Common structures for leasehold mixed use developments
Common structures for leasehold mixed use developments

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Common structures for leasehold mixed use developments
  • Why is structuring a mixed use scheme important?
  • Common structures

Why is structuring a mixed use scheme important?

Mixed use developments are schemes which comprise one or more buildings used for commercial, retail and/or industrial use where there is also an element of residential accommodation. Even where the residential element is ancillary to the main commercial use, these schemes need to be treated with a certain degree of caution. Common pitfalls and challenges include:

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Residential units—flowchart (PDF version)

  1. Right to buy/right of pre-emption — the Landlord and Tenant Act 1987 (LTA 1987) gives qualifying long lease residential tenants the collective right of first refusal (or pre-emption) to purchase the immediate reversion to their leases if their landlord wishes to dispose of that reversion. The landlord wishing to dispose of the reversion must first offer it to the tenants, who have an irreducible two months within which to exercise their rights, and cannot enter into a contract with its prospective buyer conditional on the long leaseholders not exercising that right — see Q&A: The tenants of a property have rights of first refusal under the Landlord and Tenant Act 1987. Is it possible for a seller to enter into a contract for the sale of the freehold of that property, on the basis that completion is conditional upon the tenants not accepting the offer set out in the section 5