The real estate landscape is evolving rapidly, with property owners and developers increasingly looking to repurpose existing buildings to meet changing market demands and address obsolescence. Hogan Lovells, a global law firm, has released an article examining the key factors to consider when repurposing property in England, offering insights into the legal and practical challenges involved in this process.
One of the primary considerations when repurposing property is the legal title. The article emphasizes the importance of examining title restrictions early in the process, as these can significantly impact repurposing plans. Use restrictions, often found in historic documents or newer mixed-use schemes, may limit the potential for repurposing. While some historic restrictions can be insured against, others may require renegotiation, particularly in the case of headleases. Additionally, existing occupiers and their lease terms must be considered, as well as the property's interaction with its surroundings, including shared facilities and rights to light.
Planning permission is another crucial aspect of repurposing property in England. The article outlines various scenarios where planning permission may or may not be required, including changes within use classes, permitted development rights, and the need for new planning permissions. It also highlights potential pitfalls, such as existing conditions that may override permitted development rights or impose operational requirements that could affect the new use.
Construction considerations are also addressed in the article. The choice of procurement route, risk transfer, and end-user requirements are identified as key factors. The article suggests that while design and build contracts offer advantages in terms of risk transfer, they may come with a premium or uncertainties in cost. Two-stage tendering is presented as a potential solution to reduce risk and uncertainty for property owners. The importance of detailed surveys to establish a baseline for tenderers is also emphasized, particularly when dealing with existing structures.
Financing aspects are briefly touched upon, noting that lender consent is typically required for changes of use and resultant works if the property is secured. However, the article also points out that repurposing may be a key strategy to unlock liquidity and avoid enforcement by lenders in challenging financial environments.
The article concludes by acknowledging that while there are legal issues to navigate when repurposing buildings in England, there are also significant opportunities. Hogan Lovells positions itself as a firm capable of guiding clients through the complexities of repurposing real estate, helping to breathe new life and value into assets.
