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Mixed-Use Developments: Issues to consider before completion

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18th April 2016

Mixed use developments can prove problematic for even the most experienced developers and investors, from the small time investor who buys a shop with a flat above not realising the freehold can be compulsorily acquired under the Leasehold Reform Act 1967 to the large scale property developer unaccustomed to the rights of residential tenants as regards service charges and contracts. The problem lies in the fact that whilst the relationship of a landlord and his commercial tenant is governed almost solely by the terms of their lease, in respect of residential tenants the lease is just the starting point.

In addition to rights granted by the ’67 Act, which applies to properties one might not traditionally think of as a house, the Landlord and Tenant Act 1987 grants residential tenants the right of first refusal in respect of the disposal of property interests, the right to vary their leases and the right to appoint a manager or acquire the freehold of their building in cases of bad management. The Leasehold Reform, Housing and Urban Development Act 1993 grants residential tenants the right to new leases or to acquire the freehold of their building via collective enfranchisement and for tenants not wanting to go the whole hog, the Commonhold and Leasehold Reform Act 2002 offers a no fault right to manage. For the landlord who retains his property interest and the management of it, life’s still no picnic. The Landlord and Tenant Act 1985 grants residential tenants a myriad of rights as regards the provision of services, works to their building and the recovery of associated costs via the service charge.

With some thought when setting up a scheme of a development many of these rights can be limited or avoided altogether. Do you want to know how? Well that involves an understanding of how the Acts work and a careful look at the various exclusions within them. Tanfield’s seminar will begin by doing exactly this. Focusing on three Acts: the ’93 Act and the Landlord and Tenant Acts 1985 and 1987, we will consider how to structure a development both in terms of its physical layout and legal title and which contracts to enter into when, so as to minimise the tenants’ statutory rights and the problems they can cause.

Tanfield’s Mixed-Use Development Seminars will take place at:

• Birmingham Colmore Gate DeVere hotel – 5th May
• Bristol The Watershed – 12th May
• Essex Civic Centre – 24th May

Please email fsmithson@tanfieldchambers.co.uk if you are interested in attending.

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