The underlying investment appeal of commercial property

As well as abolishing Section 21 notices , preventing landlords from calling for vacant possession, all tenancies will become periodic assured tenancies, with no fixed term tenancies. There is however a new ground for possession under Section 8 which will enable landlords to obtain an order for possession if they wish to sell. Further whilst there are no rent controls, all rent increases during the tenancy term will need to be through the Section 13 procedure, which will be enhanced to give tenants more power to challenge their proposed rent increases at the First-tier Tribunal.

The new Bill further outlaws “rental bidding wars”, which means that landlords and their agents won’t be able to encourage or invite tenants to bid above the stated rent when the demand is intense, with landlords and agents not being able to accept offers from applicants that are above the stated rent. This may in practice change the way rented properties are offered to the market in popular locations, with offers being encouraged upon markedly higher asking prices with bidding best dates. These new rules for tenancies, including the abolition of Section 21, will come into force for all tenancies, existing and new, on the same day, likely to be early in 2025. We will keep you advised.

For some landlords this new legislation might be a reason to commit into the stability offered by fixed term commercial property lettings. For many individual SIPP & SASS Pension funds this route has been discovered but for others the attraction of good high street retail and offices as an alternative is increasingly appealing. Typical commercial tenancies here in the Jewellery Quarter are Five years with a tenant break clause at the end of the third year with the contracted agreement opted out of the Landlord & Tenant Act guaranteeing vacant possession at the end of the term if needed, something the new residential law wont do. If you would like a discussion on the opportunities available or an understanding of the rental and capital growth seen over the past decade here in Birmingham please do not hesitate to make contact.