The two things you need to know about any business process are how long it will take and how much it will cost. With the answers to these questions, you can decide if the process will add value. So what about the renewal of business tenancies where the issue is the terms – most commonly the rent – of the new lease?
Many landlords and tenants look at the process for renewing business leases and see that it takes too long and costs too much. The statutory notices to terminate tenancies are fine. However, once a court process is required, the cost-benefit analysis goes awry.
One multiple tenant, whose tenancies are for five-year terms, said it felt that before it had finished paying the bills for a renewal of a lease, it had to start the next renewal.
From the moment the court fixes the timetable, it can take 15 months for the case to be heard. The costs depend on the deal with the lawyers. But the expense of a solicitor, a barrister, a valuer and getting the legal and valuation people to a hearing mounts up. If you convert the fees into a number of quarters’ rent, the result will not be pretty.
One final problem: if your case is the occasional one that does not settle, do not expect a specialist judge. You are likely to be allocated a judge with no background in rental valuation or knowledge of the 1954 Act.
Thankfully, the Property Chamber of the First-tier Tribunal has judges who understand rental valuation and the 1954 Act. It also has valuer members with relevant know-how. So, in 2017, the senior judges of the Property Chamber and the County Court in central London agreed on a pilot project using the Property Chamber’s expertise to improve delivery to landlords and tenants.
The pilot is not just about having specialist judges. It is about process efficiency. Cases referred by the court to the tribunal are managed radically differently. The Tribunal uses a fast-track timetable, suitable to these cases. This delivers a hearing in half the time, with commensurate cost savings.
Parties know that if the judge has specialist expertise, justice is much more likely to prevail: an incentive to settle.
The pilot project, which began in January 2018, applies to property in London. So far, 60 cases have been managed this way. The feedback from the parties is positive. The full value added will be achieved with two things: extending the pilot outside London and making it permanent. Ultimately, saving time and cost is what clients want.
Roger Cohen is partner at Bryan Cave Leighton Paisner