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How to Acquire Additional Space for Your Academy

on Friday, 11 December 2020.

Often we find that our academy clients require additional space for various reasons (for example - should existing space be inadequate in terms of its condition or size, or for specific purposes such as central services).

Where your school is looking for additional space, we have explained below some of the key considerations.

Lease or Licence?

When considering acquiring additional property, it is important to consider whether your occupation of the property should be by way of lease or a licence. The differences between the two are set out below:

  • A lease grants the exclusive possession of the property for a determinable period of time. Exclusive possession means that you can exercise the rights of the landowner and exclude both third parties and the landowner from the property (unless there are specific rights set out in the lease or title documents).

  • A licence is a permission for a licensee to do something on a licensor's property. A licence does not grant the exclusive possession of the property but rather grants a personal right to do something on the licensor's property. A licence does not create an interest in the property and therefore can offer little security as the licensor may terminate the licence at any time.

Heads of Terms

Once it has been agreed on what basis you will occupy the property, it is important that heads of terms are agreed with the landlord/licensor. The heads of terms should set out all the key terms of the deal, for example:

  • the length of the term of the lease/licence
  • the rent and any rent reviews
  • the right to underlet or assign the lease (this is not applicable to a licence)
  • the repairing obligations
  • what use is permitted
  • any rights to alter the property.

Ensuring the heads of terms contain all the key agreed terms and are agreed at an early stage provides clarity on the terms to be included in the document and can assist in speeding up the transaction.

Education and Skills Funding Agency (ESFA) Consent

When acquiring a property, you may be required to obtain the consent of the ESFA. The Academies Financial Handbook sets out transactions which require such consent. There are specific forms to apply to the ESFA consent depending on the transaction. "For example, the current Academies Financial Handbook states that ESFA consent is needed for a Lease with a term of 7 years and over."

Failure to obtain ESFA consent can result in a breach of your Funding Agreement. We recommend that an application for ESFA consent is submitted as soon as possible following heads of terms being agreed to avoid any delays in obtaining the consent which could hold up completion.

Due Diligence

Carrying out a due diligence exercise might reveal matters at the property which could affect your ability to use the property for your intended use. The exercise involves reviewing the Land Registry title, undertaking searches and raising enquiries about the property with the landlord/licensor's solicitors.

Carrying out due diligence is not compulsory and depends on your attitude to risk as well as the terms of deal (for example the rent and the length of the arrangement etc). We set out below, some of the searches we can carry out and what they reveal:

  • Local Authority Search
    This is a review of the local authorities records relating to the property and reveals matters such as planning (whether the property can be used for your intended use or whether you would be required to apply for change of use consent for the property), whether roads which abut the property are public highways and whether any enforcement notices have been served etc.

  • Drainage and Water Search
    This search would reveal whether the drainage and water supply pipes serving the property are maintained at public expense.

  • Environmental Search
    This is a desktop search which provides environmental information about the property based on historic and neighbouring land uses. This can assist in determining whether the site is likely to be contaminated.

  • Chancel Repair Search
    This will reveal whether there is a risk of chancel repair liability within the historic parish in which the property is located.

  • Index Map Search
    This will reveal whether any part of the site is unregistered and whether there are any registered leasehold titles affecting the property.

There are also other optional searches such as utilities searches and coal mining searches which may be relevant depending on your plans for the property and its locality.

To discuss how we can support you in acquiring additional space, please contact Ela Evans (07887 715968) in our Commercial Property team. Alternatively, complete the form below.

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