>>> continues on page 2
The year 1925 witnessed the
most radical overhauling and
modernisation that property
law in England and Wales has
ever seen. Six great statutes
dramatically changed the legal
landscape forever and land law
would never be the same again.
The Law of Property Act 1925 has
formed the cornerstone of land law in
England and Wales for nearly a century.
Starting with the basic proposition in
section 1 that the only two legal estates
in land are the ‘fee simple absolute
in possession’ and the ‘term of years
absolute’ (the correct legal terms for
‘freehold’ and ‘leasehold’ respectively),
the Act extends to 209 sections and
seven schedules covering the whole
spectrum of property-related issues.
Many of the principles of the Act are still
encountered by property professionals
on a regular basis, while others are only
encountered occasionally at most.
Anyone who has ever ventured into the
landlord and tenant arena is likely to
have encountered certain provisions of
Forfeiture – section 146 requires
landlords to serve a notice (commonly
called a ‘section 146 notice’) prior to
forfeiting a lease, unless the forfeiture is
due to non-payment of rent. The notice
must specify the breach, require the
tenant to remedy the breach (if that is
possible) and require the tenant to pay
The Law of Property Act 1925 has withstood the test of time,
but still contains some hidden gems. Bill Chandler reviews
some of its lesser-known provisions.
Section 53 similarly requires
declarations of trust relating to land to
be evidenced in writing, signed by a
person capable of declaring the trust.
There are inevitably a number of
exceptions to the general requirement
for a deed. Section 52 sensibly
excludes court orders, disclaimers and
dispositions (including surrenders)
taking effect by operation of law.
More interestingly, section 54 permits
certain leases of up to three years to
be granted orally, not in writing at all,
although this provision only applies to
leases which take effect in possession
and at the best rent reasonably
obtainable without a premium.
Perpetuities - the perpetuities rule
prevents interests being created which
only take effect many years later.
However, while the Perpetuities and
Accumulations Act 2009 removed
perpetuities concerns from most
property transactions, the 1925 Act
retains one final trap.
Section 149(3) renders void a lease
whose term commences more than 21
years after the date of the lease. So, a
lease granted on 30 November 2014
with a term commencement date of 30
November 2035 is valid, but the same
lease with a term commencement date
of 1 December 2035 would be void.
There is no obvious conceptual
reason why section 149(3) should
have outlived the old perpetuities
rules, especially now that leases which
take effect more than three months
after grant must be registered at
the Land Registry so that there is no
possibility of them being overlooked on
subsequent dealings with the property.
Perpetually renewable leases - one
statutory provision frequently assumed
to derive from the 1925 legislation in
fact derives from a slightly earlier Act.
If a lease allows the tenant to call for
a new lease on identical terms upon
expiry, the new lease will include the
same right to demand another new
It was a very good year
• Mussolini (Il Duce) announced he
was taking dictatorial powers over
• The New Yorker magazine
published its first issue.
• F. Scott Fitzgerald published The
• In Dublin, Oonagh Keogh became
the first female member of a stock
exchange in the world.
• The first surrealist exhibition was
held in Paris.
>>> continued from page 1
commercial property autumn 2014
Welcome to the autumn edition
of Hill Dickinson’s commercial
property newsletter, which we
hope you will find of interest.
I am please to say we also have a few
new faces to introduce. As well as the
new intake of trainees and the first
cohort of legal apprentices in Liverpool,
I am delighted that the property and
construction team has been joined by
three qualified solicitors in Jonathan
McMaster (property, Liverpool), Laura
Ingram (property, Manchester) and Emma
Marshall (construction, Manchester), while
Phil Parker has joined the property
litigation team as a senior associate.
If you have any queries relating to
the issues raised in this newsletter,
please contact the relevant author or
your usual Hill Dickinson contact.
If you have any comments on the
newsletter in general, or suggestions for
topics to cover in future editions, please
contact our editor, Bill Chandler, at
Head of Business Services
Section 146 also makes provision for tenants to apply for relief from
forfeiture and for subtenants to apply for vesting orders, since the
effect of forfeiture is to terminate any subleases granted out of the
Service of notices - section 196 is still incorporated into the vast
majority of leases and provides for notices to be in writing and left at:
- the last-known place of abode or business in the United Kingdom of
the person to be served;
- in the case of notice being served on a tenant, at the premises
comprised in the lease;
- in the case of notice being served on a mortgagor, at the premises
comprised in the mortgage; or
- in the case of the tenant under a mining lease, at the office or
counting house of the mine.
