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Dear Sir/Madam,
What’s the Use!
Landlords of commercial property will throw up their arms in horror following a decision of the High Court in March. This seems to reverse what is regarded as a lease with an open clause for the calculation of the rent on review. This could have a serious affect on the level of rent, and tenants may be jumping for joy!
 The use
“Only as a restaurant, bar and delicatessen or for such other purposes within Class A1 or A3 of the Town and Country (Use Classes) Order 1997 as the Landlord shall approve, such approval should not be unreasonably withheld” has for a long time been held as open use clause.
In the case below * the property in Salisbury Road London NW6 had always been used as a bar and restaurant. the tenant never wanted anything else.
The assumption
Was that it was “let with vacant possession fit for immediate occupation and use for the uses for the time being permitted under this lease (or for the actual use or uses if attracting a higher value) ”.
The parties
The tenant claimed this restricted the use to that currently permitted. The landlord claimed that the established case law applied and indeed the lease assumed that the premises were fitted out for immediate occupation and use for all the uses the landlord would reasonably allow. (This was particularly crucial as a retail Class A1 use was more valuable).
The decision
Referred to the word “let” as being the rent for the “uses for the time being permitted under the lease”. The phrase “if attracting a higher value” was irrelevant as it was to consider the premises as being fitted out as a restaurant.
Therefore the tenant would only have to pay the rent based on the current permitted use.
Lessons Learned
- Solicitors need to be extra careful in drafting use clauses.
- Valuation Surveyors can assess the difference in rent!
* Faucet Inn Pub Co plc v Ottley Corporation [2006] 14 EG 174 (CS) [2006] PLSCS 76
This is part of a regular series of topical articles provided exclusively by RDN Surveyors. If you would like further information or add your comments please reply to this e-mail or contact Roger Nelson on 0800 902 0466.
PS We would really value your comments on this one
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31 Holmesdale Road, Reigate, Surrey RH2 0BJ
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