Commercial to Residential Freeholder Consent Premium

  • Filter
  • Time
  • Show
Clear All
new posts

  • Commercial to Residential Freeholder Consent Premium

    We recently got planning persmission to change the upper floor of our small commerial unit into a residential unit that we hold on a 125 year lease. We got in contact with the freeholder to request permission to change the use and they came back with a requested premium of £20k for him to give consent.

    We felt that was very expensive and chats with other people felt likewise, however he is not willing to change that amount. There does not seem to be any arbitration for commercial negotiations in this case and appears that if we do not pay his asking premium we cannot use the space as residential?

    Does anyone know any next steps that we should consider? It says consent should not be "unreasonably held" but while the freeholder has been reasonably quick to respond (via fax and letter only) we do think the price is fair. however i also do not really have any guidance what is the premium for and how they work out the value. On top of this we probably have many thousands of legal bills etc. However the freeholder appears to have all the cards and while residential there is more ways to get addressed (leasehold tribinal) there appears nothing for commercial.

    Any ideas what we can do next would be gratefully received.

  • #2
    What does the user clause state in relation to landlords consent within your long lease?

    Also what was on the ground floor as you may not have required planning permission?
    [I]The opinions I give are simply my opinions and interpretations of what I have learnt, in numerous years as a property professional, I would not rely upon them without consulting with a paid advisor and providing them with all the relevant facts[I]


    • #3
      No consent to which you refer is very unlikely to be in any clause relating to user, just alterations. While alterations are inevitably involved, the leases restriction what you can use it as, no matter the planning consent you might obtain or might not need.

      As to the premium you must understand that you and the LL entered into a lease defining a particular use and he is under no obligation to agree.

      To the extent that they may, or the lease as suggested is so broad or ill defined that it may not preclude such use, or does so subject to consent, as well as requiring consent for the alterations, there is a control that the landlords can seek a reasonable premium to reflect any damage to their reversion.

      back to basics what does your lease say about what your premises are and are there any reference to use as JB asks?
      Based on the information posted, I offer my thoughts.Any action you then take is your liability. While commending individual effort, there is no substitute for a thorough review of documents and facts by paid for professional advisers.


      • #4
        The only reference in the whole lease relating to permitted use is simply

        "not to use the property save as permitted in accordance with the planning acts"

        we now have residential planning so we are still.

        there is no user clause stating in relation to the landlords consent but perhaps you could explain more if i have missed something. the lease reads very much like a residential lease.

        the ground floor is a b1 office. The upstairs was also classified as b1 so inorder to change its use we need to get planning from the council, which we now have.


        • #5
          The reversion should have considerably increased in value as rather than a empty commercial unit that was empty or 7 years he will one day have 2 residential flats and small office.

          the lease mentions no alterations without consent but that is to be expected and since the unit was a shell it needs basic fitting out for any useful function. The lease looks very residential and i think because all other flats in the building above are residential they might well have used a residential lease. there is nothing in the lease to say what the premises should be used for, only that it complies with planning act.


          • #6
            In the initial interpretation section does it have a description of "Planning Acts"?
            [I]The opinions I give are simply my opinions and interpretations of what I have learnt, in numerous years as a property professional, I would not rely upon them without consulting with a paid advisor and providing them with all the relevant facts[I]


            Latest Activity


            • Continuation or periodic tenancy
              Hi I'm a newby so apologies if I miss something.

              I rent 2 properties next to each other from the same landlord.

              There has been much discussion and now I've been served with 2 opposed s25 notices one for each property.

              Both properties are used in connection with...
              18-08-2017, 11:51 AM
            • Planning permission
              We have recently been contacted to say that a unit does not have planning for workshop use but for office only. We bought the unit(s) and have owned for a number of years and this unit was a workshop then (and not offices). What is the planning rule on this type of thing? All the units that surround...
              06-08-2017, 16:34 PM
            • Reply to Planning permission
              The limit is 4 years for unauthorised building work, unless it also violates an existing planning condition, in which case it is 10 years.

              It is 10 years for unauthorised change of use.
              15-08-2017, 22:34 PM
            • Reply to Planning permission
              Always Problems
              Ask a Chartered Town Planner, and I thought that the breach had to be only 4 years...
              15-08-2017, 17:34 PM
            • S146 and rent arrears
              Hi there,

              Bit of help;

              - Commercial Tenant has not paid rent on time or in full since February 2017
              - Then find out sub-letting and change of use is being applied/restructuring the building inside - both without permission
              - S146 served March 2017 to rectify by...
              12-07-2017, 19:38 PM
            • Reply to S146 and rent arrears
              If I forfeit by peaceable entry, can I still apply for a repossession order? To secure having repossession.
              14-08-2017, 19:29 PM
            • Mixed use, Commercial law help needed!
              Advice needed, please.

              We recently took our l/l to court for non-protection of deposit. To cut a long story short, the court dismissed the case on the grounds that the tenancy was of mixed use class due to use also renting a shop on the side of the house (in the extension) therefore commercial...
              05-08-2017, 09:22 AM
            • Reply to Mixed use, Commercial law help needed!
              So sorry for the delay I have been away and had no internet at all.

              Thank you for the replies and sorry it's a bit vague. We rent a house and it has an extension on the side of the original house and within the extension is a shop that we also rent. When we first moved here I personally...
              12-08-2017, 12:33 PM
            • new ceiling
              Im opening cafe and I will be putting up fireboards over the original ceiling in the kitchen but I'm also doing the ceiling out the front where customers wil sit and eat ,
              im leaving the original ceiling there but putting in a new lower ceiling with just plasterboards that not fireboard, only...
              11-08-2017, 22:21 PM
            • Reply to new ceiling
              Have a word with the building control officer at the local council.
              11-08-2017, 23:02 PM