“Better the devil you know” …in the property investment?

As residential property management continues to be more regulated, many landlord clients are seeking to diversify their portfolios and invest in commercial property, particulars with current rate of returns. The principle advantages of commercial property are:

1. You can exclude by agreement a tenant’s security of tenure. This is not possible with residential property;

2. You can pass on full repairing and insuring obligations. There are statutory obligations of repair with residential property;

3. You have the ability to forfeit the lease (bring it to an end) by re-entry for the non-payment of rent, without the need for a Court order. It is not possible to re-enter residential property and claim possession without a Court Order.

Having said this, care needs to be taken, as security of tenure can be acquired without it being apparent to the landlord, with significant consequences. For example, if a landlord were to wrongly terminate a lease, where the tenant has security of tenure, then he/she would likely face a Court injunction and a loss of profit claim; similarly, if a commercial tenant were to quit business premises without an appreciation of his/her protection, then valuable compensation may be lost

Anthony Best
Prince Evans Solicitors LLP
Tel – 020 8567 3477