The leasing and management of industrial buildings in the UK: potential environmental liabilities for landlord and tenants

Michael Jayne and Syms Paul

ERES from European Real Estate Society (ERES)

Abstract: Implementation of Part IIA of the Environmental Protection Act 1990, on 1st April 2000, introduced a new Îcontaminated landÌ regime in England, which has since been extended to the rest of the UK. This imposes a regime of Îstrict liabilityÌ, in terms of contamination, and brought to the fore issues of fundamental importance for everyone involved in the processes of letting and managing industrial properties. These have implications for the owners, occupiers and managers of such properties; indeed they go to the very heart of land ownership, having potentially adverse effects on both income and value. The legislation means that landlords and their leasing and managing agents may have to make important changes to the ways in which they negotiate the leases of industrial premises and the mechanisms they employ in the future management of those buildings. Similarly, tenants and their advisers may have to give closer consideration to the environmental liabilities they may be about to incur, especially where tenants carrying out potentially contaminating activities have previously occupied buildings. The Royal Institution of Chartered Surveyors (RICS) provides its members with guidance as to the valuation of properties affected by the presence of contamination (RICS, 1995) as well as to the role and responsibilities of the surveyor when undertaking property inspections (RICS 2000). By its very nature, the advice given in the RICS guidance is broadly based and does not identify the many ÎpitfallsÌ that may confront a surveyor. The study reported in this paper has examined current practices in the UK and has identified areas where changes may be required, or be desirable, in order to arrive at recommendations as to Îbest practiceÌ. The work is being undertaken in three phases, a questionnaire survey involving leasing and managing agents, real estate owners, lawyers and bankers; interviews with a representative sample of persons from the survey and a consultation stage with representative organisations including the RICS, the Environment Agency, British Property Federation, British Bankers Association, British Insurance Association, the Law Society and the Confederation of British Industry (CBI). This paper reports on the findings arising from the questionnaire phase and subsequent interviews with respondents.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2003-06-01
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