Case Study - Compulsory Purchase Order 2

Published on Thursday, July 19, 2007

Ref.: JH/19/7’07          Jean Howe – Partner Kirkby & Diamond

As part of a town centre redevelopment, clients who owned an intermediate leasehold interest in a property, which was used as a pizza restaurant, received notification of the confirmation of Compulsory Purchase Order for the complete redevelopment of the town centre including their own property.
The client’s objective was simply to achieve the greatest compensation for their interest that could be obtainable under the terms of the Compulsory Purchase rules.

Kirkby & Diamond undertook an inspection of the property and concluded that as no rent review had been instigated since 2002 that it would be appropriate to instigate the lease renewal process with the tenant as the lease was due to expire within the next 18 months.
Negotiations were therefore undertaken on a two pronged approach, both by negotiating the highest rental possible with the tenant in occupation and also by negotiating with the acquiring authority’s valuers for the sale of the long leasehold interest subject to the terms of the revised rent under the lease renewal negotiations thereby maximising the sum achieved.
The Result
As a result of the detailed knowledge of Landlord and Tenant legislation and the timescales involved in lease renewal notice serving, Kirkby & Diamond was in a position to advise the client on the necessity to complete a sale to the acquiring authority before a particular date. This would ensure that they could maximise their income and that the acquiring authority would be in a position to serve an appropriate objection to the lease renewal application.  

This was undertaken whilst being able to negotiate the terms on the basis of the increased rental value agreed with the tenants in occupation. Without this detailed knowledge, the clients would have achieved a significantly lower value for their long leasehold interest.
The purchase by the acquiring authority was agreed at very beneficial terms to the clients. In addition the acquiring authority paid the client’s legal, Surveyors and tax advisers fees within the timescale required to be met.