Real Estate Legal Update: Cases on Penalty Clauses, Restrictive Covenants, and Tax Tips

Welcome to the latest edition of the Real Estate Legal Update. This quarter, we delve into some interesting cases and topics that are sure to pique the interest of legal professionals and real estate enthusiasts alike.

In our Case Law Update, we explore a case involving penalty clauses in sale contracts. The court found that a clause requiring a payment of £240,000 for failure to commence development within a specified period was deemed ‘extravagant, exorbitant, and unconscionable’. This decision sheds light on the importance of ensuring that penalty clauses are proportionate to the legitimate interests they seek to protect.

Moving on to Restrictive Covenants, we discuss a case where the High Court considered the reasonableness of withholding consent under a restrictive covenant. The court found that the decision to withhold consent was not unreasonable, highlighting the importance of clear and valid reasons for refusing consent under such covenants.

In another case on restrictive covenants, the Upper Tribunal considered whether a covenant was obsolete and whether it should be modified or discharged. The Tribunal found in favor of the applicant, emphasizing the need to consider changes in the character of the burdened land and the neighborhood when assessing the obsolescence of a covenant.

In our Landlord and Tenant Round-up, we look at grounds for a landlord to oppose the grant of a renewal lease and the extent to which legal costs can be recovered from tenants through a service charge. The cases discussed provide valuable insights into the rights and obligations of landlords and tenants in lease renewal disputes.

Under Planning Points, we examine the implications of upwards development under permitted development rights. The case highlights the importance of considering the impact of proposed developments on neighboring properties and the wider locality when seeking prior approval for development.

Lastly, in our Tax Tips section, we delve into cases involving Stamp Duty Land Tax (SDLT) group relief and VAT on the transfer of a going concern. These cases underscore the importance of ensuring that tax planning strategies are in line with legal requirements to avoid potential liabilities.

Overall, this edition of the Real Estate Legal Update offers a comprehensive overview of recent cases and developments in the real estate legal landscape. Stay tuned for more insightful updates in the next edition.