The squatters' last stand – commercial property still a target

If you think of squatting as a residential problem is now solved by the 2012 criminal law reforms, think again. 

A recent Sunday Times investigation reveals how squatting in commercial properties, especially in London, is a major problem for owners. Squatting there is an increasingly organised and increasingly costly problem. It's one that so far has been neglected in legal reforms. 

This article is intended for general information purposes only and does not constitute legal advice. Landlords facing squatters, or those concerned about vacant commercial premises, should seek advice from a solicitor experienced in commercial property litigation before taking any action.

Commercial squatting is on the rise, and there’s a lot of evidence to show that. Martyn Spiers, head of evictions at High Court Enforcement Group, informed the Sunday Times article that his firm’s squatter-eviction workload had grown by around 30 per cent over the past 18 months, and that’s concentrated mostly in central London. 

However, they find that the problem is increasingly spreading to cities outside the capital; Manchester and other major cities are succumbing too. On the day the paper’s investigators spoke to him, his team had nine commercial squatter evictions booked in.

The reasons behind this rise in commercial squatting are sometimes difficult to discern, but there’s no doubting the fact that the figures are rising. Increasingly expensive residential rents, rising numbers of young unemployed people, and a subculture of an “anti-capitalist” lifestyle choice are all factors cited as contributing to this rise in squatting incidents. 

Why commercial premises?

It mainly boils down to the legalities. The basic legal position around commercial property squatting has not changed since 2012. Under section 144 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO), squatting in a residential building became a criminal offence.

Such an offence is punishable by up to six months’ imprisonment, an unlimited fine, or both. But crucially, that section applies only to buildings “designed or adapted… for use as a place to live". The UK laws leave commercial buildings such as offices, shops, warehouses, or pubs unprotected.

For non-domestic premises, the relevant law remains sections 6, 7 and 12 of the Criminal Law Act 1977. This is civil law, not criminal law, as is the case for residential squatting. Occupying a vacant commercial building is not, on the face of it, a crime. 

Squatters only commit an offence if they cause criminal damage, steal, or use utilities dishonestly while in residence. Even then, the police are often reluctant to get involved. The property owner is up against it when trying to get action from the police unless they can show clear evidence of an offence actually in progress.

This legal gap between residential and commercial squatting remedies and its perverse effect has been highlighted over many years by stakeholders, but nothing has been done about it so far. In fact, with the closing off of the residential route to squatters, the 2012 reforms have arguably pushed the same cohort of potential squatters towards commercial buildings, where the risk of them getting a criminal record is much lower. 

The routes to recovery

Faced with a squatter issue, commercial property owners do have choices. The Sunday Times report makes it clear that landlords in this situation can choose between a speedy outcome at a cost or the slower, less costly solution, or a combination of the two. 

The High Court route.

In one case quoted, a warehouse was due for demolition prior to redevelopment as co-living apartments by the developer Halcyon. But it was occupied by around 15 squatters the same night that the building’s temporary occupants – a charity given rent-free use during the planning process – moved out. 

Halcyon went straight to the High Court. The High Court enforcement officers managed to clear the building within a week of the firm starting the eviction process. Neil MacLeod, a partner at the firm, told the newspaper that the total cost, including paying the enforcement officers, other security measures, and all associated expenses, came in at around £100,000. 

By the time the building was free to be redeveloped, it had already undergone nearly three years’ delay during the planning process. The arrival of squatters', said Mr MacLeod, was the last thing the project needed, not only adding more delay but a thumping great cost to boot.

The County Court route

Another case quoted was that of Andrew Wood, a landlord owner of a Putney High Street property. It was occupied by squatters who broke in and changed the locks, declaring themselves the new occupants. This was in March.

Mr. Wood went through the County Court route rather than using the High Court. The cost was considerably less for him with legal fees between £3,000 and £4,000. But in his case it took much longer to get his property back. It wasn’t until April the following year before he recovered his property. In the meantime you can imagine the state his property was in. He said it was unbelievable, the state it was in inside, with rotting food and drug paraphernalia everywhere.

The High Court route is obviously effective; it buys valuable time and most likely prevents a lot of internal damage, but it comes at a cost. If speed is essential, there’s a real financial premium to pay. This will only make sense if there’s a development or you have an incoming tenant. When you have the time to wait, there's a saving to be had going down the County Court route, but this needs to be offset against any damage done in the meantime. 

