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Ask Buachaill Your Own Question
Buachaill, Barrister
Category: Property Law
Satisfied Customers: 10954
Experience:  Barrister 17 years experience
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I have a long lease use and almost 100 years

Customer Question

I have a long lease for commercial use and almost 100 years left. Last years i took planning permission for change of use from commercial to residential from Council. Now i need consent from the landlord and the landlord is council, the council is asking for a premium to be paid because the value of the property is increasing and whatever the increase is, it has to be share 50:50.
I need advised either it is normal that a landlord can ask for premium like this.
Submitted: 2 years ago.
Category: Property Law
Expert:  Nicola-mod replied 2 years ago.
I've been working hard to find a Professional to assist you with your question, but sometimes finding the right Professional can take a little longer than expected.
I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.
Thank you!
Customer: replied 2 years ago.
Hello Nicola
I am happy to wait but if you can please let me know the approximate time scale.
let me know if you need copy of lease.
Just wanna update you that i got response from the managing agent today
They are sayingHe has approached us as Managing Agents for Wandsworth Council seeking permission for a change of use from D1 to C3 under his lease.
Whilst the principle has been agreed in terms of the proposed alterations and planning consent secured, a formal Licence is needed to document formal Landlord’s consent.
As the proposed use clearly represents an enhanced capital value my client is seeking a premium for the benefit of the improved use. We have explained therefore that he needs to submit a proposal which the Council can consider. In other cases within the Borough where a change of use has been granted, the Council has sought 50% of the uplift in value resulting from the surrender of the existing lease and the grant of a new residential lease.Kind Regards
Expert:  Buachaill replied 2 years ago.
1. I regret to say that it normal for a landlord to seek a premium where the permitted use on a leased premises is improved from one type of use to a more profitable use. This is normal practice. So here, the Council are not doing anything out of the ordinary. Without the landlord's consent to the change in use, you are in breach of the lease, if you change the use. So, the landlord can demand a suitable uplift for the change in use. Be aware that 50% of the uplift in value is not excessive. Within London, higher uplifts have been sought. Your client needs to be told that there are considerable benefits from being granted a new lease with an improved use category. The lease will only get more valuable with the passage of time, particularly as the new lease will also be for more than 100 years. There is nothing to prevent your client from subsequently assigning the lease and pocketing the additional value created for him. So it is a highly beneficial situation.
Customer: replied 2 years ago.
Thank you for the answer,
But I was concerned that under under what law they can ask premium and according to lease conditions they cannot with held unreasonable.
Expert:  Buachaill replied 2 years ago.
2. The claim for a premium is not laid down in any law. It is just commercial practice that if a landlord is going to grant a valuable right, that some corresponding benefit be given to the landlord. It is a division of the spoils of the tenant suddenly finding his leasehold interest is worth much more. Secondly, it is not unreasonable for a landlord to withhold consent to a change in use when the landlord is not getting enriched. No court is going to side with the lessee in those circumstances. I think you need to tell you client the facts of life in relation to suddenly finding his interest in the property is much more valuable and he can immediately sell it for a much increased market value.