When acquiring a development site, it is not unusual for problems to crop up but in one recent matter two significant issues arose which, if not handled properly, could have derailed the project. After some lateral thinking, senior property lawyer Daniel Ginsbury found solutions to both problems, saving his client a six-figure sum and protecting the anticipated return on investment
On paper, this property acquisition looked fairly routine. A client wanted to buy an industrial estate in South East England to redevelop it into residential and commercial units. The owners were keen to sell, the local council appeared content for the project to go ahead and our client was raring to go.
On paper, this property acquisition looked fairly routine.
As Daniel explains:
‘Unfortunately, all was not as it seemed. Unbeknown to our client or apparently the current owners, nestled within the estate was a residential property. This housed a tenant who enjoyed long-term occupation rights and could have made redevelopment of the site very difficult.’
‘Upon discovering this, the natural inclination of most people would be to say to the owners “get rid of the tenant, or the deal is off.” However, after some discussion we agreed an alternative approach with our client which would be to the client’s advantage.’
‘We advised the exchange of an option agreement with the seller, prior to exchange of a detailed sale contract; thus giving our client time to negotiate directly with the tenant to sell their property in a pre-development deal so the problem they posed went away. At the same time, the client was able to negotiate a price reduction with the estate owners to negate the hassle value.’
‘As a result of the deal done, the client managed to secure the site – free of any incumbrances – for an agreed price that was six figures less than the sum originally proposed.’
‘This on its own was a triumph, but later we had to put on our thinking caps again when part way through the development we stumbled across another problem.’
‘There was a risk that the purchasing leaseholders of residential units would try to get together to acquire the freehold to their properties via leasehold enfranchisement legislation, in an attempt to block the commercial phase of the development plan from proceeding.
Later we had to put on our thinking caps again when part way through the development.
‘We considered a number of possible solutions and, in the end agreed on phased construction and sales of the residential and commercial units. This would ensure that there would be insufficient residential properties sold to long leaseholders before the commercial units were built and pre-let, preventing a leasehold enfranchisement application within the critical timeframe.’
The development has now been completed, with the client securing a very good return on their investment which in no small part is down to the skills and expertise of Daniel, his keen attention to detail and ability to think laterally.
If you require help with a commercial property matter, why not give Daniel a call on 020 7845 7432 to see how he can help.
Daniel undertakes a variety of property work, including acquisitions and disposals, development and planning oversight and real estate finance. He is particularly experienced in dealing with leasehold transactions and is recognised specifically for his specialist knowledge of leasehold enfranchisement issues.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.