Section 196 also permits the notice to be sent by registered letter
(which includes recorded delivery) to any of those addresses - in that
case, notice is deemed to be served at the time the letter would in the
ordinary course be delivered, although the notice is not validly served if
the letter is returned undelivered.
The following provisions may not be encountered on a daily basis, but
anyone involved with residential or commercial property is likely to
have at least heard of them:
Quasi-easements - section 62 is entitled ‘general words implied in
conveyances’, but is not as innocuous as it appears. The long list of
items deemed to be included with any conveyance of land is primarily a
word-saving provision, ensuring that all buildings and benefits enjoyed
with land are included without needing to be specifically listed.
However, the inclusion of rights enjoyed with the land has led to section
62 being interpreted by the courts as creating new legal easements
over the seller’s retained land on a sale of part. Since section 62 can be
excluded by agreement between the parties, in practice the section
is most commonly encountered in specific clauses in transfers of part
excluding its operation.
Restrictive covenants – section 84 empowers the Upper Tribunal to
modify or discharge a restrictive covenant in certain circumstances,
including where changes to the character of the property or the
neighbourhood have rendered the covenant obsolete, or where the
covenant impedes a reasonable use of the land and does not secure to
the beneficiary any practical benefit of substantial value.
Other parts of the Act crop up less
frequently in practice, but nonetheless
remain in force:
Enlargement - section 153 allows a
tenant to execute a simple unilateral
deed upgrading their lease into a
freehold title if the following conditions
- the lease was originally granted for at
least 300 years;
- at least 200 years of the term
- either no rent or a peppercorn rent
is payable (or a rent not exceeding
one pound is payable which has not
been collected or paid for at least 20
- the lease does not permit forfeiture
for breach of condition.
For decades it had been accepted
that enlargement must extinguish the
existing freehold title. However, in the
absence of clear legal authority, the
Land Registry changed its practice
in April 2013 and will now keep the
landlord’s freehold title open when
the tenant’s title is enlarged, albeit
with an entry that the title may have
been determined. Land Registry
Practice Guide 26 has been amended
The concept of two different freehold
titles existing simultaneously in the
same land does not sit easily with the
principles of the 1925 Act.
Deeds - the Law of Property
(Miscellaneous Provisions) Act 1989
regulates the format and execution of
deeds (and also requires any contract
for the creation or transfer of an
interest in land to be in writing), but it is
section 52 of the 1925 Act that requires
all conveyances of land or any interest
in land to be made by deed.
‘Conveyance’ is widely defined in the
1925 Act to include not only transfers
of land, but also leases, mortgages,
assents, releases and every other type
of disposition except a will.
lease upon the expiry of the renewed
term, and so on. The statutory grounds
to oppose lease renewals under the
Landlord and Tenant Act 1954 will not
assist the landlord, since the tenant’s
right to a new lease is contractual
rather than statutory. In theory, the
landlord might never be able to get the
To remove this problem, the Fifteenth
Schedule to the Law of Property
Act 1922 provides that a perpetually
renewable lease takes effect as a
lease for two thousand years, while a
perpetually renewable underlease takes
effect as a lease for the residue of the
headlease out of which it is granted,
less one day.
The 1925 legislation is likely to remain
with us for some considerable time to
come and cannot be ignored. Some
provisions are more widely used and
understood than others, but most
will be encountered during a typical
working lifetime within the property
sector. Perhaps the biggest traps lay
with those provisions encountered only
very occasionally, which can easily be
An earlier version of this article
appeared in the Estates Gazette
commercial property autumn 2014
Letters from Manchester - part two
The property and
construction team in
our Manchester office
have continued to write
regular columns in the
Andrew Carmichael brings us up to
speed on competition law
Three years ago, the repeal of the Land Agreements Exclusion
Order exposed property contracts and leases to the full force
of competition law. Recent developments serve as a timely
reminder of the risks this poses to landlords and tenants.
Any agreement which restricts the use of land is vulnerable.
This isn’t just about competitors carving up territory between
them – it is also about restrictive covenants, imposed on the
disposal of land, or lease covenants, whereby the landlord
guarantees the tenant exclusivity within a particular scheme.
You don’t even need to be protecting yourself from
competition to be in trouble. The recent first reported case
on the application of competition law to commercial property
concerned the lease of a newsagents shop in a suburban
shopping parade. The local authority landlord deliberately
used narrow user clauses to maintain a diverse and vibrant
parade for the benefit of the local community, but that was
insufficient to invoke the consumer benefit exemption.
