19 December 2024
Modernising lease renewals – Court or PACT
Industry News, Rent reviews & Lease renewals, SHW News
Following his recent experience dealing with a number of lease renewals at Stockport Retail Park, Jeremy Good, SHW’s Head of Out-of-Town Retail, was invited to take part in a panel session at Accessible Retail’s recent CPD event.
One of the big issues at lease renewal in the Out-of-Town Retail sector is the question of modernisation of lease terms, especially as many of the leases coming up for renewal are over 15 years old. In that time, we have seen many changes to the market and a number of issues. For example, Green Clauses, service charge and rent review caps, were not in vogue when the leases were originally entered into. The catch-all phrase familiar to all in lease renewals “subject to suitable modernisation” does not, generally allow the introduction of new clauses, even where they are common in new leases, and the extent of modernisation remains governed by the O’May Principles”.
The panel discussion covered many of these points in the light of the active consultation on updating the 1954 Landlord & Tenant Act.
Jeremy says: “In particular, we were able to discuss the use of PACT (Professional Arbitration on Court Terms) processes at renewal and demonstrate how they can (and probably should) be used in place of the Courts to help determine disputes. There remains some resistance to adopting PACT where other lease terms are still in dispute, but my recent experience shows that PACT can deal with legal matters as effectively as it can deal with the issue of rent. In my recent case, four outstanding legal points were dealt with by a legal assessor sitting alongside the arbitrator. This approach allowed the legal points to be addressed as a preliminary issue followed by the question of rent, resulting in a much cheaper and quicker resolution of the dispute than would have been the case at Court.
“With the consultation into proposed reforms of the 1954 Landlord & Tenant Act underway, this discussion, hopefully, provided a timely insight into how we, as surveyors, can take a more active role in ensuring these disputes can be resolved in a more timely, cost-effective manner. This will be particularly important as we continue to trend towards shorter leases where, as a result, lease renewal disputes will be more frequent.”
If you would like any assistance on the particular issues relating to lease renewal and in particular whether the PACT process would be a better way to resolve your dispute, please contact jgood@shw.co.uk
