Under the apparent misapprehension that the cause
of European unity will be aided by trying to copy European stamp
duty rates, Gordon Brown has hiked duty on property sales to 3% - a
200% increase in 9 months. How long before the rate is 6% as in
Ireland and the Netherlands? What price 10% as in Portugal?
Although more aggressive duty avoidance has been forestalled by the
courts in recent months, there are other ways of creating a saving.
With the rate on share transfers still at 0.5% there is a powerful
incentive to look at property companies - investors should be
considering acquiring property through corporates to ease the stamp
duty costs of on-sale or establishing permanent nominees for
property holdings. At these rates, taking stamp duty costs
seriously makes more sense than ever.
Consent Subject to Licence
A year ago the Court of Appeal held that a letter
giving consent to a tenant to carry out works but marked "Subject
to Licence" was sufficient consent under the terms of the
particular lease. The point has cropped up again, this time in the
context of a restriction on assignment.
In Next plc v National Farmers Union Mutual
Insurance Company Limited the relevant letters were one stating
that subject to satisfactory references solicitors would be
instructed to issue a draft licence, and one confirming that
satisfactory references had been received and that solicitors had
been instructed to issue a draft licence. Both these letters were
headed "Subject to Licence". The tenant received the draft licence,
approved it, executed it and returned it to the landlord's
solicitor. Further financial information on the assignee then came
to the landlord's notice and the landlord's solicitors informed the
tenant that on the basis of that information the landlord intended
not to give consent.
The tenant successfully applied for a declaration
that consent had in fact been given by the landlord.
Whilst the court accepted that the requirement in
the lease for a direct covenant from an assignee suggested that a
formal licence was contemplated, this did not, in the absence of
contrary indication, mean that consent could not be given in
another manner. The correspondence as a whole and the forwarding of
the draft by its solicitors clearly signified that the landlord had
consented and the "Subject to Licence" heading on the letters did
not displace that. The lease required a consent, not necessarily a
The use of "Subject to Licence" headings should not
be relied upon to protect a landlord's position. Instead, more
thought should be given to structuring any relevant letter to make
it clear that the consent in question is not yet given (and will
not be until there is a formal licence in place) and is dependent
upon further outstanding information.
The action to take in any given case will depend on
the terms of the lease but, for instance, appropriate
correspondence might include a phrase like "Our consent will not be
given other than in the form of a completed formal licence....etc".
Advice will always be required whether what is proposed conflicts
with any requirement for the landlord to act reasonably.
When is a repair a renewal?
In Minja Properties Limited v Cussins Property
Group Plc an office block was to be refurbished prior to sale. The
leases obliged the landlord to keep the structure in "good and
tenantable repair" and required the tenants to allow the landlord
access to the property to carry out repairs and to pay for the
repairs through the service charge.
One item in the refurbishment programme was the
installation of new (and upgraded) window frames to replace the
existing corroded steel ones. This would cost each tenant over
£6,000 and one of the tenants objected. It argued that replacing
the window frames was a renewal not a repair, was therefore outside
the scope of the landlord's obligation and so beyond what the
tenants should have to pay through the service charge. The tenant
refused to allow the landlord access.
The court ordered the tenant to allow access. These
works were a renewal of part, and as such were within the
landlord's repairing obligation. Further, even though the new
windows were an improvement on the original ones, the replacement
was still a repair.