Yet the official guidance promises that only a small minority
of property agreements will have the appreciable effect
on competition required to infringe competition law. The
emphasis is on the effect of a particular restriction on
the relevant market. Matters are further complicated by
the principle of ‘transient voidness’, under which valid
restrictions can still breach competition law months or even
years later following changes in the relevant market.
As if all that wasn’t enough, the Supreme Court of Latvia
has just asked the European Court of Justice to consider
whether exclusivity agreements given to tenants by shopping
centre landlords automatically offend competition law.
Such an outcome would require a complete rethink of
the current position in the UK, although judicial guidance
on assessing such agreements would be welcomed.
The answer? Every proposed restriction must be
individually risk-assessed before the agreement is entered
into. Existing restrictions are affected too, but it should
never be assumed that they can simply be ignored. The
consequences of getting it wrong can be severe… not only
is the offending restriction void, but the parties involved can
each be fined up to 10% of their annual global turnover.
Michael Woolley assesses how
the Construction Act payment
mechanism is working in practice
The increase in construction activity across the Greater
Manchester region, as the economy grows from the recent
recession, is a welcome improvement for all in the industry.
However, as some north west contractors and developers
have already found out, there can be a major sting in the tail
to this increased activity.
Almost three years ago, significant changes were introduced
to the Construction Act. Not only did the requirement for
contracts to be in writing disappear, but the Government also
brought in a robust payment mechanism.
One of the surprises of the last two and a half years has been
the regularity with which parties ignore these requirements.
There has been no month in that period where Hill Dickinson
has not been dealing with cases, across the Greater
Manchester and north west regions, resulting from such
From a developer’s point of view, the risk is that you may
be faced with a sudden and unexpected liability to make a
payment. For a contractor, the risk is the same albeit one tier
down in the contractual chain.
It is often said that coming out of recession - and the
increase in trade that brings - is one of the riskiest times for
a business. The increased trade will require increased capital
and unexpected payments may cause financial stress if not
What then does the mechanism require? At its most basic,
it is for the paying party to give a notice to the recipient
of the amount due and the basis of calculation. A contract
certificate may well suffice, but care still needs to be taken
over timing. If no timely notice is sent then the recipient may
do so - but he may have a more optimistic view of what is
due. In some cases, an earlier application will count as the
recipient’s notice. Either of these notices will set the ’notified
sum’ which then becomes payable. The only basis to avoid
paying a ’notified sum’ is a properly drawn up ‘payless’ notice.
For example, in a well-known Manchester Construction
Court case the developer of apartments was ordered to pay
£8,762,731.32 more than its own valuation because it had not
followed the requisite notice procedure.
Our advice to both contractors and developers across the
north west is simple: ensure your contract complies with the
Act and then follow it.
Michael Blakey advises landowners
to protect their assets from
Property is one of the most valuable assets that many
people own. Wherever there is value, from the family home
to complex commercial premises, there will always be
fraudsters seeking to make a fast buck.
Technological advances, combined with the abolition of
physical land certificates proving ownership, have allowed
criminals to ‘steal’ title to property. Using assumed identities
and fake documents, they extract its value by selling or
mortgaging your property to an unsuspecting third party.
But landowners can protect themselves. The Land Registry
allows owners to register restrictions preventing the
registration of dispositions without a certificate from a
solicitor or other professional conveyancer that they have
checked the identity of the person or company making the
Individuals may register such restrictions for free against
properties they do not occupy, while companies may register
free restrictions against up to three properties. Owners
should also consider paying to register similar restrictions
against other vulnerable properties.
Restrictions may deter an opportunist, but for determined
criminals it is simply one more document to fabricate. The
Land Registry’s new online property alert service offers
even greater protection - this free service takes five minutes
to set up and allows individuals to monitor up to ten titles.
Users receive an email whenever the Land Registry receives
a search or an application relating to one of the protected
titles, allowing them to spot and thereby prevent potentially
While only individuals can set up a property alert account,
they don’t need to own the properties they are monitoring.
You may therefore wish to include within your list a
combination of personal and business premises, and maybe
even protect elderly relatives who don’t have internet access.
Additionally, since property fraudsters will frequently target
easy pickings, it is important that unoccupied properties are
kept secure and are checked regularly for signs of entry or
Don’t panic. Statistically, the chances of becoming the
victim of property fraud remain quite small. But, in the same
way that you wouldn’t leave your front door wide open for
burglars, let’s keep the door firmly closed on property fraud.
commercial property autumn 2014
Bill Chandler, in his
capacity as firmwide
deputy head of training
at Hill Dickinson, was
recently asked to write
for Safety & Health
Practitioner on the
importance of a lifelong
commitment to training.
