Pitfalls and Predicaments: Protecting against the “Use-less” Property

Ever had a pen without ink?  A car with a flat battery?  A property but can’t use it?  I hope not!  Sadly the risk of the latter is there.  One issue which clients often face is a property which does not have planning permission for the intended use, and this can lead to the client being prevented from using it.

Planning permission for use of a property is not to be confused with the use allowed under a lease or contractual document – they are separate regimes – nor with the assurance of the seller/landlord; only planning permission or a certificate of lawfulness of existing use or development (“CLEUD”) can give complete assurance that the property is authorised for the intended use.

Purchasing or letting a building without planning permission or CLEUD for use can have catastrophic consequences.  For example, if a tenant takes a lease of a building which allows use as a shop but it only has planning permission for use as a warehouse, the council may be able to prevent the tenant trading from the property.  Despite the tenant’s inability to use the property, the lease will continue and the tenant will still be liable for paying rent unless protective steps have been taken in the lease’s drafting.  Likewise, a purchaser needs more than the verbal assurance of the seller that the property has been used continuously for the same use for the past 10 years; the risk of buying a “use-less” building is not to be taken lightly.

Whilst making the seller or landlord apply for planning permission or CLEUD may appear like the best solution to this common problem, this can cause significant delays and the recent case of London Borough of Islington v Secretary of State for Housing, Communities and Local Government and another [2019] EWHC 2691 (Admin) highlights that this is not without risk.

In this case, an owner applied for a CLEUD for use of a property as a residential dwelling based on what he believed had been sufficient time.  The council served an enforcement notice against the owner and after various appeals, the owner lost the case; a period of renovation to the flat had broken the continuity of use.  By applying for a CLEUD the owner had effectively put the council on notice of his breach.

The need to think laterally and outside the box when trying to resolve the issue of a “use-less” property is paramount.  Perhaps a break right in the case where enforcement action is taken would be more appropriate?  How about making the contract conditional upon obtaining the planning permission or a CLEUD?  Obtaining sound legal advice and ensuring secure drafting is key to protection against this pitfall.

Are you in a similar situation? Contact us to learn more about this or for legal advice on how to tackle this issue by filling out our easy online form here.