Governor of Bank of England prepared to act on housing bubble

Mark Carney has signalled that he is prepared to act to prevent a housing bubble getting out of control as he delivered his first speech as Governor of the Bank of England. The Bank could use new tools to recommend that banks and building societies "restrict the terms on which new credit is provided, or even to raise capital requirements on mortgages or other types of lending", he told business leaders in Nottingham. Mr Carney added: "The Bank is acutely aware of the risk of unsustainable credit and house price growth and will be monitoring it closely. The important thing to recognise is that we now have tools other than interest rates that can be used to contain risks in the property and financial sectors. We are now fully prepared to deploy them if that were needed."

Empty shops could become homes

Several papers reflect on comments by Nick Boles, the Planning Minister, that town centre shops could be converted into homes. In an interview with the Sunday Times, Mr Boles suggested that rather than seeking to revive every street of boarded-up shops, councils should concentrate on retail outlets in "prime" locations and allow other areas to become residential areas. Mr Boles said that the rise in internet shopping and a change in working patterns meant councils needed to take a "more relaxed" approach to converting underused retail space. Retail experts were divided on his proposal. Mary Portas said: "My concern is that the local councils will just go for the easy option of 'let's turn it back to housing' and that mustn't happen." Retail campaigner Bill Grimsey offered a different view. He said: "At last the message is getting through - that there are high streets out there that need to be considered in a very different way. It's only going to get worse. High streets cannot continue to serve solely as a retail destination, they have to be seen as a community hub."

7 things to be wary of if you are thinking becoming a commercial tenant

In the first of a series of short articles we discuss the risks of being a tenant in the world of Commercial Property Leases. The next article will look at leases from a Landlords perspective and the risks Landlords face with regard to protecting the value of their property investments

We have recently been acted in a sad case where the tenant has come to the end of their lease and presumed that the landlord would be “forgiving” of their financial and other lease obligations only to find that the Landlord has taken a commercial view on the obligations of their legal agreement and is expecting the tenant to carry out significant works. When we investigated the case it transpires that the tenant never understood or even read some onerous terms of the lease and consequently was severely financially embarrassed by their recently discovered obligations.

1. Check what you are signing up to. We see many situations where a tenant has a different expectation of the areas of buildings and land from that which the landlord has granted a lease. A prospective tenant must ensure that he checks the extent of his rights and restrictions before you commit to a forma lease arrangement
2. Understand your obligations. Commercial leases will contain numerous “terms” for a tenant to comply with; these are called covenants and are a tenants obligation to the landlord. Some of these covenants can be very onerous and WILL have a cost implication for you. Its important to plan for these departures particularly in this market where landlords are offering substantial incentives to attract occupiers. These incentives can have a sting in the tail and need to be fully considered
3. Check whether your lease is excluded from the provisions of the Landlord and Tenant Act 1954. If this is the case, and a formal procedure needs to be adopted to make sure you understand this to be the case, you have no rights to remain in the property after the end of the lease. We see tenants presuming they can remain in occupation when this is not the case and have not made alternative provision to re-house their business, the consequences can be dire if this is the case
4. Make sure you keep your building in good condition. This is important because if the landlord believes you are not ensuring the condition of his property he may attempt to force you to carry out repairs during your occupation.
5. Check what repairs you are obliged to do. In leases there will almost certainly be an obligation to carry repairs and reinstatements at the end of the lease. Even if you make significant and expensive alterations and improvements to the property you may still need to remove these at the end of the term at your expense. We regularly see tenants having to remove expensive shop fittings, IT installations, heating and air conditioning.
6. Make sure you plan for departure. And that you plan carefully for your surrender at the end of the term. This needs to be planned well in advance of the date upon which you vacate to ensure you put yourself in the best negotiating position and can properly allocate time and financial resources to your vacation. Don’t assume that the landlord will want to renew your agreement, often he will wish to redevelop the property and while this action may offset your financial and repair obligations there will be significant issues to resolve
7. Employ a proper an experienced lawyer.  It is essential that you have advice from a lawyer who deals with Commercial Leases regularly. The law is continually changing and test cases often change the emphasis of your obligations particularly with regard to the work to vacate the property it is essential that the person giving you advice is familiar and up to date with current case law
8. At Nick Bevan Consulting we believe in giving you more than you expected hence point 8! We have a very experienced team of Chartered Building Surveyors who are highly respected in this field, particularly in reducing the impact on Landlords claims for damages at the end of the term of the lease (referred to as dilapidations) please feel free to call one of our team for further practical, impartial and objective advice.

Contact Nick Bevan Consulting Ltd for advice on leases at www.nickbevan.co.uk