Legal Updates

Property Law – Rent Review Provisions – Planning Permission - Extension to Building

The recent case of Asda Stores Ltd v Salya Investments Ltd [2007], concerned a claimant who was granted a lease of a site by the defendant. The claimant sought a declaration from the courts that an extension to an existing building was to be disregarded for the purposes of the rent review provisions in the lease. In 1980, the claimant obtained planning permission allowing for the construction of a superstore, petrol station and car park on a piece of land.

The planning permission was not implemented. In 1981, the claimant successfully applied again with an amended plan. In 1982, the defendant granted the claimant a lease of the site. After the lease had been granted building works took place in accordance with the planning permission. The lease contained a number of rent review provisions, which included the following:

§   A provision that reviews were to take place at five-yearly intervals from a specified date; and

§   A provision for intermediate rent reviews.

It stipulated that further rent would be payable in the event buildings (additional to those for which planning permission had been obtained) were built. In 2007, the claimant carried out various works with the consent of the defendant. These works included an extension to the left hand corner of the store.

The claimant brought proceedings seeking a declaration that the works should be deemed improvements by the tenant which were to be ignored for the purposes of the rent review provisions. The issue to be decided by the court was whether an extension to the original building fell within the rent review provisions, or whether the application of those provisions was restricted to the construction of a further freestanding building.

The court decided that on the true construction of the lease, any building by way of extension was to be taken into account for the purposes of both rent review provisions. Additionally, the court felt that there was no good reason to distinguish commercially between a freestanding building and an extension to the original.

Please contact us for more information on assessing damages due under termination of a contract at  enquiries@rtcoopers.com

© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

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