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Monday, 28 February 2011

Max Headroom: Ownership Of Airspace – Can You Reach For The Stars?

If you own a freehold interest in land, how much of the airspace does that include?

First, a bit of gratuitous Latin.

Cuius est solum eius est usque ad coelum et ad inferos.

Meaning the owner of the land owns everything up to the sky and down to the centre of the earth, or more poetically, “for whoever owns the soil, it is theirs up to heaven and down to hell.”

“A colourful phrase often upon the lips of lawyers since it was first coined by Accursius in Bologna in the 13th century”, to quote Justice Griffiths, in Baron Bernstein of Leigh v Skyviews and General Ltd [1978] QB 479, in an all too rare example of judicial humour, in land law at any rate.

However, before you start thinking about fencing off parts of the solar system, Justice Griffiths in Bernstein introduced some clarity to this Latin maxim, by stipulating that a landowner’s rights in the airspace above his property do not extend to an unlimited height. Otherwise, every time a satellite passed over a suburban garden it would be committing a trespass.

Instead, the rights of an owner in the air space above his land are limited to such height as is necessary for the ordinary use and enjoyment of the land and the structures upon it; above that height the landowner has no greater rights in the air space than any other member of the public.

Civil aviation can therefore continue, as under the Civil Aviation Act 1982 it is a defence to an action in trespass or nuisance for aircraft to fly at such a height which is reasonable under the circumstances.

Getting more down to earth, where there is an interference with the legitimate rights of the freehold owner, then the owner can assert those rights by an action for nuisance or trespass. This might happen for example where a neighbour allows an advertisement to overhang your premises, or where a crane on adjoining land swings over your property without your permission (usually given in the form of a crane oversail licence).

How high can you build?

This will usually be a matter for planning control. Your planning permission will govern the height of your development. Rights of your neighbours to light may also be relevant (see my post Let There Be Light etc).

If your building is going to encroach upon or overhang someone else’s airspace, then you will need their permission to do so.

This is something that often gets forgotten about when structures are built close to the highway. If anything is going to jut out over the highway, then you first need to get the highway authority’s consent.

What about leasehold property?

Here it depends on what is included in your lease, often referred to as the extent of your demise.

The general rule is that a lease of a whole building or of the upper portion (including the roof) includes the airspace above it, unless the lease expressly excludes it. That airspace will be limited to such height as is necessary for the ordinary use and enjoyment of the land and the structures upon it, just as it is for the freehold owner.

This can be important in determining who has the right to exploit valuable airspace.

For example, if the airspace is included in your demise, this might prevent your landlord letting valuable roof space to telecoms operators. It might also limit your landlord’s ability to place air conditioning units on any adjacent property it owns, even if they are several metres above ground level, if they overhang the airspace that has been included in your demise.

Conversely, if the airspace is excluded from your demise, then you would not be able to put, for example, aerials or satellite dishes on the roof without your landlord’s consent (which he does not have to give), unless you have included a specific right in your lease to install such items.

If your lease does not include the structure of your building (if it is an “internal” demise), then the airspace and the roof itself will be excluded from your demise, and so if you want to install things on the roof, you will need express rights to do so in your lease, together with rights to run cabling as necessary and rights of access to the equipment on the roof for the purposes of maintenance, repair and replacement.

This report from Wragge & Co of a recent case (Rosebery Ltd v Rocklee Ltd) demonstrates how, in a residential context, it is important that leases which include airspace should be carefully drafted to ensure the height of the demised airspace is properly defined.

In Rosebery the problem arose from granting a lease of airspace to a tenant for them to build another storey on top of their 6th floor flat, and how that impacted on the rights of the 7th floor flat owner to the airspace above the roof of that extension in a building which narrowed towards the top.

The issue in Rosebery is far too complicated to describe accurately in a post like this, so for a summary of the problem and the decision – see the Wragge & Co piece!

The case illustrates how important it is to consider and, if necessary, define airspace carefully when granting and accepting leases and particularly, where tenants want to build extensions, supplemental leases.

