Update on Leasehold Reform Act 1967 Landlords, beware of the potentially problematic Leasehold Reform Act 1967 ("the Act"). If you or your tenant lets, for business purposes, a building that was designed, built and initially used as a house, the Act confers on certain tenants holding long leases the right to acquire the freehold (and superior leasehold reversions). A recent Court of Appeal case involving Howard de Walden Estates concerned proceedings against two tenants who served notice under the Act to acquire the freehold of buildings that were designed as houses (and were described in the leases as residential), but were being used for the business of providing temporary bed-sits and offices respectively. In this case, it was held that notwithstanding the fact that the buildings were being used for the tenants' businesses, the buildings were houses and qualified under the Act. Therefore the tenants were entitled to acquire the freehold interest. The decision turned on the physical appearance of the buildings and not, as the landlord contended, their use. In this instance, the buildings remained suitable for living in, despite the internal parts being adapted for commercial use.

Are you committed? - CRC registration deadline 30 September 2010 The Environment Agency has sent out an update informing those affected that it is aware of problems businesses are having in deciding which business structures need to register for the CRC and in particular they have issued supplementary guidance on the treatment of funds and trustees. This update is really a further reminder that registration is unlikely to be straightforward. Remember the registration process has to be completed by 30 September 2010 and although the Environment Agency are trying to be as accomodating as they can be (and have a helpline available) the Environment Agency are unlikely to be as lenient on companies that do not start the process until the last minute. The registration process will take at least 4 weeks so you need to get cracking if you have not already started the process!

RECOVERING COSTS Would you be able to recover your costs of enforcing tenant's covenants? A recent case has highlighted just how strictly courts construe costs recovery clauses in leases. The tenant was in breach of its repairing obligations and the landlord served a section 146 notice but did not commence forfeiture proceedings. After subsequently negotiating a deal with the tenant the landlord was unable to recover its costs incurred in relation to the negotiations. The Court of Appeal held that the terms of the lease which provided for the tenant to pay the costs incurred by the landlord in connection with or in contemplation of proceedings under section 146 of the Law of Property Act did not allow the landlord to recover its costs when dealing with the tenant breach by way of negotiation. Wording in the costs recovery clause in leases needs to be wide enough and clear enough to enable the landlord to recover its costs incurred in dealing with tenant breaches in the most appropriate manner. Drafting that entitles a landlord to recover "any costs incurred in enforcing the tenant's covenants" should enable a landlord to recover costs incurred in dealing with tenant breaches by methods other than proceedings.