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Tenant's planning liability
In most commercial leases, tenants are responsible for complying with planning laws and regulations.
If a tenant makes alterations or changes the use of a commercial property without obtaining the necessary permissions or approvals, they will usually be liable for any resulting breaches.
It is important to note that simply because a lease permits a particular use of a property, this does not automatically mean that suitable planning permission is in place.
It is the tenant's responsibility to raise enquiries to the local planning authority to establish the planning position and, where necessary, make an application for their proposed use.
Landlord's liability
Landlords also have a role to play in ensuring that their properties are used in accordance with planning regulations.
If a landlord is aware of a tenant's planning breach and does nothing to address it, they might be considered complicit in the breach and could potentially face liability.
Landlords must, therefore, include provisions in the lease that require tenants to comply with planning regulations and seek the landlord's consent in respect of any planned alterations or changes of use.
Enforcement
Breaches of planning laws and regulations can have serious consequences for the responsible party, such as fines, injunctions stopping the development and even restoration notices.
In extreme cases, the local authority can prosecute individuals or businesses for developing without planning permission or not complying with enforcement notices.
Planning case law
Historically, landlords have often been relatively complacent about planning breaches by their tenants.
However, recent case law has served as a stark reminder to landlords that they cannot simply turn a blind eye to the activities carried on by their tenants on their property.
In a recent case involving a landlord company named T&M Property Investment Limited ("TMPIL"), the Proceeds of Crime Act 2002 ("POCA") was used to confiscate rent monies collected from a tenant who had failed to comply with a planning enforcement notice.
TMPIL case study
TMPIL had leased its premises in Rusholme, Manchester, to a tenant for use as a café.
At some point during the lease term, the tenant altered the shop front and started operating as a shisha bar.
The tenant failed to make any planning application to authorise the alterations or the change of use.
Manchester City Council ("MCC") issued an enforcement notice, which required reinstatement of the property and cessation of the unlawful use.
The tenant and TMPIL ignored the notice, and the tenant continued to operate the shisha bar.
Whilst an unlawful development carried out by a tenant is not a criminal offence in itself, failing to adhere to an enforcement notice's terms carries criminal liability.
The enforcement notices attach to the land upon which the planning breach has occurred; therefore, in circumstances where the tenant fails to adhere to the notice, ultimately, the landlord is responsible.
The landlord cannot fall back on the statutory compliance provisions in the lease in this situation.
In the TMPIL case, MCC prosecuted TMPIL for non-compliance with the enforcement notice, resulting in a conviction and a fine.
MCC also made an application under POCA to recover the gains made by TMPIL from the criminal activity and successfully secured the confiscation of rents amounting to £174,074.
Warning for landlords
The outcome of the TMPIL case is a significant warning and reminder for landlords to be proactive in monitoring their tenant's compliance with planning laws and regulations.
Where a planning breach has been identified, landlords should take steps to enforce the statutory compliance provisions in the lease.
If the tenant fails to comply, landlords should consider exercising forfeiture rights where available under the lease.
The potential criminal liability for planning breaches should leave no further room for complacency by landlords.