Most modern commercial leases allow for premises to be used for a specific purpose only – the “Permitted Use”. This Permitted Use might be drafted in wide terms potentially allowing a variety of specific uses but most landlords benefit from additional protection of standard provisions providing that premises must not be used for any illegal purpose and requiring the tenant to comply with all laws etc.
Tenants will be advised to check that the premises can lawfully be used for their exact purpose – namely the purpose that is authorised under planning legislation – as well as being the authorised “Permitted Use” under the lease.
Despite this, it is not unknown for landlords to turn a blind eye to the tenant’s use even where it knows or suspects that the use might not necessarily be lawful for planning purposes. The tenant must, after all, continue to pay the rent. So what difference will it make to the landlord if the local planning authority commence enforcement action and serve an enforcement notice where there is a purported breach of planning.
The answer to that question is, in fact, that it could make quite a big difference to a landlord. Failure to comply with an enforcement notice can result in criminal liability. Such criminal liability can rest with the landlord. Having been served with an enforcement notice for the unlawful use by a tenant, a landlord must take active steps to prevent such use continuing. Planning authorities have successfully persuaded the Courts that rents obtained from a tenant that continues to operate premises in breach of enforcement notice, can be made subject to a Confiscation Order under the Proceeds of Crime Act 2002 (POCA).
In the spring of this year, a local Manchester newspaper reported such a case. Whilst the prosecution of a landlord for allowing continued breach of an enforcement notice resulted in fines of less than £20,000.00, the local planning authority succeeded in obtaining a Confiscation Order against the landlord and this resulted in confiscation of a sum equivalent to all of the rent that the landlord had received from the date that the enforcement notice was served – a sum exceeding £174,000.00.
In making such Orders, the Courts are confirming that there is a causal connection between the criminal act activity (ignoring enforcement notice and taking no action to stop the tenant from carrying on with that use) and the benefit obtained (the rent). It is worth noting that, once it has been decided that the landlord has benefited from the payment of rent as a result of a crime, the Confiscation Order is enforceable against any assets of the landlord – so not just against the actual money in the rent account.
Landlords must not therefore tolerate breaches of planning following service of enforcement notices. It is in their interest to enforce strictly the terms of the lease.
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