Overseas real estate newsletter – October 2021

28th October 2021

This Newsletter builds on our July Newsletter and aims to give our overseas Real Estate clients and contacts an insight into how the UK Legal Market is adapting to the new post COVID world we find ourselves living in, to give you our thoughts on various topical issues and to give you a summary of any relevant legal updates.

We aim to include content which will be relevant and interesting to you. We hope you find this useful. If there are any areas or topics you would like us to cover, please let us know. Please feel free to forward to your associates. If your associates would like to receive this newsletter then please contact Nigel Griffiths.

Return to the office – some employment issues

Businesses in city centres across the UK have obviously suffered in the last 18 months during the various COVID-19 lockdowns. What is the “new normal”? The rebuilding of those businesses – e.g. shops/bars/restaurants – will depend on how quickly the office population returns to city centres.

What is the current state of play? The Financial Times reports that almost half of UK white-collar staff have returned to the office at least on a part time basis. That reflects what we are seeing as a firm. Many office managers we deal with are offering staff a “hybrid” approach – requiring staff to work at least 2 or 3 days in the office, with the remainder at home. However, persuading staff to return the office is not proving that easy in some cases. Debra Gers from our Employment Team highlights some of the issues facing employers in the next few months.

Read more

Green leases – it’s not easy bein’ green – or is it?

The Prime Minister recently told world leaders at the 76th Session of the UN General Assembly that “When Kermit the Frog sang ‘It’s not easy bein’ green’ I want you to know he was wrong”. Boris was referring to forthcoming COP26 Conference to be held in Glasgow, Scotland and stated, “if we keep on the current track then temperatures will go up by 2.7 degrees or more by the end of the century”. World leaders will come forward at the Glasgow conference with their emissions reductions targets for 2030 as governments look to introduce legislation to offset carbon emissions. Rhiannon Peploe-Williams provides some insight into how the UK Government’s drive to be more “green” will impact upon the content of commercial property leases.

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Coronavirus and Non-Payment of Rent – how much protection does a tenant have?

The Coronavirus Act 2020 (CA 2020), which became law on 25 March 2020, has significant implications for landlords and tenants of commercial premises.

The Act gives considerable protection to tenants against the remedies which a landlord would normally take for non-payment of rent. The CA 2020 suspends a landlord’s ability to forfeit a lease during the suspension period, but it does not prevent rent and other sums due under the lease from accruing.

In the recent High Court case of London Trocadero (2015) LLP v Picturehouse Cinemas Ltd and others [2021] EWHC 2591 (Ch) (London Trocadero) the tenant challenged and tested this provision and put forward some novel arguments to say that rent should not be payable during a period of COVID-19 closure. Did the tenant succeed?

Read more.

Legal updates

Post COVID – how are cities recovering?

In our July Newsletter we asked how cities (London in particular) would change post COVID. We have an update. A survey published by the Office for National Statistics shows that just 54% of working adults went to a place of work in the week ending 23 October 2019. One in seven adults said they worked solely from home. Whilst a central plank of the UK Government’s pandemic recovery strategy is to get people back to offices, there does seem to be a long way to go. London does seem to be faring better than other cities. The Times has reported that central London gained the most from office workers returning with shopper numbers rebounding by 66% compared with the same period last year, with week-by-week footfall rising by 8.8%.

Cadogan Estates – an update

An indication of just how hard the various COVID lockdowns has hit some landlords is a piece in the Estates Gazette, which reports that the Cadogan Estate, which owns large parts of Chelsea and Kensington, has provided £15 million of support to retail and leisure tenants. The Cadogan Estate spans 93 acres of prime London real estate and has some 300 tenants. Rent collection has been considerably down on pre-COVID levels and support measures include: deferring rent, agreeing monthly payments, ‘turnover only’ rent deals.

Investing in UK Property?

The Daily Telegraph recently reported following an interview with Marcus Phayre-Mudge, manager of the TR Investment Trust that “the pandemic won’t kill off the British retail park – we’re buying more”. The report states that the TR Property investment trust has navigated the market better than most with £1.5bn returns over the past three years and in addition, it has maintained dividend payments. It invests across Europe usually by investing in the shares of property companies rather than in actual buildings. When asked whether he was optimistic about the British commercial property market, Mr Phayre-Mudge was positive. A third of the trusts investments are in British commercial property shares and buildings.

In its latest Property Snapshot report, Colliers reported UK retail investment volumes picked up to hit £755 million with office and industrial activity remaining steady.

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