rights, some of which originated here and/or are more generous than their EU equivalents, will see more than minor changes. Further, we consider that this will be the case whether or not we leave the EU with a comprehensive deal – unless there is a substantial change in the politics of the day. In this regard, the current Government has made commitment after commitment to protecting existing workers’ rights and the vast majority of the House of Commons appears to be unified behind this. However, UK employment rights advancement might not necessarily keep pace with the EU in the future.
Will there be fewer days of holiday leave?
We consider that statutory holiday entitlement, a favourite of workers and generally accepted by employers, will not be affected after Brexit. However, many employers strongly disagree with previous decisions of the European Court of Justice in relation to holiday entitlement, such as allowing it to be earned during sick leave, the carrying over of it in cases of long-term sickness absence and requiring pay for it to be calculated with reference to all aspects of pay (not just basic salary). Therefore, these may be areas in which the Government will intervene.
Will family rights be weakened?
There is a mixture of UK and EU rights in this area and it might surprise you that in some respects, such as in regard to UK maternity leave provisions and pay, the UK rights are more generous than their EU equivalents. Additionally, both the right to shared parental leave and the right to request a flexible working arrangement originated here in the UK. Therefore, unless the political landscape changes significantly, we do not expect to see any changes in this area after Brexit.
What about discrimination protections?
We consider that businesses are unlikely to push for a weakening of the discrimination protections and that this subject is unlikely even to feature on the Government’s radar. However, there is some thought that a cap might be imposed on discrimination compensation, as this is currently unlimited.
The employment law landscape might have looked similar today even if the UK had not joined the EU, because protecting workers’ rights has long been a significant consideration here in the UK. As it is, subject to the decisions of the Government of the day, a few limited changes to these rights may be made post Brexit to appease employers, but we do not anticipate any drastic changes.
If you have any questions about this article, or a different employment law matter, please contact Ben or our employment team.
A recent case provided an opportunity for the High Court to confirm the correct approach to assessing damages where a landlord has undertaken some but not all the repair works required under a lease. In short, Car Giant leased units to the London Borough of Hammersmith and Fulham (“Hammersmith”) under full repairing leases which came to an end in 2011. Surveyors were instructed at the time and costed out a schedule to remedy the breaches of the leases at £400K.
By September 2016 Car Giant had carried out remedial works costing around £170k and, importantly for the case, had sub-let the units again.
Car Giant decided in 2017 to take Hammersmith to court to recover the full cost of the remedial works as per the 2011 schedule even though they had not been fully carried out and 6 years had elapsed since the lease expired.
Amongst the key points that Car Giant put forward to justify its position were that:
finance was not available to carry out the repairs
it did not want to disrupt its new tenants
it did not want to incur the costs whilst Hammersmith was refusing to pay.
The court however was not satisfied that an adequate explanation had been provided for why all the works were not undertaken. Crucially, the fact that the units had been re-let at market rent did nothing to assist Car Giant with its case. The court concluded that the damages for the tenant’s repairs should be limited to £166,000. This would have been a particularly unsatisfactory outcome for Car Giant, given that some considerable time before the trial, Hammersmith had made a part 36 offer of £250,000. Car Giant would have received cost penalties for the failure to beat this offer at a trial and therefore any victory in this case was extremely hollow.
This was the second case covered by Michael Lewis, head of property disputes at Sherrards, and Ben Walters who were guest speakers at a recent CPD training day run by South of England Surveyors for over 100 surveyors based on the south coast.
If you are a landlord or you are buying a property with a tenant, it is important to consider the issue of succession. Where a tenant is protected by the Rent Act 1977, the landlord may well be burdened with a tenant for a number of years. It is not uncommon for a buyer to acquire a freehold anticipating that on the death of the tenant the lease will terminate.
This may not be the case. Where there is ‘a Rent Act tenant’, there is a risk that the rules of succession come into play and a family member is entitled to succeed the tenancy on the death of the tenant. This will have a substantial effect on the value of the interest being purchased and must be considered.
Following the decision of the UK to leave the EU the medicines regulator, the European Medicines Agency (EMA), argued ‘frustration’ to try and bring their 25-year lease at premises in Canary Wharf to an end.
The EMA contended that the 25-year lease, granted in October 2014, would be frustrated by the potential withdrawal of the UK from the EU. The court did not accept their arguments that frustration had occurred. Key to the finding was the length of the term of the lease (25 years) the absence of a break clause and the ability to assign and underlet the premises.
This clearly could have had a significant impact, if it had gone the other way the floodgates would no doubt have been opened.
In the same vein, it is unlikely that this is the end of these type of arguments and commentators have stated that it is possible where parties can show a common purpose to the signing of the lease specifically depended on the UK remaining within the EU, Judges may have a more sympathetic ear. The EMA have sought leave to appeal- watch this space!
There is no point sugar coating the fact that potential buyers in the UK seem to be resting on their laurels right now when it comes to property investment. A combination of Brexit, fear of rising interest rates and general anxiety over economic conditions seems to be putting those buyers off for now. Bucking this trend are overseas investors. Despite higher stamp duty rates and capital gains tax liabilities, buyers from Asia and the Middle East are snapping up second homes in London, especially those valued at over £1m.
The fall in property prices and the weak pound means it is now costing overseas investors less to buy UK property. The biggest driver for prime properties in London will no doubt be foreign investors looking to hedge their bets against a favourable currency play. Investment from China continues to go from strength to strength where gaining access to top educational institutions is a key factor in relocating. The feeling is that the top end of the London market will continue to go from strength to strength in 2019 with overseas investors ignoring Brexit. Buyers taking a long-term approach will no doubt be looking to make a savvy investment by purchasing now and this, in part, is preventing doom and gloom from completely overtaking the property market.
