Figures compiled by the legal publishers Sweet & Maxwell show a 43% increase in disputes in the High Court in London involving landlords and tenants of commercial property.
The numbers rose from 28 in 2008 to 40 in 2009, the latest year for which data is available. However, these figures only cover cases involving sums above £25,000. It’s thought there were many more disputes involving lower figures.
Sweet & Maxwell also point out that thousands of disputes are settled by negotiation or arbitration and don’t get to court.
The researchers put the increase down to the economic downturn which has prompted businesses to try to reduce their overheads by shedding excess office and retail space. In the haste to cut costs, legal obligations can become blurred.
Some of the trigger points include tenants trying to reduce their costs by scrutinising service charges and their contractual obligations. There has even been legal action over whether or not a service charge covers Christmas decorations in a shopping centre.
Disputes can also arise when tenants try to sub-let some of the space they no longer need, sometimes at a sub-market rent. Landlords may fear that this could have a detrimental effect on future rent reviews and consequently, the investment value of the property.
Lease assignment can be another point of contention if the tenant tries to hand over to someone the landlord considers inappropriate or unable to meet the necessary financial or legal requirements.
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