Prevention is the best solution

As any commercial landlord will appreciate, an empty building turns an income-earning asset into a liability. Not only is there the risk of squatter occupation, but insurance costs probably double; there’s the business rates bill to pay along with utility charges and, if you are wise, extra security precautions. 

Another case quoted in the Sunday Times report shows how prevention is far better than cure. Putney High Street convenience store owners Dave and Deep Khurana were coming to the end of their existing lease. But they needed a bigger unit as they were expanding. 

When the ideal unit came vacant next door, they snapped it up. So to avoid a vacancy in either unit, risking squatter occupation, they used both for a time, agreeing with their existing landlord to extend the old lease. 

An experienced landlord will tell you, when it comes to squatters, prevention is far better than cure, if only to avoid the stress this situation brings, let alone the cost in time and money. Landlords with vacant commercial premises should consider securing the property comprehensively. 

It goes without saying that void periods should be minimised, even by using temporary short-term lets, which means there’s someone in occupation. Even taking a lower initial rent or rent-free periods to secure a long-term lease sometimes makes a lot of sense.

Make sure you notify your insurers promptly when a vacancy is about to arise. It will probably cost you more money, but cover is usually conditional on you disclosing extended void periods.

 All entry points should be securely locked, and any easy entry points should be boarded. Pay particular attention to the rear of the property and any access points to the upper floors.

Regular inspections and providing visible signs of activity, such as timed lighting, setting an alarm system that triggers remotely, and removing mail deliveries regularly, make the property appear occupied.

Keeping a detailed record of ownership (registered title), inspections and property management. You will need these if and when you need to go to court. These are also strong protections against any adverse possession claim a squatter may bring.

Property guardianship is another option, as well as 24-hour manned security for larger higher-risk buildings with extended vacancies. Even a high cost can be less than fighting a drawn-out contested eviction.

Adverse possession

It is a remote possibility, but still there’s a risk of an adverse possession claim. The press tends to exaggerate this, as it’s generally unlikely – squatters can’t acquire ownership of a property after weeks or even months of occupation. 

For registered land ( Land Registry squatters), a squatter must show ten years of continuous, exclusive occupation without the owner’s consent before they can even apply to the Land Registry to be registered as owner.

Existing registered owners are notified and given the opportunity to object if a claim is brought, which in most cases will defeat the claim outright at source. 

With unregistered land a squatter typically needs 12 years of adverse possession to remove an owner's paper title. If the owner fails to start court proceedings to evict the squaters within this time window, a squatter can apply for first registration of the land (building).

For actively managed commercial buildings with properly registered titles, this risk is largely theoretical. 

A failure in law 

There have been continuous calls to extend criminal protection to commercial premises ever since the law was changed for residential property. In 2013, the then Justice Secretary acknowledged reports that squatters were moving on from residential to non-residential buildings.

The government’s then response was that it was monitoring the situation. Thirteen years later and nothing has changed. Despite lobbying from landlord groups, industry bodies and developers, all frustrated at the cost and delay squatting involves. 

Why does this anomaly still exist when seemingly it would be a simple matter to criminalise commercial property squatting? Is there an inherent desire within our policymaking profession (politicians) to provide protections for squatters? 

Whether the pressure being applied will eventually result in reform remains to be seen. In the meantime, landlords need to take matters in their own hands: prevention is far cheaper than cure. In the worst-case scenario, if squatters do get into your property, you must decide on the best plan of action for yourself with legal advice: the choice between the High Court and County Court routes. 

This article applies to England and Wales. Squatting law in Scotland is different. There, unauthorised occupation of any premises, residential or commercial, has been a criminal offence since the Trespass (Scotland) Act 1865. Northern Ireland also has its own distinct regime. 

Landlords with squatters in their properties in any UK jurisdiction should seek local advice before taking action.

See also:

The Sunday Times — “Squatters’ last stand”, Jim Armitage - thetimes.co.uk (subscription required)

HM Land Registry — practice guidance on adverse possession - gov.uk/government/publications/adverse-possession-of-registered-land

LandlordZONE — “Avoiding squatters in your property”

[Main image credit: Brunxs]