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Dear Sir/Madam,
What’s the use?
There is a bar and restaurant in Salisbury Road London NW6 that has recently been the focus of intense legal scrutiny.
No, it hasn’t been packed with lawyers eating and drinking there. Instead, they have been digesting the wording of the lease.
 It included a clause which stated the property could be used as a restaurant, bar or delicatessen ‘or for other such 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.’
This type of clause has long been held as an ‘open use’ clause, meaning tenants would have no restrictions on use.
In March 2006, that meaning changed.
Good news for tenants, bad news for landlords
The tenant claimed that the use was not open, it was actually restricted to ‘current use’ and therefore the rent should be lower.
The landlord argued that it was open to all uses the landlord would reasonably allow.
The High Court decided it was NOT an open use clause – which means it is restricted use – which means the rent is lower for the happy tenant.
The case* is going to appeal.
The lessons
- If you own or rent commercial property, make sure your solicitor is careful when drafting use clauses
- At rent review time, a chartered valuation surveyor will interpret rental value based on the lease and background case law like this.
*The case:
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 any further information or add your own comments please reply to this email or contact Roger Nelson on 0800 902 0466
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31 Holmesdale Road, Reigate, Surrey RH2 0BJ
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