Commercial property case ''a wake up call'' commercial mortgages

02 May 2007

A prominent commercial property legal case involving high street retailer PowerHouse has gone in favour of the commercial property market at large, after a High Court ruling that will protect billions of pounds of market value.

A number of commercial property landlords had challenged the legality of PowerHouse''s actions in using a Company Voluntary Arrangement, effectively allowing it to avoid certain rental obligations. A High Court has ruled in favour of these landlords, in turn protecting some £38 billion worth of property assets according to the British Property Foundation.

Nonetheless commentators are highlighting the case as a wake-up call for the industry with widespread ramifications for many parties, including those with commercial mortgages.

"Losing the case would have been detriment to the market," explained Charles Woollam of property consultants Donaldsons, according to City Wire.

"It''s been a bit of a scare, but it''s also been a serious wake-up call for the industry."