However most leases will include provisions giving the landlord control over the tenant’s ability to erect signage which is visible from the exterior of the building. The amount of control the landlord requires will usually depend on the nature and location of the premises. A landlord will often want to restrict the size of the advertisement or even want a say in the design. The requirement for landlord’s approval can often extend to the tenant’s display of posters and notices with landlords often wanting to restrict these to normal trade posters and advertisements in keeping with the permitted use of the premises. Furthermore landlords will often insert provisions allowing them to display “to let” and “for sale” signs and tenants will want to ensure that such signs do not interfere with their business or access to the premises. Even if there isn’t any specific clauses in a lease dealing with signage the tenant needs to consider other third party consents such as planning and listed building consents.

A number of prominent business across Northern Ireland have found themselves on the wrong side of the planners in relation to advertisements placed on business premises where planning consent has not been sought. Readers may be familiar with the recently published story concerning the erection of the ‘Coca–Cola Happy Holiday’ banner on the front of The Square Hotel in Belfast. This story reminds business owners, particularly those who own or occupy a listed building, that Councils will pursue enforcement proceedings if they consider planning requirements have been breached. If a building is listed as a building of special architectural or historic interest then listed building consent is required for any works of alteration or extension which would affect the character of the building. The erection of most advertisements on a listed building will require listed building consent and it seems, in this case, Belfast City Council are threatening enforcement proceedings because of the failure to obtain such consent.

For all buildings the relevant legislation in Northern Ireland dealing with the erection of signage is the Planning (Control of Advertisements) Regulations (NI) 2015. Under these regulations there is a requirement for planning consent for the display of an advertisement unless it falls within either the “deemed consent” provisions of the regulations or within a class of uses set out in the regulations where permission is not required.

Deemed consent deals with matters such as advertisements relating to the business or trade carried on at the premises where it is displayed but there are conditions that need to be met for each deemed consent such as restrictions on size and illumination of signage. Interestingly whilst deemed consent is provided for signage  relating to the sale or letting of premises, one of the conditions of such deemed consent (which appears to be universally ignored) is that the board must be removed within 14 days of completion of the sale or tenancy.

The classes of uses within the legislation where planning permission is not required extend to such matters as display on site of an advertisement on a balloon, advertisement on enclosed land not visible from the outside, advertisement on a vehicle and advertisements in the fabric of a building if it is not used principally for the display of advertisements. All classes contain wide reaching conditions which must be met for the exemption from planning to be met.

It remains to be seen if the planners will reconsider the expediency of enforcement proceedings bearing in mind the temporary nature of the ‘Coca Cola Happy Holiday’ banner and it may be that a retrospective application for permission is lodged. In any event business owners wishing to pursue new advertisements on their buildings would be well advised to check what consents are required.

Graham Pierce is a partner heading up the commercial property department of Worthingtons Solicitors Belfast office and can be contacted on 02890 434015 or graham@worthingtonslaw.co.uk

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A break clause is an important agreed commercial provision of a lease and can often prove valuable to the party benefitting from the break option. Business needs change over the years (particularly in the current economic and political climate) and a Tenant may need to terminate their lease early. It is therefore vital that break options in commercial leases are carefully drafted. When commercial terms of the lease are being negotiated, a Tenant should take steps to ensure that exercise of the break option is unconditional – in other words, the Tenant does not have comply with conditions in order to exercise their break option. Conversely, a Landlord may want to protect themselves by imposing certain conditions required before the break option can be exercised. Typical conditions to exercise a break clause include ensuring the rent and other payments such as service charge and insurance rent are up to date and there has been no breach of tenant covenants. If any conditions attached to the break option must be strictly performed, then Tenants could potentially lose their right to break because of a trivial breach of covenant.

Another consideration to bear in mind is if a Tenant has paid any rent or other sums due in advance (for example, rent is often paid in quarterly payments) then the Tenant should be refunded a proportionate amount of rent and other sums paid for the period falling after the break date, up until the next payment date. Again, a thorough solicitor acting for the Tenant should ensure wording to this effect is included in the lease.

