How to do a lease renewal- part 7

I have only been to court as an expert witness occasionally. The first time, acting for a firm of solicitors, one of whose partners had been struck off for allegedly putting intimating persons in the public gallery, …

…I was so inexperienced that I delayed writing my report until I received a copy of the landlord’s surveyor’s report. The second time, acting for one of the Freshwater group of companies on one of the only two instructions that came my way, I guess because my father had been one of their managing agents for years, whereas I failed their trialling.

The third time I drove from London to Southport (Lancashire), aiming to arrive at 9.30am only to find that when I got to Southport, I had difficulty in finding the whereabouts of the court, so by the time I did, it was a minute or two before the start of the hearing. Acting for the landlord with a substantial portfolio in the north of England, including a parade of shops in Southport, the client’s barrister was impressive in suggesting that the numerous assignments of the lease were not evidence of instability as opined by the tenant’s surveyor but of demand. The judge told the tenant’s surveyor to wipe the smirk off his face. When the hearing was over and a date of a second day was agreed upon, the judge pleaded with me to attend, but I couldn’t. In my absence, the landlord won.

The next time, the tenant’s solicitor was scathing of the landlord. I was kept waiting almost all day before being called to give evidence. When I went into the witness box, it was evident that the judge was on my client’s side, so the experience was relaxed.

As I mentioned in part 6 of this series, the last time was not my finest hour. It was more demanding because my client was apparently being stitched up, but we couldn’t prove it. When the court adjourned for lunch, during which the landlord’s surveyor said he would check the facts of one of the comparables, I had no idea when he resumed whether what he said was true. After the judge’s criticism of my approach, I declined instructions from new clients to deal with lease renewals, but I haven’t been steadfast now that short-term leases are the norm. 

It seems to me that to be a reliable expert witness requires three attributes: good at public speaking, able to concentrate for long periods without the mind wandering, and indifferent to the consequences of one’s opinion. The latter is a challenge for a surveyor who, having negotiated for the client before acting as an expert witness, is more likely to be biased and ripe for judicial criticism. I am honest and truthful, so I have never been criticised for partiality. My not being a chartered surveyor but self-taught has also passed the snooty scrutiny of cross-examination. Where surveyors are criticised for “descending into the arena” to argue the client’s case – a phrase from Wallshire Ltd v Aarons 1989 (also the source of the hierarchy of evidence oft quoted without regard for the exceptions)  – taking the client’s side is not only contrary to the expected conduct of an expert witness but also to a fundamental principle of lease renewal, which is to be objective.

Unlike negotiations before going to court, which in theory have no regard for the wider consequences for the parties but in practice invariably do, in court, the only person allowed to include the wider consequences in their thinking is the judge, provided it ie done with such subtly as to go unnoticed. The wording of the key sections 33, 34, and 35 of the Landlord and Tenant Act 1954, legislation that, despite having stood the test of time, is regarded by some as outdated, has become the focus of criticism. The latest norm is for tenants to have a rent-free period at the start of the renewal. Interim rent, more beneficial for landlords, is now more generous where the in-between period is lengthy.

In my opinion, explaining to clients what happens on expiry and renewal of a lease should be straightforward, but it is not. There are so many permutations that understanding is complicated, even for the experienced. For example, the snag with tinkering with LTA54 is in the Law of Property Act 1969 and the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003. Why, for example, have an interim rent? In my opinion, it would be best for the renewal rent to start immediately after the expiry of the existing lease. Now that the tenant does not have to serve a counter-notice within two months of a section 25 notice for whether to renew, and is not obliged to give the landlord advanced warning, the landlord cannot be sure of the tenant’s intentions before the notice end date without going to court beforehand. Why not revert to having the tenant commit to staying or going before the notice end date? And where the section 25 notice does not oppose the renewal, why must the tenant claim renewal rights? Why not require the parties to go to court if the negotiations and completion of the renewal lease exceed, say, 12 months? With or without a hint from the landlord, the tenant can request an extension to the notice end date, but that is neither compulsory for the tenant nor obligatory for the landlord to agree. As for the landlord’s proposals in the s25 notice and the tenant’s in the s26 notice merely for satisfying statutory requirements and not needing to be genuine, let alone binding, why not require them to be binding if accepted? As for PACT, intended as a friendly alternative to court, it is frequently suggested as a negotiating ploy to fool the recipient before going for the jugular with a Part 36 offer. 

Michael Lever
The Rent Review Specialist