What’s the difference between
Usain Bolt and many property and
It sounds like a joke, doesn’t it, but it’s
a deadly serious question. Ok then,
let’s start by asking what property
and construction professionals
have in common with the fastest
man in history. The answer is that
they all want to be the best in the
world at what they do… or at least
to be the best they can be.
If you ask any professional how they
would wish to be regarded by their
clients, their peers and their employers,
they are likely to mention some or
all of the following in their reply:
- ‘being the best’, obviously;
- ‘a safe pair of hands’, with a
reputation for providing a reliable
and consistently high level of service;
- ‘a leader in their field’, respected
for their skills and knowledge; or
- ‘a trusted adviser’, in high demand
among clients and colleagues.
So, back to my original question, what
is the difference between them? The
answer is their attitude to training!
Successful athletes recognise that
they can only stay ahead of the
competition by following - with
unswerving devotion - a rigorous
training programme to stay physically
and mentally in tip-top shape.
Many professionals, however, fail
to appreciate the direct correlation
between training and performance
that sportspeople take for granted.
Too many professionals view
training as a distraction from their
job, something that they have to
do because the business requires
it or because they need to clock
up so many hours to maintain
their professional qualifications.
It would be unthinkable for an elite
athlete to arrive at a major event
saying: ‘I haven’t done any training
this year, but that’s ok because I know
what I’m doing and I’ve done it a million
times before’. Yet how many of us have
said something similar when faced with
the choice between attending a training
session or doing some ‘real work’?
There is a natural tendency to think
that if we’ve learnt something once that
is enough, but things change over time.
Theory and practice are constantly
evolving, as is the legal and regulatory
framework within which property and
construction professionals operate.
How can we provide that gold
medal level of service to which we
all aspire if we’re not entirely up-todate?
In many areas of property and
construction, any deficiency in training
can quite literally put lives at risk.
Practitioners - and their employers -
need to recognise that the quantity and
(even more importantly) the quality
of training will ultimately determine
the quality of service provided by
the practitioner and appreciate that
investment in training will ultimately
be rewarded by enhanced reputation,
reduced risk and increased profitability.
Companies and other employers
need to recognise the fundamental
importance of training and
create a culture where training
is positively encouraged rather
than merely tolerated.
Managers must lead by example. It is
incumbent on all managers to promote
training and encourage their teams
to attend, but it is equally important
that managers and senior staff make
time in their busy schedules to attend
if a convincing message is to be
sent out that training is important.
It goes without saying that those
responsible for training provision must
ensure that the training is relevant
and does actually benefit delegates
(and the business). Training must be
provided in an appropriate format,
at a convenient time and venue and
should (dare I say it?) be enjoyable.
Companies and employers can only
do so much. Ultimately, whether
we work for a large organisation
or for ourselves, we all need to
take personal responsibility for
our own career development.
If we truly aspire to be the best we
can be – respected, trusted and
admired by colleagues and clients
– then like a world class athlete we
must accept that success won’t
happen by chance. We must embrace
the inherent link between quality
of training and quality of service
and make a lifelong commitment
to continual self-improvement.
The Land Registry seems to be
in the news a lot these days, with
controversial proposals surrounding
local land charges and possible
privatisation. The way that we, as
lawyers, engage with the Land Registry
is also changing and it is important
that in-house property teams are
aware of these changes and are
using them to best advantage.
Registration Service (eDRS)
eDRS allows an ever-increasing
range of transfers, leases and
other dispositions to be registered
online. Originally only available to
organisations with a full ‘Network
Access Agreement’, eDRS is now
available through the portal. With a
50% fee discount recently introduced
to encourage the use of eDRS rather
than traditional paper applications,
organisations that have not yet
embraced eDRS should be considering
it. However, you should consider how
best to implement eDRS in practice and
ensure that suitably robust supervision
is in place where applications are to be
submitted by junior or unqualified staff.
In the vast majority of cases, original
documents should no longer be sent
to the Land Registry. Certified copies
are now acceptable for all applications
except first registrations and any
original documents sent with other
types of application will be destroyed
- even if accompanied by a certified
copy. This is, perhaps, another good
reason for considering eDRS.