Ultimately, if a Tenant is being offered or has negotiated a break option, it is prudent to have this set out as an ‘unconditional break option’ at the heads of terms stage, to avoid any ambiguity or uncertainty when the Landlord’s solicitor and Tenant’s solicitor negotiate the drafting of the lease. Similarly, if the Landlord requires the break option to be conditional, then the conditions should be set out in the heads of terms.   

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A licence (in respect of land or property) is permission to do something with that land which would otherwise be deemed trespass. An example would be a licence to occupy part of a building on a temporary basis, such as for storage purposes.

• A licence is merely permission to do something with that land such as occupying it. A licence does not create a legal interest in land.
• A licence does not confer exclusive possession of the land to the licensee and;
• A licence is usually not for a determinable period of time and is revocable by the licensor at any time.

Broadly speaking, a lease is a contract between the parties, ie. the Landlord and Tenant (and Guarantor) which creates a legal interest in land for the Tenant and sets out the parties’ obligations. The case of ‘Street v Mountford [1985]’ establishes the 3 key features of a lease:

• The Tenancy is for a consideration of payment (‘Rent’);
• The Tenancy is for a fixed determinable period of time (‘Term’) and;
• The Tenancy grants exclusive possession of the property to the Tenant. This means that the Tenant can exercise the rights of landowner to the exclusion of all others, including the Landlord (save for any rights the Landlord has specifically reserved). In practical terms, the land is the Tenant’s for the Term, subject to restrictions and compliance with obligations.

The distinction between a lease and licence is important because if the Tenancy is for a period of 9 months or more and used for business purposes then the Business Tenancies (Northern Ireland) Order 1996 (“BTO”) will apply and the Tenant will have security of tenure. This means the Tenant has the right to occupy the property after the Term has ended, unless the lease is surrendered or there is a Court Order obliging the Tenant to vacate. At the end of the Term, the Tenant has a statutory right to request a new tenancy and the Landlord can only refuse this under certain limited grounds. The grounds for refusal are set out in full under Article 12 of the BTO and examples include Tenant breaches of their repair obligations, persistent delay in paying rent, other substantial breaches of Tenant covenants or if the Landlord wants to take the property back to carry out a business or to use the property as their residence.

From a Tenant’s perspective, a lease offers them security which is important if they are running a business from the property. The Landlord cannot just remove the Tenant from the property at the end of the Term if the BTO applies. However, if there is a licence and not a lease, the Tenant does not have this security. For this reason, Landlords should always treat licences with caution and should remember that just because a document is labelled a licence, does not necessarily mean it is a licence. As case law tells us, if it is called a licence but embodies all the characteristics of a lease (ie. for a fixed determinable period of time, payment of Rent and the Tenant has exclusive possession) then it may very well be a lease and the Tenant will have the security and protection afforded to it under the BTO.           

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Presently, the market norm for a commercial lease is for a term of between 5 and 10 years. This is a significant undertaking in today’s uncertain economic climate irrespective of whether the Tenant’s business is a new venture or long established operation. During the term, a Tenant may find themselves in the position where they wish to extricate themselves from their Lease particularly if the post-Brexit economic climate and trading landscape changes. A break clause can provide a valuable solution which allows a Tenant or Landlord (or both) to terminate the Lease at a future date and should be considered by the parties at the outset of negotiations.

Break clauses usually contain pre-conditions which the breaking party must comply with in order for the break right to be exercisable. Such conditions will be a matter for the parties to agree but generally include the payment of rents reserved (including any service charges or insurance rent), compliance by the breaking party with their obligations contained in the Lease and the delivery of vacant possession.