Per ardua ad astra.

As you might want to say to yourself if the going gets tough in lease negotiations.

Friday, 25 February 2011

The Heat Is On! UK Government Continues Its Attack On Solar Farm Subsidy

“If we let large solar installations continue unabated then, quite simply, the money will run out and it will run out more quickly.”

The words of Chris Huhne, Secretary of State for Energy & Climate Change, speaking to the Western Morning News and Western Daily Press and reported yesterday on the DECC website.

Although stating that the Coalition means to be the “greenest government ever”, determined to cut emissions, increase the amount of green energy generated and create jobs, he says the money set aside for renewable energy under the Feed-in-Tariffs (FITs) scheme in the autumn Spending Review is principally for householders, small businesses and communities to play their part in tackling climate change and reducing their fuel bills by generating their own green electricity.

As there is a finite pot of money available in subsidy, the government does not want to see it all swept up by industrial scale solar farms.

Here’s Huhne again:-

“Let me put it in black and white. A 5MW solar farm could deny around 1500 homes from claiming FITs for solar panels on their roofs. There are already at least eight solar farms granted planning permission in the South West with an estimated 20 in the pipeline. Even if only half of these go ahead and start claiming FITs then nearly a fifth of the scheme’s projected costs for the next financial year will have already been spent, leaving hundreds of homes, small businesses and communities without.”

Has he prejudged the outcome of the government’s review?

Huhne says instead he wants a sustainable growth in the solar business and not a “boom followed by a bust”.

However, Dale Vince, founder of Ecotricity which owns the wind farm at Conisholme and is developing a solar park at the site, is reported by PowerGen as saying that plans to stop commercial ventures from receiving green subsidies are "ill-conceived” and could leave his solar farm in Conisholme, which could start generating electricity by April, as the only commercial one in the UK.

Mr Vince said large-scale solar costs about 30 per cent less to generate electricity per unit than small photo voltaic panels on homes.

He thinks the government FIT review will kill all big solar projects.

The uncertainty this has created in the market must make getting private funding for these projects well nigh impossible for the time being.

But are FITs themselves really a suitable form of funding for large scale projects such as solar farms? FITs are financed by small increases on household energy bills. They pay people and organisations for the "green" electricity they generate from small-scale solar panels, wind turbines and other renewables.

FITs sounds more like a Big Society policy than a nationally organised renewable energy strategy.

The government has said it is not against solar farms per se, but it doesn't want large-scale solar installations to be claiming money meant for householders, small businesses and communities.

Clearly this all comes down to an allocation, and prioritisation of what is now a limited amount of subsidy.

If the government really wanted to promote renewable energy and be the “greenest government ever” it would have to offer other grants or financial incentives to solar farms and other large scale renewable energy projects, rather than just what is available through the FITs scheme, which anyway does not appear to have been designed for that purpose.

And to do that, the DECC would have to persuade the Treasury.

Given the state of the nation’s finances, how likely is that, I wonder?

Thursday, 24 February 2011

King’s Speech – Queen’s Land: Escheat, Last Remnant Of Feudalism, In The Spotlight

The King’s Speech is a fine film (notwithstanding the occasional bit of historical inaccuracy, eh Sir Winston?) which deserves to do well at the Oscars this weekend. [Update September 2013 - This is a blog and this is an old post (long forgotten but now bizarrely resurfaced!), in case you're wondering why I'm blathering on about a film now gathering dust at the bottom of your Blue Ray pile!]

But what relevance does the monarchy still have when it comes to land ownership in England and Wales?

Its relevance, from a land law perspective, lies in the small trace of feudalism still lingering in our property laws today.

Although owning a “freehold” title to land is the best you, a mere mortal, can get, it doesn't mean your ownership of the land is all-embracing.

If you own a freehold, what you actually own is an estate or “interest in possession” in land.

