True to its name, a Branded Residence is a property attached to a brand. Historically, we've predominantly seen renowned hotel brands absorbing the lion's share of the market: Six Senses/The Whiteley, The Four Seasons/Twenty Grosvenor Square, Raffles/the OWO, the Peninsula/the Peninsula Residences, to name but a few.
Recently, other well-known names have started to move into the market: fashion designers, car manufacturers, jewellers and even luxury restaurants are demanding a place at the branded residence table.
Why invest in a Branded Residence?
These prestigious brands have a track record in the highest levels of customer care, hospitality and amenities, resulting in, quite literally, all singing all dancing accommodation - residential living with the services, facilities and luxuries of a hotel.
Never has the word "turnkey" been more apt than for a hotel branded residence. Need your car? The valet will have it at the entrance before you've made it downstairs. Staying in the UK intermittently/for short periods at a time? Someone will stock your groceries before you arrive. Looking for somewhere to eat? The concierge knows a place - and can get you a table, at short notice. And that doesn't even cover the world-class gyms, swimming pools, spas, private dining rooms, private cinemas, not to mention the highest levels of security... the list goes on.
On top of this, there is of course the fact, that by aligning themselves to a particular property/development, these brands are accepting a certain level of responsibility with regard to the running and overall "feel" of a building, often beyond their contractual duties; there is automatically a reassurance as to the quality and management. Whilst there is likely to be an independent managing agent "running" the residential aspects, it is likely be the household name that people remember and automatically associate with the property, wrongly or rightly and for good or bad reasons. This offers comfort to buyers - they are not just purchasing a property, they are investing in a trusted brand.
What are the legal implications?
The agreement for lease (i.e. the purchase contract) and the long residential lease which would need to be entered into by buyers on completion are likely to be very similar to those seen on a high-end new build estate without the branded element. The legal paperwork will often be more detailed than that of a second-hand sale and purchase in order to:
- cover the ongoing development;
- deal with snagging/the Seller's pre-completion obligations;
- address any other complexities across the site; and
- take into account any third party operator involved (such as a hotel brand).
That said, there is unlikely to be a significant amount to consider legally on the branding side. This can be positive (global brands often means hugely complex, sensitive and probably confidential agreements) but ultimately this is simply because it is unlikely that a brand operating at this level will agree to enter into a direct contractual relationship with individual buyers.
Given that the majority of "new" long residential leases are granted for a term of 250 – 999 years, it is understandable that these companies are unwilling to be held to ransom for the duration of these leases which often vastly exceed the term of the agreement between the freeholder/superior landlord and the brand in question. In some instances, developers (and/or the brands themselves) may even require a waiver signed by the buyer, confirming that they understand the brand could withdraw from the estate in future.
The considerations are largely commercial and, as one might expect, tend to relate to the costs involved. A luxury brand is likely to come with a luxury price tag, not to mention luxury services and therefore, luxury service charges. Service charge deposit deeds requiring 6 - 12 months of service charge on account are often required by management companies at this level, employing concierge teams of the highest calibre costs money and buildings insurance on these schemes isn't cheap.
In conclusion, branded residences offer a harmonious blend of luxurious living and hotel-style services. With turnkey convenience, world-class amenities, and the assurance of a trusted brand, buyers invest not only in property but also in a lifestyle. While, as a potential buyer, considerations on the branding side are likely to be more commercial than legal, buyers should be sure to appoint a lawyer who is well-versed in the intricacies of new developments/off-plan paperwork, and of course be prepared for the potential costs of such a high-end living experience.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.