A Landlord is contractually obliged to accept the Tenant’s exercise of a break clause when all conditionality attached to the break clause has been complied with. However, Tenants should note that even a small deviation from the conditions imposed in a break clause could render a break invalid. It is also vitally important that a party seeking to exercise a break right complies with any time limits imposed as time is deemed to be ‘of the essence’. Failing to serve the correct notice on the Landlord within the prescribed timeframe will result in the loss of the break right (United Scientific Holding Ltd. v Burnley Borough Council [1978] AC 904).

Whilst the inclusion of a Tenant’s break clause can be valuable to the Tenant, from a Landlord’s perspective there may be less value in a Landlord’s break clause. If a Lease falls within the protective ambit of the Business Tenancies (NI) Order 1996 (“the BTO”), then it can only be determined if the Landlord establishes one of the grounds for opposing a tenancy set out in Article 12 of the BTO. Such grounds range from a Tenant’s failure to comply with their obligations in respect of repair to the Landlord requiring possession to demolish the premises or carry out substantial works to them. When serving notice of their intention to determine the lease, the BTO requires a Landlord to stipulate the ground(s) upon which they are opposing the continuation of the tenancy. Whilst there are limited grounds for opposing the continuation of a tenancy, there may still be value in a Landlord’s break clause particularly if redevelopment opportunities arise or they require the Premises to operate their business out of.

On a more practical note, a party contemplating the exercise of a break right should allow sufficient time to prepare for serving notice. This will give the breaking party an opportunity to ensure the correct notice is served on the correct party and within the correct time limits, review the conditionality attached to the exercise of a break right and assess their compliance with the conditions of the break clause.             

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The requirements address the following areas:

·         Dual agency, that is where there is an agency relationship with both seller and buyer at the same time, must not be undertaken under any circumstances. The ban may also extend to situations where the buyer (or seller) is considered to be a related company of an agent. This practice, colloquially known as “double dipping” has been frowned upon by many, both inside and outside the industry, for some time but nonetheless is still common across the UK although many of the worst excesses seen during the property boom appear now to have been curtailed.

·         Multiple introductions, that is where an agent has competing contractual relationships with several buyers at the same time, continue to be permitted but no individual should act for clients competing to purchase the same commercial investment property. In the case of a firm of agents, multiple introductions are permitted provided that terms of engagement are agreed in writing and the terms make it clear whether the agent is working on an exclusive or non-exclusive basis (when undertaking multiple agency relationships). If the appointment is on a non-exclusive basis the agent must obtain the client’s “informed consent” to the conflict of interest and an effective “information barrier” must be established within the firm to ensure that no confidential information can pass between the relevant individuals within the firm.

·         Incremental advice, that is where an agent is asked by another party to provide advice, such as valuation or planning advice, related to a sale or purchase that is incremental to an existing instruction. For example where the agent is acting for the seller on a sale and is approached separately by the buyer or its lender to provide a valuation. Such scenarios are common across the UK. The new rules permit the giving of incremental advice but only in the following circumstances:

1.    An information barrier must be established between the relevant personnel in the firm and confidentiality must be maintained throughout;

2.    Where an agent has an exclusive instruction to purchase, informed consent from the client must be obtained before providing incremental advice to another prospective buyer; and

3.    Where the agent has a sale instruction, the client must be notified before incremental advice is given to a prospective buyer (but consent is not required).

Incremental advice should not be provided under any other circumstances.

These new requirements apply irrespective of whether or not the RICS member or firm is located in or conducting business from the UK but only apply to open market transactions.

Several large property companies and agency firms, including UK REITS, Land Securities, SEGRO, JLL and CBRE have already adopted the new requirements without waiting for the 1 January 2018 mandatory implementation date.

With the continuing trend of consolidation across the property agency and surveying professions, including acquisitions and mergers of local firms with UK-wide or global firms, the incidence of conflicts of interest will only increase and it is therefore more important than ever that firms introduce and stick to effective policies for managing conflicts when they arise. Failure to do so may well damage the integrity of the profession and undermine public confidence in it.

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