Sometimes it's called a “tenancy in fee simple”. It's superior to a leasehold interest, but it's still inferior to the hierarchical interests of the “feudal lord of the estate”, which, in the “modern” era (that’s now, believe it or not), means the Crown or one of the Royal Duchies (Cornwall or Lancaster).

The underlying ownership of all land in England by the Crown has existed since the Norman Conquest. There is, even today, always a presumption in favour of the Crown unless it can be proved that land belongs to someone else.

Is there ever a time when this feudal remnant has any practical relevance?

Most of the time, no. We don’t live in an absolute monarchy and our registered titles (proof that we own our freehold “interests”) are guaranteed by the state through the Land Registry.

There's still an instance however where that freehold “interest” can be removed from existence, under the little talked about common law prerogative of escheat (pronounced “eesheet”), an old French legal term.

This happens when the land is disclaimed as onerous property following insolvency, for example by a company’s liquidator or an individual’s trustee in bankruptcy. The liquidator or trustee might want to do that if ownership of the land is basically a liability, when it is “onerous” property.

When a freehold interest is disclaimed it no longer exists. The land ceases to be owned by anyone.

Escheat operates to ensure that land isn't left in limbo and without an owner.

Escheat isn't governed by statute; it makes no difference whether the land is registered or unregistered; and it can only happen to freehold land.

Under common law the interest in possession of the discalimed land reverts back (is escheated) to the Crown and becomes land held by the Crown in “Royal Demesne” (pronounced “de-main”), sometimes referred to as the “allodial” lands of the Crown.

The escheated land is owned by the Crown but it isn't part of the Crown Estate.

If all this surprises you, there was even a time in the dim and distant past when an owner could lose his freehold interest by escheat if he were convicted of a felony.

The escheated land remains subject to any charges or other encumbrances created by the former freehold owner or its predecessors. 

Leases, rentcharges, mortgages and other inferior interests are therefore not affected, but (and this is where things can become complicated) the Crown doesn't assume any liabilities for escheated property and so wouldn't be liable for any landlord’s lease covenants, for example.

I mentioned this in my post What Happens If Your Landlord Goes Bust?.

All is not lost to royal fiefdom however, as any person with an inferior interest can make an application for a vesting order, effectively getting the land back from the Crown by the grant of a new freehold estate. 

This is a complex issue however and you need to take specialist advice if you ever find yourself in this position.

Some guidance is provided on the Crown Estate website.

The Crown is usually represented in escheat matters by Burgess Salmon, which has carved out a niche for itself in this area, unless the land is escheated to one of the Royal Duchies, in which case it is usually dealt with by Farrer & Co.

So does escheat happen often?

Although this may all seem a bit arcane, roughly 300-500 freehold estates escheat to the Crown every year.

Indeed it's relatively common for a liquidator or trustee in bankruptcy to disclaim the common parts of freehold blocks of flats, because they have no real value and would otherwise be a burden to the estate.

Usually in that situation the owners of the flats would collectively apply to have the ownership of the common parts vested in them, or more usually in a management company set up by them for that purpose.

Or the land might be a private road, in which case the householders alongside it might apply for ownership.

Disposals of escheated land by the Crown are made at market value.

Until recently, land held by the Crown in Royal Demesne couldn't be registered because it was not held under any feudal tenure (meaning it wasn't freehold or leasehold) and the Land Registration Act 1925 only allowed interests in land to be registered.  

This created a slow leak of property out of registration, amounting to hundreds of freehold titles every year.  

Things changed after the Land Registration Act 2002 and an escheated title is now noted on the register.

There's also another way for the Crown to come by property – bona vacantia – such as when a company that still has assets is dissolved. 

Just to confuse matters, however, it's open to the Treasury Solicitor to disclaim any property which vests in the Crown as bona vacantia, and if it does so it's then subject to escheat. So it goes back to the Crown, albeit in a different form!

Also, if a dissolved company is foreign, then its freehold land reverts to the Crown by escheat.

