Compensation for Lost Rent Due to Property Developer Disruption

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    Compensation for Lost Rent Due to Property Developer Disruption

    I’ve been letting a property in Chelsea for nearly 30 years. Recently a developer began work on a luxury development close to mine and my tenant served notice that he would end the tenancy at the end of the current lease due to the disruption, but he would be willing to staying on with a 30% deduction in rent. The Estate Agent advised me to take his offer as she felt I would have trouble finding a new tenant at any price. My questions: (1) how likely/unlikely will it be for me to get compensation from the developer for this reduced rent? (2) What are the legal precedents?

    The so-called ‘liaison group’ hired by the property developer has advised me that compensation is unlikely as the property developer has planning permission. I've also heard that other landlords have lost rent due to substantial renovations by their neighbours. But I would have thought that the law would make a distinction between individuals renovating property for their own benefit (I might do something similar at another time) and a commercial property developer who is undertaking this work solely for profit.
    Last edited by Joe; 07-05-2014, 11:09 AM. Reason: Inappropriate Font Size

    #2
    Anyone renting out property does it for the income realised.
    You will have no chance of suing for compensation because a development is to take place near a property that you own, so your two options are to accept the reduces rent or try to secure a new tenant.

    What I would consider is what I paid for the house 30 years ago and what percentage rental return I have achieved for those thirty years.
    Then I would calculate the return on my investment if I allowed the current tenant to remain with a discounted rent.

    If the return on the investment is still acceptable then keeping a tenant in situ is probably sensible.

    That is why many people with savings that are now being offered 1.5% return on their capital are looking to buy rental properties, even in areas of the South East of England where 5% return is all that can be realised.
    If your tenant paying 70% of the current rent still gives a sensible return on what was paid for th ehouse 30 years ago, take that on board or else seek another tenant.

    Chasing the developer is pointless, as there is no legal trespass over your property just because someone is developing adjacent land.

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      #3
      Just give the guy 6 months at the lower rent. I dare say the building work will be over by then.

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        #4
        Many thanks. That sounds sensible advice.

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