Mixed use development and structure (Part 2/2)

Mixed use development and structure (Part 2/2)

This two-part blog examines questions that might arise in relation to structuring a mixed use development as a variation on clean freehold investment structure. The first part of this blog looked at whether, for a buffer lease to be effective, the main structure of the building needs to be included in the demise of the management company lease and, if not included, whether the tenants’ right of refusal would still apply.

In this second part, we ask two further questions: Can we split the demise of the main structure between a management company lease (residential elements) and a long lease (commercial element)?  And, if so, would the tenant’s first right of refusal and right to manage then only apply to the management company lease and the part included in the demise?

Splitting the demise of the main structure

Whether the demise of the main structure of the building can be split as above will depend on the layout of the development. That is, are the commercial and residential elements two separate ‘buildings’?  We also need to consider appurtenances to the residential part of the building.

So, what is a building? The Landlord and Tenant Act 1987 does not define ‘building’.  The term is not confined to the bricks and mortar of which the building is constructed, but extends to the garden and other appurtenances (expressly or impliedly) included in the demise of a flat to the tenant.  That the building

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