Of course the Crown, through The Crown Estate, still owns a great deal of other land (worth over £6.6 billion), including over half of the “foreshore” (those shifting areas between high tide and low tide on the beaches around Britain) and all of the seabed out to 12 nautical miles. 

The Crown also owns vast agricultural estates, mines and significant London property, especially in Regent Street, Regent’s Park and St James’s.

However, that's “real ownership” of the feudal interest, rather than the more esoteric position assumed by the Crown under escheat. 

 Revenue from Crown Estate land goes to the government, and in return the monarch receives a fixed annual payment known as the Civil List.


September 2013: I'm not aware of anything interesting happening in the world of escheat since writing this post nearly three years ago, but I haven't checked, so who knows? The usual disclaimer applies...!

Tuesday, 22 February 2011

Defence Against Flooding – Is The UK Economy In Danger Of Drowning?

Flood defence plans could sink economic recovery.

That is the stark warning issued today by the British Property Federation (BPF), responding to DEFRA’s consultation on future funding for flood defences.

In last year’s comprehensive spending review, Chancellor of the Exchequer George Osborne earmarked only £500m a year to spend on flood defences from 2011 to 2015. This is a reduction of £216m and substantially less than the Environment Agency’s recommended total of £1bn a year by 2035 to maintain current levels of protection.

BPF says the government is looking to households and businesses to make up the shortfall caused by government spending cuts.

The DEFRA consultation refers to Sir Michael Pitt’s independent review of the 2007 floods which recommended that:-

 “Government should develop a scheme which allows and encourages local communities to invest in flood risk management measures”.   

However, the BPF has warned that the proposal would not provide sufficient certainty to property investors - and insurers – that the risk of flooding was being properly managed.

Insurers have warned that insufficient investment in flood defences could cause them to withdraw insurance from some homes and small businesses. Under the current ‘Statement of Principles on Flood Insurance’ agreement with the government, which expires in 2013, the insurance industry has committed to insure homes and small businesses where the flood risk is no worse than a one-in-75. Higher risk properties are only considered insurable if work is being carried out to mitigate risks.

The BPF also criticised the government’s intention to give households greater flood protection than businesses – a move which it argued was not only impractical but could cause the damage from future floods to ripple out into the wider economy and cause damage beyond the immediately flooded area.

Here is a link to DEFRA’s website giving information on new and proposed flood defence schemes.

DEFRA’s consultation on the future of funding for flood and coastal erosion risk management in England ended on 16 February 2011.

Back in November 2010, DEFRA issued a blunt rebuttal (“Myths busted”!) to claims in the media that dozens of flood defence schemes will be cut following the Spending Review, and that Defra is planning to introduce a ‘flood tax’ on communities at risk of flooding to pay for defences.

“The truth”, said DEFRA, “is there are no plans to introduce a ‘flood tax’ for people whose homes and businesses are at risk of flooding”.

“However, it’s important that the people who benefit most from flood defences are more involved in their development to ensure that they provide the necessary protection in the most cost efficient way.”

DEFRA said all flood defences already under construction will be completed, and all funding proposals for future schemes will continue to be considered as part of normal business.

Monday, 21 February 2011

SDLT Rate Rise For Residential Property Looms – When Is A House Not A House?

From 6 April 2011 the rate of Stamp Duty Land Tax (SDLT) on residential property acquisitions will increase to 5% where the price (and other chargeable consideration) exceeds £1,000,000.

Here is a link to an interesting article by Wragge & Co earlier this month which looks at whether developers will have to pay the tax on the purchase of land for development.

I am no tax expert, so I cannot add any incisive or brilliant insight or analysis to this, other than to say that trying to apply logic and reasoning to tax laws is like trying to herd an overturned box of angry frogs into an egg cup, which is neither incisive nor brilliant...but it is tricky, if you’ve ever tried it (which I haven’t).

What I mean is, you can never just think your way to the right answer when you have a tax problem. You have to know the rules, or ask an expert who does.

