REAL INSIGHT - Property Update - July/August 2011
The future's green (but taxing!)
The Government has outlined its main proposals to simplify its carbon reduction measure, the CRC Energy Efficiency Scheme, and to reduce the regulatory burden on those who qualify. The changes are intended to come into force in April 2013.
CRC is a "cap and trade" scheme which is intended to encourage large users of energy to become more energy efficient. Organisations which qualify for CRC must purchase "allowances" from the Government to cover their carbon emissions.
The main recommendations are:
- Participants no longer get a proportion of their purchase price back, effectively making the scheme into a carbon tax.
- To replace yearly auctions of allowances with two fixed price sales per year.
- Simplified rules for splitting up groups.
- Better handling of property held on trust.
- The qualification process will be simplified.
- Sites covered by Climate Change Agreements or the EU Emissions Trading Scheme will be automatically exempt from the CRC scheme.
- Footprint reports will be scrapped.
Comments are required by 2 September 2011. Click here for more information.
Drain on the community
The responsibility for private sewers and drains (apart from those within the curtilage of a property) for commercial and residential properties will transfer to water and sewage companies on 1 October 2011.
In most cases this will be a positive development. However, on multi-let sites or developments, landowners may have put in place complex provisions relating to sewage and drainage, or they may have easements with "lift and shift" provisions. In those situations, landowners should take action to appeal against the automatic transfer of the sewers and drains on the grounds that the transfer would be seriously detrimental to the interests of a person affected by the scheme.
Caravan sites and some larger commercial and industrial sites will be treated as a single curtilage. Pumping stations and pumping mains are excluded from these transfers but will pass to the water and sewage companies by 1 October 2016.
For more information please call us or click here.
Going GAGA about AGAs?
The Court of Appeal in K/S Victoria Street -v- House of Fraser has confirmed the decision in Good Harvest and given further guidance on when a guarantor can guarantee the liabilities of an assignee of a lease:
- A contractual obligation that a guarantor must guarantee the obligations of future assignees will be void and any guarantee given pursuant to such an obligation will be ineffective.
- Subject to (3) and (4) below, a guarantor of an assignor cannot validly guarantee the liability of the assignee by giving a direct guarantee, even if it does so voluntarily, and even though this may be commercially desirable (e.g. in a group company assignment)
- A guarantor may validly guarantee the liability of an assignor's assignee by guaranteeing the assignor's Authorised Guarantee Agreement. (Known as a sub-guarantee or GAGA).
- A guarantor can in any event validly guarantee the liability of an assignee on a further future assignment (providing it is validly and fully released from its obligations after its initial guarantee period).
The real deal
Mishcon de Reya has recently advised on a number of high profile deals including the sale of the historic Piccadilly Estate, which includes the site of the former 'In & Out Club'. We also advised Matterhorn Palos Partnership on their £113.5 million acquisition of the Kings Mall Shopping Centre in Hammersmith, and Cathedral Group and Development Securities on their acquisition of London Gate business park in Middlesex.
Hit the ground running
Our Real Estate Group put their best foot forward at the British 10K London Run on Sunday 10 July. A record 25,000 people from 26 countries took part in this year's 10km road race, which is sponsored by Mishcon de Reya. Our mighty athletes included head of real estate Nick Doffman, tax partner Jonathan Legg and corporate partner Richard Tyler.