A controversial increase in probate application fees has moved a step closer to being introduced, after being narrowly approved at a parliamentary committee hearing earlier this month. The fee, which is currently £155 when using a solicitor and £215 when people apply directly, will now be applied on a sliding scale according to the value of the estate, with the highest fee capped at £6,000. The new fees will begin in April 2019 for all applications for grants from that date regardless of the date of death.
Although this increase, dubbed a “stealth tax”, is due to be scrutinised again by the House of Commons in the near future, it is likely that the new fees will be introduced from April. The changes are projected to add an additional £185 million per year to the Ministry of Justice coffers. The fees will far exceed the costs of the whole probate court service – it would seem bereaved families are being asked to pay for other parts of the court system – there is a dark irony here where victim’s of crime may, in effect, be part funding the criminal courts.
These new fees seem manifestly unfair and unjustified given that the work involved for the probate court on an application for a grant of probate does not increase in relation to the value of the estate.
The Labour party is believed to be preparing to object to the proposals during its final stage in the House of Commons. However, with the current Brexit wranglings taking most of the limelight and column inches, it may be the case that these unfair changes will just slip in through the back door.
If you would like to discuss how this may affect you please contact our Wills, trust and probate team who can advise you on how the proposed changes apply to your situation.
Due to a recent ruling by the European Union Intellectual Property Office (“EUIPO”), any business across Europe is now permitted to use the name “Big Mac” on any of their products in stores. The change comes after the relatively small Irish restaurant chain, Supermac, won a long running battle against McDonald’s to have use of iconic Big Mac trademark cancelled across Europe.
The global powerhouse McDonald’s ultimately lost the case for their trade mark due to an inability to prove “genuine use”. The McDonald’s defence included providing print-outs of its websites, examples of advertisements and packaging, three signed affidavits from its executives, and a print out of its Wikipedia page as evidence that it sells Big Macs across the EU and deserves a trademark. This was not sufficient evidence in the case however and the EUIPO held that, “Even if the goods were offered for sale, there is no data about how long the products were offered on the given web page or in other ways, and there is no information of any actual sales taking place”.
In the end, McDonald’s lost their monopoly over the name Big Mac, which is sure to be a huge blow to the company due to Big Mac being considered one of the most easily recognisable brands on the planet. We are waiting on news of any appeal but for now the real question that we must ask ourselves is “can you call it a Big Mac if it has bacon?”
This article was written by Sherrards’ intern Daniel O’Doherty
A recent case has shown that courts are willing to be sensible in their interpretation of deadlines for accepting or defending proceedings. But defendants should not allow this apparent leniency to lull them into missing deadlines.
When a claimant serves proceedings on a defendant, the latter has a prescribed period to either accept or defend the proceedings. Should the defendant fail to do either within that time, the claimant can seek judgment in default under the Civil Procedure Rules (CPR).
In the case of Cunico Resources NV and others -v- Daskalakis and another  EWHC 3382 (Comm) claimant served proceedings on the defendant, who was in Switzerland.
The defendant did not file an acknowledgment of service within the time afforded, so the claimant requested judgment in default.
But, in a twist of timing, it transpired that the defendant had filed his acknowledgment of service, albeit out of time, approximately one hour before the claimant submitted their application requesting judgment.
In considering whether the claimant was entitled to judgment in default, the judge acknowledged that there were three possible interpretations of the CPR.
The only allows the court to enter default judgment against a defendant where, at the time of the judgment being entered, there is no acknowledgment of service by the defendant and the time for the defendant to acknowledge that service has expired.
The allows the court to enter default judgment so long as, at the time the request or application is made for default judgment is filed, there was no acknowledgement of service and the time for acknowledging service had expired.
The CPR allow the court to enter default judgment where timely acknowledgment of service was not filed, irrespective of any acknowledgment later filed, after expiry of the time period set under the CPR.
The court found that the first meaning applied. Judgment is obtained when it is entered on paper by the court or pronounced in court if there has been a hearing to request such.
At the time the claimant requested judgment, there was an acknowledgment of service filed, albeit a late one, prior to the default judgment application.
Many will see this as the sensible solution, and it has been followed in practice prior to this case. However, we should not allow this example to lead to complacency.
A defendant must not become lackadaisical about complying with deadlines. It is of paramount importance that, if they wish to contest a claim, they must do so within the prescribed time.
Now is an appealing time to look at refinancing property and we have seen a surge in UK homeowners doing just that over recent months. The steady growth in the remortgage market place is fuelled by purchasers, homeowners and buy to let investors taking advantage of reduced interest rates with the uncertainty in the current market place. We are seeing many high street lenders releasing new products and reduced rates; and a major driving factor behind this current market position is of course Brexit.
Market predictions suggest the reduced rates will continue into spring 2019 at least, meaning now may a good time to start the refinancing process.
At the same time, house prices are dropping. Whilst the annual change in house prices reveals a modest drop in the market from 0.5% to 0.4% compared with late 2018, the really interesting fact is that this represents the lowest annual growth in 6 years. The Nationwide House Price Index confirmed the average UK home is now worth £211,966 compared to £212,281 in December 2018.
There is an expectation that even in this period of economic uncertainty, we will see a moderate increase in house prices as we move further into 2019; as long as borrowing costs remain steady and the economy continues to grow at a stable rate.