What emerges from the Wragge & Co article is that the key issue for developers to consider is the character of the land when it is bought, rather than how it will be used by the buyer.

Of itself, an acquisition of land for residential development will not mean the land is residential and liable to the new 5% rate. Provided a development site is not an existing dwelling’s garden or grounds, bare development sites will not be liable to the new rate of SDLT.

Here are some key points from the Wragge article:-

“The new rate will only apply if the land that is being acquired (under one bargain) consists entirely of residential property. Where the land is, in part, residential and, in part, non-residential, the new rate will not apply at all (i.e. there is no apportionment).

Land will be residential if it is:
·         a building or buildings; or
·         land that forms part of the garden or grounds of such a building or buildings, that, at the effective date (usually completion but see above) of the transaction, is used, or is suitable for use, as a dwelling or less than six dwellings.

Land will also be residential if it is in the course of construction of a building for use as a dwelling or less than six dwellings (see below).

Use at the effective date overrides any past or intended future use. If a building is not in use at the effective date but its last use was as a dwelling then it will be treated as a dwelling unless evidence can be produced to the contrary.

Certain buildings are specifically residential for these purposes, namely: residential accommodation for school pupils, students (but not halls of residence) and members of the armed forces and certain institutions.

Certain buildings are specifically non-residential for these purposes, namely: student halls of residence, children's homes, homes for certain persons in need of care, hospitals and hospices, prisons, hotels and inns. In addition, a single transaction involving six or more dwellings is non-residential.

Examples of acquisitions of residential property:
·         an acquisition of the end portion of a house's garden; and
·         an acquisition of a single vacant house where the developer intends to demolish the house before commencing development.
Examples of acquisitions of non-residential property:
·         an off-plan acquisition of six flats by an investor landlord;
·         an acquisition of a site for development where the site has three houses and a shop located on it; and
·         an acquisition of farm land where there is a farm house on the site.”

There are transitional provisions, which are explained in the article.

This tax rise might increase the already mounting pressure on solicitors and other conveyancers to become involved in dodgy SDLT “avoidance” schemes, a trend highlighted in this Law Society Gazette article earlier this month. Presumably if it is unlawful it amounts to tax “evasion” rather than legitimate tax “avoidance”.

HMRC has produced a guidance note outlining a number of ineffective schemes, and the Law Society has drawn solicitors’ attention to this note to help protect them and challenge requests from clients or third parties to become involved in such schemes. I can imagine that sometimes advisors must come under huge pressure to become involved in these schemes or else lose the instruction.

HMRC is smoking out and hunting down the guilty.  It has said it will ‘relentlessly pursue’ those who deliberately bend or break the rules, including seeking penalties where appropriate.

HMRC has identified 1,200 cases where marketed avoidance schemes have been employed to reduce SDLT due on property transactions artificially, estimated at £35 million in tax revenues.

You have been warned.

Now, back to those frogs...

Or is that a toad...?

Friday, 18 February 2011

Solar Flares – Solar Energy Firms Instruct “The Shed” To Sue For Sunshine

The most violent explosion in the solar system is a solar flare, releasing as much energy as a hundred million hydrogen bombs and sending the temperature of regions of the sun’s corona the size of our planet to 20 million Celsius.

On Tuesday the most powerful solar flares for four years erupted from a massive sunspot. The rush of particles hurtling towards Earth is expected to light up the night sky with aurora borealis (the northern lights), cloud cover permitting.

Meanwhile on this planet, the Telegraph reports that more than 20 energy companies have hired law firm, Eversheds, to challenge the government’s decision to review £360 million in subsidies for solar farms in the UK.

Eversheds, reports the Telegraph, has drafted a letter warning that many of the UK's largest solar companies are prepared to take the Government to judicial review for failing to consider all the consequences and not consulting widely enough. The correspondence is apparently likely to say that whilst the companies would prefer not to resort to judicial review, the group is raising funds for a joint case if the matter cannot be resolved through talks.