Anyone with a portal account now has
access to the excellent ‘MapSearch’
facility, which allows users direct (and
free!) access to the Land Registry’s
index map. If a guaranteed result is
required then an official search of the
index map should still be considered,
but there will be many situations
where the ability to quickly check
for a title number or the extent of
a registered title will be useful.
‘Property Alert’ allows landowners
to safeguard their properties from
fraud by linking up to ten registered
titles (recently increased from three)
to their email address. The account
holder will then receive notification
if an official search or a substantive
application is lodged affecting
those titles. It took me less than five
minutes to set up my account and it is
something we should all be considering
for our own properties. While only
individuals may set up an account,
they can include company-owned
properties among their ten titles.
Restrictions can be registered for
free to protect the most vulnerable
properties from fraud. Individuals may
register restrictions in Form RQ for
properties they own but do not live at,
whilst companies may register standard
form RQ (Co) against up to three titles.
In each case, the restriction prevents
the registration of a disposition without
a certificate from a solicitor or other
professional conveyancer that they
have checked the identity of the person
or company making the disposition.
Further information on all these
developments can be found on
the Land Registry website.
An earlier version of this article
appeared in Local Government Lawyer
Land Registry update
Training: going for gold
Bill Chandler highlights several significant recent developments from the Land
Registry which affect all in-house lawyers involved with land and property -
whether dealing with residential properties or complex commercial premises.
Commitment to training
= improved knowledge and
skills = work of higher quality
and lower risk = increased
reputation and demand =
greater career opportunities,
pay and job satisfaction
If you have any queries about matters
raised, please contact:
Head of Business Services
Business Development Manager
commercial property autumn 2014
Liverpool Manchester London Sheffield Piraeus Singapore Monaco Hong Kong ®
Ask Hill Dickinson
The information and any commentary contained in this
newsletter are for general purposes only and do not constitute
legal or any other type of professional advice. We do not
accept and, to the extent permitted by law, exclude liability to
any person for any loss which may arise from relying upon or
otherwise using the information contained in this newsletter.
Whilst every effort has been made when producing this
newsletter, no liability is accepted for any error or omission. If
you have a particular query or issue, we would strongly advise
you to contact a member of the commercial property team,
who will be happy to provide specific advice, rather than
relying on the information or comments in this newsletter.
About Hill Dickinson
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comprehensive range of legal services
from offices in Liverpool, Manchester,
London, Sheffield, Piraeus, Singapore,
Monaco and Hong Kong. Collectively
the firms have more than 1300 people
including 180 partners.
QAs a landlord, I am still experiencing corporate tenants
requesting alienation clauses which allow them to assign the
lease within their corporate group without consent, provided the
assignor gives an authorised guarantee agreement (AGA) and the
parent company guarantees the assignee. I thought repeat parent
company guarantees had been declared unlawful?
ARepeat guarantees are indeed unlawful and an AGA given
where the lease does not require consent to the assignment is
also unlawful, potentially leaving the landlord who agrees such a
favourable regime with no remedy against either the assignor or the
parent company following the assignment.
The Good Harvest and House of Fraser cases a couple of years ago
decided that an outgoing tenant’s guarantor can never guarantee the
assignee, even where all parties desire this and the repeat guarantee
is being offered because the guarantor is the parent company of both
assignor and assignee. This is of course incredibly inconvenient for
many corporate tenants, who require maximum flexibility to move
property interests around within the group.
The most that the parent company can offer in such a scenario is to
guarantee the assignor’s AGA obligations.
The Court of Appeal in House of Fraser suggested that the parent
company guarantor may come back into the picture on subsequent
assignments, although any attempt to contractually oblige the parent
company to guarantee future tenants will fail.
Where such intra-group assignment arrangements already exist,
the Court of Appeal has demonstrated in the recent case of Tindall
Cobham -v- Adda Hotels that it will not simply allow the tenant (who
is of course unable to provide the required guarantee) to assign to
any other group company regardless and will where possible interpret
such clauses as traditional qualified covenants against assignment.
It is also important to remember that the Landlord and Tenant
(Covenants) Act 1995 specifically provides that an AGA is only valid
if given as a condition of landlord’s consent to an assignment. If there
is no requirement to obtain landlord’s consent, the AGA is invalid
and the outgoing tenant obtains a complete release on assignment.
Like the prohibition on repeat guarantees, this statutory requirement
for consent if an AGA is to be valid is causing practical difficulties in
situations where both landlord and tenant would otherwise be happy
to adopt a more flexible approach to alienation.