Don't be late for change in rates

The Problem
You wish to redevelop your multi-let office building and have a number of leases expiring soon. When should you serve your Section 25 notices?

The Law
A landlord must pay statutory compensation to a tenant where the lease ends and the landlord redevelops. The compensation equates to one times the rateable value of the premises or twice the rateable value if the tenant (including his predecessor) has occupied the premises for fourteen years.

In April 2000 new rateable values come into force and the increases are expected to be significant, especially in London.

The Solution
Landlords should serve their hostile Section 25 notices prior to 1st April 2000. This ensures that they will only have to pay compensation at the existing rateable values and not at the higher levels.

Remember, Section 25 notices can be served not more than twelve months before the end of the lease and a minimum of six months’ notice must be given to the tenant to quit.

Conversely, if you are a tenant and believe your landlord has redevelopment proposals then defer serving a Section 26 notice until after 1st April 2000. This means you can claim compensation at the higher rateable value limits.