The Coalition parties both backed feed-in-tariffs in their manifestos and in the autumn spending review, giving many companies previously reluctant to invest in solar energy the confidence to spend hundreds of thousands of pounds on projects. A case of “solar estoppel”, as it might one day be known...or perhaps not.

The solar farms have ambitions to become large scale clean energy providers. They contrast their position with the £1 billion grants paid by the government to giant wind farms and the high level of support given to the nuclear power industry.

The feed-in-tariff review has not put off Solarwatt AG, one of Germany’s largest solar panel companies which, according to this report in Building UK, has announced plans to expand into the UK and target the entire photovoltaic cell market from “domestic through small scale commercial, to large scale solar PV farms”.

Building UK reports Detlef Neuhaus, Solarwatt’s director of sales and marketing, as saying that the UK is lagging well behind in solar capacity compared to Germany.

“The UK has a very long way to go. In 2009, PV installations totalled 6MW, whereas installations in the USA were 500MW. Both of these pale into insignificance when compared to Germany which has installed 3,800MW.”
So, to use a deeply crude and unsound bit of national stereotyping for which I apologise unreservedly in advance, they don’t only beat us to the sunloungers.

Ah well...The British Geological Survey has said displays of the northern lights have already been seen further south than usual in the UK.

Bet they don’t get those in Munich!

What Happens If Your Landlord Goes Bust?

The recession hasn't just hit tenants - landlords of commercial property may also be at risk of insolvency. 

If you're a commercial tenant, what should you look out for if your landlord goes bust?

You might be lucky, and it has little effect on you, or it might set in train a sequence of events over which you have little or no control.

Here's a brief outline of some of the things to think about and discuss with your advisors.

Will you be told?

You're likely to receive a letter from the insolvency practitioner (IP) dealing with your landlord’s insolvency telling you about the insolvency and directing you to carry on paying your rent, service charge, insurance contributions etc, but from now on to a different bank account. 

If the IP doesn’t give you enough information or if you have any questions, you should get in touch with the IP straight away.

What should you do?

Carry on complying with your obligations under your lease as before. 

If you don’t, then the IP still has the benefit of your landlord’s rights to end your lease (forfeiture) for breach of covenant.

Make sure your landlord’s obligations in the lease are complied with, for example any obligations to light and maintain common parts.

Make sure the IP has details of any side letters or other supplemental agreements recording concessions or special agreements you have reached with your landlord and which are not dealt with in the lease. 

For example you may have negotiated a personal deal with your landlord to pay your rent monthly, rather than quarterly. The IP needs to know this in order to understand how you pay your rent. 

Your landlord’s filing of deeds etc might be in a mess, so be as helpful as you can to the IP where it's in your interests to do so, for example by providing copies of any missing letters or deeds.

The IP may be looking to sell the property, so check what your lease says about you having to allow your landlord to show people around and whether your landlord is allowed to put up a “for sale” sign. 

If signs are allowed, check if you enjoy the benefit of any conditions in the lease that say your own signage must not be obscured by sales boards (particularly important if you're in retail). 

Make sure the IP complies with any obligations to give prior notice before showing people around and sticks to any hours restrictions on when they can do so.

Is your rent deposit at risk?

If you paid a rent deposit, how safe it is will depend on how well it was set up and documented in the first place.

If the money was simply paid to your landlord then there's a danger it will be swept up with any other money held by your landlord and be subject to the claims of your landlord’s creditors.

In order to avoid this, when a rent deposit is initially set up, ensure it's paid into a separate account from your landlord’s other monies so it's easily identifiable in future.

You should also enter into a rent deposit deed with your landlord when the deposit is paid. 

The deed should spell out the circumstances in which your landlord would be entitled to draw on the deposit money and should also say that the deposit money is either held on trust by your landlord or that the money belongs to you but is charged to your landlord. 

This will help stop your landlord’s creditors being able to claim the money for themselves.

What about service charges and sinking funds?

