Commercial Property Update February 2023

Posted: 28th February 2023

Change to EPC Legislation – A Reminder

Under the current legislation enforced in April of 2018 there is requirement for Landlord’s granting either a new or renewal lease of a commercial premises to hold an EPC with a rating of E or above. Any premises with a lower rating of F or G are deemed sub-standard.

As of 1 April 2023 the Minimum Energy Efficiency Standard (MEES) regulations will tighten and make it unlawful for a property owners to continue to let a sub-standard property.

The MEES regulations apply to all non-domestic properties that are let pursuant to either an assured tenancy, regulated tenancy or an domestic agricultural tenancy and are legally required to have an EPC. However the MEES regulations are not applicable to tenancies over 99 year or of less than 6 months with no option to renewal.

Not only this but there are more requirements that are forecast to follow in 2027 (an EPC of C or above) and 2030 (and EPC of B or above). However, property owners may be able to recover costs of improvements through the service charge provisions of the ease.

As a point to note, the grant of any new leases should include sufficient access rights provisions that enable landlords readily to comply with MEES requirements.

Points for consideration

  1. Rent Review- Standard leases usually include the assumption that the premises can be lawfully let. Effectively this means any negative effect on the impact of rental value of the lease should be disregarded.
  2. Dilapidations claims- A commercial landlord may not be able to recover any damages in respect of repairs that would be rendered obsolete by a landlord’s proposal to carry out alterations or demolition to the property at the end or shortly after the end of the lease term.

Land Registry application processing times

The Land Registry has given a 2023 service update on their processing times and have advised that they receive approximately 2.3 million applications and requests per month. These are made up of:

  1. Information service requests;
  2. Register updates;
  3. Register creates

Information Service Requests:

Of the 2.3 million applications and requests received per month, approximately 1.8 million of these are information service requests, which include searches of whole or part, official copies and searches of the index map. 92.4% of these applications are responded to within 1 day, as this part of the Land Registry service is mostly automated.

Register Updates: 

Approximately 430,000 of the 2.3 million applications and requests received are register updates. These are changes to existing registered titles that usually take place once a property has been sold or changed hands.

Register Creates: 

Approximately 43,000 of those 2.3 million applications are register creates which are more complex applications such as multi-title applications submitted by developers, major infrastructure projects, registering a property for the first time, dividing existing titles or lodging a new lease. The Land Registry have confirmed that over 50% of these applications are taking longer 12 months to complete at the Land Registry, which is a long time if you are a developer or project manager waiting on the outcome of an application to commence work.

If delays to the Land Registry completing an application is causing hardship or puts a transaction at risk, a request can be made to expedite the application for free. Land Registry processes the vast majority of expediated applications within 10 working days

Statutory compensation for business tenancies 

On 1 April 2023, the Valuation Office Agency is updating the rateable values of all business and non-domestic properties in England and Wales.

The change in rateable values will affect how much statutory compensation can be claimed under the Landlord and Tenant Act 1954. The updated list of rates will be in effect for three years until 31 March 2026.

Recent case judgements

Hudson v Hathaway [2022] EWCA Civ 1648 

The Court of Appeal concluded than an email signature was sufficient for a party to transfer their beneficial ownership in a property. This highlights that the Court and willing to adopt a wide discretion when showing compliance with the usual legal formalities relating to the transfer of beneficial interests in the property.

Davies v Bridgend County Borough Council [2023] EWCA Civ 80

The Court of appeal held that diminution/loss in value was a recoverable loss in Japanese knotweed cases where a defendant had failed to notify the claimant about the presence of knotweed on their property, and that there was either encroachment on the claimant’s property, or this impacted the claimant’s quiet enjoyment of the land.