Landlords given recession masterclass

With this in mind, Mishcon de Reya and Property Week held A Landlord’s Masterclass: Essential Tricks of the Trade, at the firm’s central London office on 13 October to help landlords manage their properties and their tenants more effectively.

Speakers at the event, which was chaired by Property Week editor Giles Barrie, were:

• Daniel Levy, head of the Mishcon de Reya property litigation group, who talked about what to do when the landlord-tenant relationship breaks down
• Jonathan Seitler QC, barrister at Wilberforce Chambers, who explained the circumstances in which landlords can refuse consent
• Anthony Lorenz, senior partner at the Lorenz Consultancy, who said landlords should be proactive with tenants to get the best results.

What to do when the relationship with your tenant breaks down

You want to maintain your relationship with your tenant if you can. But Daniel Levy, partner and head of property litigation at Mishcon de Reya, says there are eight steps you can take to achieve a quick settlement if your disagreement does come to blows.

Litigate for money, not vengeance Litigation is there to get you a better financial result. Do not get into an expensive case because you are angry and want to prove a point. Money is your priority.

Get an assertive litigator You need an assertive litigator, not one who wants you to talk more to your tenant, particularly if you have to give information that weakens your position.

Know what is in your arsenal For prompt payment, threaten to send in bailiffs. Tenants, particularly retailers, want to avoid embarrassment. You can also threaten insolvency for an unpaid debt or use publicity to force the opponent to act. Or call Property Week on 020 7921 8562.

Use “shock and awe” tactics

You need a forceful strategy. You want to control the pace of litigation and destroy the tenant’s will to fight. To be taken seriously, you need to be at the top of the pile of things to deal with.

You can avoid pre-action protocols

Pre-action protocols are there to achieve a settlement before action starts, but sometimes you can get a quicker result by issuing proceedings.

Fight dilapidations claims with detailed evidence

You can bring these to a head quickly with a detailed claim backed by good legal advice.

Don’t try to get blood out of a stone

Do not take action if your opponent hasn’t got any money, even if it makes you feel better.

Produce a decent service charge defence

Don’t get worn down by detailed service charge claims from tenants who say they want money back. Again, a detailed claim will bring things to a head and speed up settlement.

How to become better acquainted with the law of consents

Landlords need to know when they can refuse a tenant’s request to assign a lease, sublet space, undertake works or change use. Jonathan Seitler, a barrister at Wilberforce Chambers, broke down the confusing law of consents into six key points:

The most important rule is that the landlord can refuse consent only to protect its commercial interests, so long as refusing consent is allowed under the terms of its lease.
A landlord should ask two questions to ascertain whether it is reasonable to refuse consent. First, does this impact prejudicially on my commercial interests?

And second, is the interest being prejudiced one that is protected in the lease?

If the answer to both questions is “yes”, the landlord can refuse consent.

“It’s that easy. Everything else is a footnote to that,” said Seitler.

For example, if your tenant wants to assign a lease to a company and there is a genuine concern that company may not be able to pay, you can refuse consent. That is because the assignment would impact prejudicially on your commercial interests and is protected in the lease.

You can’t base a decision on previous cases. Each decision needs its own evidence.
Your fears must be reasonable. Would other landlords have similar concerns?
Write your reasons down as soon as possible. If you do it later, then “nobody is going to believe you had that reason”.
Don’t give unreasonable arguments for refusing consent as these could undermine your good reasons for refusing.
You must be reasonable and not let your tenant suffer disproportionately.

How to improve your working relationship with your tenants

You need to be active if you want to work well with your tenants. That is the advice from Anthony Lorenz, senior partner at the Lorenz Consultancy, who offered five tips:

Keep an eye on your tenants If you know everything about your tenants, then you can anticipate trouble before it happens. Keep a watch on corporate acquisitions and the strength of their covenant, and be ready to negotiate changes to lease terms. Don’t look at the lease as being written in stone. It isn’t.

Review your rents every year

This assists you in monitoring investments and helps at rent reviews.

Be transparent on service charges

Show how you are spending their service charge, so that they have no cause for complaint.

Meet tenants every three months

There may be the potential to work together. For example, if they want to improve the building, then you could make a contribution in return for a higher rent.

Think about dilapidations two years ahead

This will help you negotiate the slow dilapidations system.

View the full article at www.propertyweek.com