Please Note: This Article is 6 years old. This increases the likelihood that some or all of it's content is now outdated.

The recent ruling on why landlords cannot rely upon general advice from HMRC – https://www.landlordzone.co.uk/news/why-landlords-cant-rely-on-guidance-from-hmrc – is a timely reminder of the perils of free advice generally.

Inexperienced persons guessing what information is needed to enable someone knowledgeable to provide an answer is the stuff of property forums, both on LZ and elsewhere; there is no shortage of people wanting to save a few bob by asking anyone for help on technical issues. On my website I used to say that if you would like some general advice about rent review and business tenancy advice then please feel free to contact me. So many people availed of my generosity that it encroached upon time for clients so I amended the wording. However, I still receive enquiries from landlords and tenants pushing their luck in wanting free advice and answers to what (I assume) they regard as simple questions. I do my best to answer, but have drawn the line against helping students grappling with “what if” scenarios and valuation problems!

Commercial property differs from residential in many ways, not least the application of the law. Unlike a residential property lease or tenancy agreement, a business tenancy is a commercial contract which means the parties are deemed to know what they are doing. Unlike residential property, there is less political interference and in some instances overriding legislation can be contracted out of.  Unlike residential property whose assured shorthold tenancy agreements are of fairly standard wording, there is no set standard wording of leases of business premises, so the only questions that can be answered with any certainty without actually reading the lease for oneself are those that are too general to be of much use to the particular situation. I could for example explain in outline what happens on expiry of a business tenancy but I’d start by saying “brace yourself”, because what ought to be straightforward matter is not. For a situation that is pressing, and where the person is lacking knowledge, generalisations can be too late. For example, a questioner on the LZ commercial property forum had served a s25 notice under Landlord and Tenant Act 1954; the questioner admitted to being out of his depth. The answer to the question posed also depends upon whether the s25 notice is valid. I presume the questioner assumes it is valid but, since invalidity is a common mistake that even lawyers are known to make, how is anyone who really knows what he is talking about is going to know for certain without seeing a copy of the notice?

If you inhabit the same property forum(s) regularly then you get to differentiate between contributors that really do know what they’re talking about and those that don’t. Those that don’t can, especially in the field of commercial property, often be recognised by a tendency towards politically-correctness rather than the legal position. Whether a particular course of action should have to be intrinsically fair to both landlord and tenant, or the tenant should not want to even look for a way to wriggle out of a responsibility, may be the sort of conversation amongst woolly-headed liberals, but philosophy and ideology are separate subjects to the law. To quote from Kataria v Safeland plc [1997]: “Whatever view might be taken of the landlords’ conduct in a court of morals, in this court of law we are bound to hold that the landlord’s conduct was lawful agreement to sell to the defendants the reversionary interest on Kataria’s lease. As part of that deal it was agreed that the defendants would assign back to Standard Life the right to recover all arrears of rent due up to the date of the transfer. Two days after this deal was completed, and without any prior notice, certificated bailiffs re-entered the premises at five in the morning, thereby forfeiting the lease”.

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Whenever I need time to reflect on a client matter, rather than get bogged down in detail, I enjoy the fresh air of chipping in to the commercial property forum on LZ and hope that my answers and comments are useful. What fascinates me is how many posters find themselves in a muddle either through having taken a verbal agreement on trust rather than getting it in writing, or not really understanding what they’ve let themselves in for, or not wanting to incur the cost of professional advice either because they’re mean or that they confuse the cost with the benefit; it’s true that costs can be disproportionate for low-rented premises but so too can having a go oneself and coming unstuck.

The snag with free advice of a general nature is that there’s a limit to its usefulness. The idea that knowledgeable advisers are somehow able to provide off-the-cuff verbal comment at short notice from enquirers jostling for attention, without sight of all the documents and/or checking the legislation or case-law, is a misapprehension that can lead to the wrong answer and, when dealing with an inexperienced party, misunderstanding.

In business, no matter how long it takes to go beyond each step of the way, it pays to put everything in writing. I am happy to accept verbal promise and assurance from people I know and deal with regularly but otherwise I want something tangible, I may need to provide evidence. During the 1980s, having incurred capital expenditure on my home and not knowing whether I could claim tax relief should a particular situation I had in mind arise, my accountant at the time also unsure of the point suggested I write to what is now HMRC for a ruling. I’m glad I did because when the situation arose and my accountant encountered resistance to the claim for tax relief I produced the letter to confirm that the relief would be forthcoming. The HMRC Inspector we were dealing with did not agree with the writer of the letter: as it happens, since he later conceded, I don’t think it was a matter of law, simply he thought it a moral issue that should be not tolerated.

Misunderstanding is common, caused partly I think when people are not being honest enough with themselves to admit to not really understanding what an adviser is telling them, or from assuming that the knowledge they have is enough to be able to understand the advice.

The facts can often differ from the person’s side of the story. To emotionally detach from a situation one finds oneself in order to remain objective requires a cool calm and collected temperament, not an upset mind. On the principle that misunderstanding is often superficial, I like to delve deep. I find that by explaining the process and providing an overview, it doesn’t matter how familiar the person says they are with the subject at least I know we’ll be on the same wavelength to begin with. Even so, my approach to advice doesn’t stop some people from asking questions the answers to which are in the information I give them to read and which they assure me they’ve read! I understand that people don’t necessarily have the time to read explanatory material but it never ceases to amaze me just how many people only really care about what they’re interested in. To care regardless is probably too much for anyone to bear, despite  stressful attempts to carry responsibility for the world upon one’s shoulders.  With commercial property, the landlord’s care is to make a profit and increase (or at least maintain) rental income net of expenses and tax; the tenant’s care to minimise liabilities and reduce property costs. Charging into the commercial property market without taking advice from those that know what they’re talking about is like wading into the deep end without any idea how murky the water and what dangers could be lurking in the shadows. After all, since it only takes a well-advised tenant to ruin a landlord’s investment, what would it take when the investor’s mistake is self-inflicted?

Anyone can read a lease but not everyone knows what they’re looking for so suggesting the questioner reads their lease, even suggesting where best to look, can be fruitless as far as the questioner is concerned. As I’ve said elsewhere, it can be a mistake to rely on the literal meaning. It can also be a mistake to assume that advice from someone that claims knowledge is more likely to be correct than someone of experience.

Please Note: This Article is 6 years old. This increases the likelihood that some or all of it's content is now outdated.
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