These payments are potentially more at risk. 

It depends how well your lease was negotiated and drafted. 

You're just another unsecured creditor, unless the money is being held on trust. 

The RICS Service Charge Code of Practice recommends that sinking funds are held in trust for occupiers and separate from the landlord’s own monies.

What if it all grinds to a halt – can you/should you step in and do what your landlord should be doing?

Check with the IP that the property is still insured. 

If it isn’t, you may need to consider insuring the property yourself. 

This could prove problematic though as you need to avoid any double insurance and you might not be able to recover the cost of insuring from anyone else (eg other tenants).

Where your lease is only of part of the property, if the common parts are not being maintained properly, you might want to consider doing it yourself or together with the other tenants, but you need to be careful you don't breach any of your lease obligations. 

You would need to get the IP’s permission to do this and you're unlikely to be able to recover the costs from anyone else. In these circumstances, try to open a dialogue between you, the other tenants and the IP.

You may be able to claim damages if you suffer loss, or be able to set off rental payments, but you should take specialist advice before contemplating these actions, as much will depend on what type of insolvency applies to your landlord.

The IP might be an administrator or a receiver, or ultimately a liquidator or (if the landlord is an individual) a trustee in bankruptcy. 

Alternatively the landlord might be entering into some form of voluntary arrangement with its creditors. 

A discussion of the different types of insolvency practitioner is outside the scope of this post.

Will your lease survive?

It's very unlikely that your lease will contain any provisions allowing it to be terminated if your landlord becomes insolvent.

Assuming the property has value and a good income stream (your rent), the IP’s aim will usually be either to carry on your landlord’s business in some way, or to sell the property with the benefit of your lease. 

In those circumstances the IP will want to maintain a good relationship with you and any other tenants. If all goes well, it should have little effect on you.

On the other hand, if the property is not economically viable, and is effectively a liability rather than an asset, then if your landlord is bankrupt or in liquidation, there's a danger your landlord’s interest might be disclaimed. 

This is where things can get complicated and where your continued occupation of the property may be in jeopardy.

If there's a risk of that happening you need to take specialist legal advice. A full discussion of disclaimer would take too long in a post like this, but briefly, the possibilities are:-

·         If your landlord owns the freehold, and it's disclaimed, it reverts to the Crown and the Crown does not accept lease obligations if this happens (see this post on the practice known as escheat).
·         If your landlord’s interest is leasehold and the IP disclaims your landlord’s lease, your own lease would also fall away. Then you might be able to apply to the court for a vesting order vesting the landlord’s lease in you (the rules are quite complex). But, the new lease would be on the same terms as the landlord’s old lease, not your old lease, which may not be what you want if you only had a lease of part of your landlord’s property.

There may be other difficulties if your lease is a sub-lease. 

If your landlord’s lease (the head-lease) allows its landlord (the superior landlord) to end (forfeit) the head-lease when your landlord becomes insolvent, then forfeiture of the head-lease would also bring your lease to an end. 

However, all is not necessarily lost as you might be able to obtain relief from forfeiture from the court (another fairly complex process).

Another possibility, where you're a sub-tenant and your landlord is in arrears under the head-lease, is the superior landlord might serve notice on you requiring you to pay your rent direct to the superior landlord until those arrears are covered. 

Again, seek advice and check the validity of the notice. It’s a cheap and quick way for the superior landlord to maintain some income, but it creates a new landlord and tenant relationship between the superior landlord and you.

What if your landlord goes bust whilst you are renewing your lease?

It can be very awkward if your landlord is opposing your lease renewal and then goes into administration.

You cannot take the lease renewal to court without either getting the consent of the IP (in this case the administrator) or permission from the court. 

In deciding what to do, the court has to strike a balance between the rights of the IP to conduct an administration in accordance with its objectives, and your right to have your application heard and to be granted a new lease. 

There's been some recent case law on this, but clearly it's something on which you would need to take specialist advice.

