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New edition of CPSE.1 has been issued
Practical Law UK Legal Update 9-523-3472 (Approx. 5 pages)
New edition of CPSE.1 has been issued
| Published on 22 Jan 2013 • England, Wales |
A new version (3.2) of CPSE.1 has been released and is available for immediate use. There are new enquiries relating to concealment of planning breaches, assets of community value and Community Infrastructure Levy (CIL). Other statutory references have been updated and the capital allowance enquiries have been completely rewritten. Many of the drafting notes have been amended.
Speedread
A new version (3.2) of CPSE.1 (Commercial Property Standard Enquiries) has been released and is available for immediate use.
Changes have been made to:
- Update statutory references.
- Introduce an enquiry on deliberate concealment of planning breaches.
- Ask whether the Property may be listed as an asset of community value.
- Expand and update the capital allowances enquiries.
- Introduce a set of enquiries on the community infrastructure levy.
- Update the integrated drafting notes, both to these enquiries and others.
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Background
The Commercial Property Standard Enquiries (CPSE) suite of documents are prepared by members of the London Property Support Lawyers Group and endorsed by the British Property Federation. The CPSE are updated and modified from time to time and CPSE.1 was reviewed at the end of 2012, in the light of various statutory changes.
A new version of CPSE.1 (version 3.2) has been published by PLC Property (see CPSE.1 (version 3.2) General pre-contract enquiries for all commercial property transactions). It replaces version 3.1, which can still be viewed (with previous versions of all the documents in the CPSE suite) on the Historic Versions page (see Commercial Property Standard Enquiries: historic enquiries and guidance notes).
Changes made to the CPSE.1 enquiries
The enquiries that have been amended or added are:
Enquiry 8.3: Control of Asbestos Regulations 2012
The enquiry now refers to the most recent set of these Regulations (and, in general terms, to the predecessor regulations).
Enquiry 12.14: concealed planning breaches
This enquiry is new. The Localism Act 2011 introduced a procedure that can extend the period during which the local planning authority may enforce a breach of planning control, where that breach was deliberately concealed. The enquiry asks whether the Seller is aware of circumstances that might lead to such enforcement.
Enquiry 12.15: assets of community value
This enquiry is new. It asks whether the Seller is aware of anything that would lead it to believe that the Property is to be listed in the Local Authority's list of assets of community value.
Enquiry 19: capital allowances on plant and machinery
These enquiries have been extensively updated and reorganised, in part because of the new "requirements" of section 187A of the Capital Allowances 2001 (CAA 2001) which came into force in April 2012. The new versions were kindly contributed by SNR Denton UK LLP and Davis Langdon LLP. The most important changes are:
- References to "investor/owner": The change from "investor" to "investor/owner" throughout makes it clear that the differentiation of the tax status of the Seller applies to owner occupiers of commercial property as well as to traders (dealers in property) and investors (which would generally mean landlords selling investment properties).
- Grant of a new lease: This enquiry is not new, but now appears earlier in the sequence (it was formerly enquiry 19.16). It is now clear that it is relevant only if the lease is granted for a premium. Former paragraph (a) (which related to the now abolished system for industrial buildings allowances) has been deleted. The combination of answers to enquiry 19.2(a) and (b) determine which of the subsequent enquiries are relevant.
- if the answers to both are "yes", then enquiry 19.3 will be relevant;
- if the answer to enquiry 19.2(a) is "yes" and to enquiry 19.2(b) is "no" then the Buyer cannot claim capital allowances on the premium, as it will not qualify as an "owner" for this purpose;
- if the answer to enquiry 19.2(a) is "no" then there is no need for a reply to enquiry 19.2(b) or 19.3. Instead, enquiry 19.4 will be relevant as section 184 of the CAA 2001 will apply.
- Does the Seller have to bring a disposal value into account for any Fixture? This enquiry is developed from enquiry 19.2 in CPSE.1 version 3.1 but:
- avoids the expression "claim", since this could mislead a Seller who is not aware of the interpretation of that expression in section 202(3) of the CAA 2001;
- focuses instead on whether the Seller has to bring a disposal value into account, since that requirement is the trigger for the potential application of sections 185 and 187A of the CAA 2001 (about which the Buyer would be concerned, because these may impose restrictions on the Buyer's position for capital allowances);
- adds an enquiry on elections under sections 198 and 199 of the CAA 2001;
- asks the Seller to provide the documents which the Buyer will require under section 187A of the CAA 2001.
If the answer to enquiry 19.3 is "no" then enquiry 19.4 must be answered instead. - Effect of previous transactions: Enquiry 19.4 repeats the substance of enquiries 19.4 and 19.5 in CPSE.1 version 3.1, but has been simplified so that it asks only the relevant amounts of "disposal value" applicable to previous transactions. It also now asks the Seller to provide the documents which the Buyer will require under section 187A of the CAA 2001.
- Enterprise zone buildings: Enquiry 19.11 in CPSE.1 version 3.1 has been omitted since capital allowances on enterprise zone buildings have been abolished.
- Claims for industrial buildings allowances: Enquiry 19.10 draws on enquiries 19.12 and 19.14 in CPSE.1 version 3.1. It now asks whether industrial building allowances or business premises renovation allowances have been/will be claimed in relation to expenditure on fixtures on the Property (since these may qualify for capital allowances on plant and machinery).
- Contributions to expenditure by others on fixtures: Enquiry 19.12 repeats enquiry 19.15 from CPSE.1 version 3.1 but omits reference to industrial building allowances (which have been abolished).
IMPORTANT NOTE: These enquiries make no reference to the "pooling" requirement in sections 187A (3) (a) or (4) of the CAA 2001, as the pooling requirement does not come into effect until April 2014, and it is not yet clear how a Buyer can ensure that the Seller, or a previous owner, has or will "allocate the historic expenditure to a pool" within the permitted period.
Enquiry 32: Community Infrastructure Levy (CIL)
This enquiry is new. Whilst CIL will not be relevant to most transactions where CPSE.1 is used, the implications of CIL are so far-reaching (and, at present, not fully appreciated) that Buyers should consider on every transaction whether CIL will be an issue and, if so, in what manner and to what extent. As the new law settles down, it may be possible to reduce the number of enquiries about CIL.
Changes to the drafting notes
Where enquiries have been amended or added, new drafting notes have been inserted. In addition, these drafting notes have been updated (though the text of the enquiry has not changed):
- Enquiry 2: Party Walls and remedies.
- Enquiry 3: Rights benefitting the Property.
- Enquiry 4.6: Public rights of access to "access land".
- Enquiry 4.7: Town and Village greens.
- Enquiry 6: Access to neighbouring land.
- Enquiry 7.1: Enquiries relating to highways.
- Enquiries 8.2 - 8.10: Asbestos issues.
- Enquiry 11: Fire safety.
- Enquiry 13: Statutory agreements and infrastructure.
- Enquiry 14: Health and safety file and any EPC or air conditioning report for the Property.
- Enquiry 15: Environmental issues.
- Enquiry 18: Rates and other outgoings.
- Enquiry 21: TOGC issues.