As you can see, your landlord going bust can lead to a number of different outcomes depending on the circumstances. 

It's wise therefore to be aware of the possible implications of your landlord’s insolvency and to take legal advice at an early stage.


For more about the impact of landlord insolvency on subtenants, see my post Subtenants - What Happens If Your Landlord Goes Bust? 

UPDATE 19/2/2013 - The above post is now two years old, but still seems to be a popular one on this blog - a continuing and troubling sign of the times. If I come across any more recent examples of what can happen when a landlord goes bust, I'll do a follow-up post. if anyone else meanwhile has any examples, I'd be delighted to hear from them.

Thursday, 17 February 2011

Yew Turn – Government To Climb Down From Forest Sale Fiasco

According to the BBC ministers are preparing to ditch the controversial plans to sell thousands of acres of state-owned woodland in England.

[UPDATE 1PM: The Environment Secretary, Caroline Spelman, has now confirmed that the current consultation will be halted.]

See my posts Government Puts Forest Sell Off On Hold – Olive Branch or U-Turn? and Forest Dump – Selling England’s Woodland By The Pound.

Instead, apparently a new panel of experts will be set up to look at public access and biodiversity within the publicly owned woodland.

Will the forests really be safe if this is true, or will the Forestry Commission still be able to sell them off piecemeal, under the radar? Time will tell.

Wednesday, 16 February 2011

Solar Farm Sun Seekers See Red – Is Feed In Tariff Review FIT For Purpose?

Angry reaction continues to grow amongst investors in the solar farm industry and promoters of renewable energy in response to the government’s announcement last week of a review of Feed in Tariffs (FITs).

The review was instigated by the government to look at how the development of large-scale installations, like “solar farms”, affects the FIT scheme and whether such developments are in danger of hovering up the subsidies meant for people who want to generate their own electricity.

According to Green Investing it has since been revealed the review will encompass any installation capable of generating 50KW of power, generally regarded in the industry as medium rather than large scale, including those fitted on buildings and rooftops.

Jeremy Leggett, executive chairman at Solarcentury, told Business Green:-

"It has taken the new government just seven short months to undermine what by their own admission has been a successful programme to date."

What is clear is that the announcement has cast the nascent solar industry under a cloud of uncertainty.

24 comments that solar farm investors claim that as a result of economies of scale and the lower payments provided for large scale developments, their installations are a more efficient use of the money being channelled into generating green electricity.

It is a view shared by Friends of the Earth, whose renewable energy adviser, Alan Simpson told

"The Government's feed-in tariff review is a complete fiasco that has created total confusion within the energy sector.

"If Ministers have concerns about solar farms they should address them through the planning system - not by undermining confidence in green energy investment.

"We need urgent action to tackle climate change and rising fossil fuel prices - feed-in tariffs have a key role to play in creating a clean energy future."

Ken Moss, chief executive of solar developers mO3 Power, told

"It costs consumers £24 million to put 5MW into the grid from rooftop arrays - it only costs us £12.3 million from a single farm.

"It is subsidising large-scale solar photovoltaics (PV) developments which is the most efficient use of taxpayers' money.

"Commercial developments have the capacity to drive down the technology costs, produce more power, and cost less.

"Plus they receive less in subsidies than domestic arrays, giving the Government and the taxpayers more bang for their buck."

A big part of the problem appears to be that when the FIT scheme was set up, it was not meant to be restricted to a fixed pot of money. However, ministers have set a £360 million cap on the scheme by saying they wanted to cut the spending on the programme by 10%, reducing it from an estimated cost of £400 million by 2014/2015.

It’s a world away from the massive solar farms being developed in the US desert (which enjoys even more sunshine than Somerset!). This report from Reuters shows one leading company over there, BrightSource, is constructing a 392-megawatt Solar Electric Generating System in Ivanpah California for which it is receiving a $1.37 billion loan guarantee from the US Department of Energy.

Meanwhile, back home the FIT review risks putting the UK solar farm business permanently in the shade.