7. Landlord's remedies and lease termination

Question 1

How long is an AGA implemented for?

Answer 1

Duration of the assignee’s ownership of the lease and so when the assignee assigns the lease on, the tenant who gave the AGA will be releases from it

Question 2

What remedies are available for the breach of covenant to pay rent?

Answer 2

Action in debt

Commercial Rent Arrears Recovery

Pursue guarantors and / or rent deposit

Forfeiture

Question 3

What is the time limit for bringing an action in debt regarding breach of a covenant to pay rent?

Answer 3

6 years

Question 4

What is Commercial Rent Arrears Recovery (CRAR)?

Answer 4

Permits the landlord to enter the property and seize and sell goods belonging to the current tenant

Question 5

What are the restrictions on CRAR?

Answer 5

Landlord must give 7 days’ notice of intention and must use and enforcement agency to enter the premises to remove goods

Not allowed to remove certain goods, including items or equipment up to value of £1350 which are necessary for tenant’s business such as computer or telephones

Only available if at least 7 days’ rent is outstanding

Question 6

If a landlord intends to pursue the guarantor of a former tenant following the breach of covenant to pay rent by an assignee, what requirements must be met?

Answer 6

1. Serve a default notice on any former tenants or their guarantors if landlord intends to recover a “fixed charge” from them
2. Serve this within 6 months of breach

Question 7

How can a landlord enact forfeiture following breach of covenant to pay rent?

Answer 7

Through taking possession, either by “peaceable re-entry” or obtaining a court order

Question 8

What remedies are available for the breach of covenant to repair?

Answer 8

Specific performance

Damages

Self-help / Jarvis v Harris clause

Forfeiture

Question 9

When would specific performance be available for the breach of covenant to repair?

Answer 9

Only where other remedies are not appropriate

Court must be sure that the order is not being sought by the landlord simply to harass / put pressure on the tenant

Question 10

What is the impact of s 18 LTA on the landlord’s ability to claim damages for the breach of the covenant to repair?

Answer 10

It limits the amount of damages to the reduction in value of the asset as a result of the damage

Question 11

What is the impact of the Leasehold Property (Repairs) Act 1938 on the landlord’s ability to claim damages for the breach of the covenant to repair?

Answer 11

Only applies to leases granted for 7 years or more, with more than 3 years left to run

Landlord must serve notice on tenant - if they serve counternotice then landlord cannot proceed any further with claim without lease of the court

Question 12

How can a landlord enact forfeiture following breach of covenant to repair?

Answer 12

Must follow procedure in s 146 LPA

1. Serve s 146 notice on tenant requiring remedy of breach / compensation for breach
2. If tenant doesn’t comply then landlord can forfeit by peaceable re-entry or court order
3. Tenant can apply for relief from forfeiture

Question 13

If a lease was originally for 7 years or more and has at least 3 years left unexpired, how does the Leasehold Property (Repairs) Act 1937 apply in relation to s 146?

Answer 13

The s 146 notice must include notification of the tenant’s right to serve a counter notice within 28 days

If tenant serves counter notice then landlord can only proceed to forfeit with leave of the court

Question 14

What remedies are available for the landlord for breaches of other covenants (asides from rent and repair)?

Answer 14

Forfeiture - s 146 applicable

Injunction, for breach of negative covenant

Specific performance but only where positive obligation is sufficiently precise, performance or supervision over a period of time is not required and damages are not an adequate remedy

Damages

Pursuing former tenant / guarantor

Deduction from a rent deposit deed

Question 15

How can leases be terminated at common law?

Answer 15

Effluxion of time

Notice to quit

Surrender

Merger

Question 16

What are the relevant time frames regarding notice to quit?

Answer 16

o Periodic tenancies are determined by the appropriate period’s notice to quit given by the landlord or tenant

o Yearly tenancy is determined by at least half a year’s notice expiring at the end of a completed year of the tenancy

o Other periodic tenancies are determined by one full period’s notice (i.e. one quarter, month, etc) expiring at the end of a completed period of the tenancy

Question 17

What are the rights afforded to tenants under the 1954 Act?

Answer 17

1. Continuation of tenancy
2. Tenant’s right to a new lease (which can only be opposed by the landlord on one of the 7 statutory ground contained within the act – if they cannot do this then tenant has statutory right to be given a new lease on broadly similar terms to the original lease)
3. Procedural nature of determining protected tenancies
4. Limited number of grounds available to L to object to a new tenancy
5. Compensation payment possible if successful in removing from tenancy

Question 18

How can a landlord avoid security of tenure under the LTA 1954 for a tenant?

Answer 18

• Provide a licence - risk it would still be construed as a lease if exclusive occupation
• Tenancy at Will - lack of certainty for either party
• Two tenancies of 6 months’ duration
• Contracting out of the LTA 1954

Question 19

What are the requirements for validly contracting out of the 1954 Act?

Answer 19

Notice in prescribed form containing a “health warning” informing the tenant of the consequences of contracting provided to the tenant

Tenant must respond in prescribed form that it agrees to contracting out; if the tenant is given notice less than 14 days before the lease is entered into, then tenant’s response must be by statutory declaration

A record of the notice and declaration must be on the lease - the lease must therefore be in writing

Question 20

What are the 7 methods of termination available for the landlord under the 1954 Act?

Answer 20

1. Service of a landlord’s notice under s 25
2. Service of a tenant’s request for a new tenancy under s 26
3. Forfeiture
4. Surrender
5. Periodic tenancy = tenant giving landlord notice to quit
6. Fixed-term lease = tenant serving 3 months’ written notice on the landlord
7. Fixed term lease = tenant ceasing to be in occupation of business purposes at the end of the lease under s 27(1A)

Question 21

When is a s 25 notice served?

Answer 21

For termination by the landlord - whether landlord wishes to get property back, or would like to terminate current lease and grant a new one

Question 22

What is the procedure for serving a s 25 notice?

Answer 22

1. Landlord serves s 25 notice on tenant
2. Notice must state date upon which landlord wants tenancy to end (cannot be earlier than date it would terminate at common law)
3. Notice served no less than 6 months and no more than 12 months before termination date in notice
4. Must be served on one of the s 30 grounds

Question 23

If landlord uses the s 25 notice to indicate it will oppose the grant of a new tenancy, what must the tenant do?

Answer 23

Apply to the court before the expiry of the notice or will lose their rights under the 1954 Act

Question 24

If landlord uses the s 25 notice to indicate the negotiation of a new lease, what must the tenant do?

Answer 24

Begin negotiations, but also should apply to the court before the expiry of the notice so they do not lose their rights under the 1954 Act

Question 25

If a tenant protected by the 1954 Act wishes to remain in the property after the contractual expiry date, what should they do?

Answer 25

Serve a s 26 notice

OR do nothing as tenancy will continue

Question 26

What is the procedure for a tenant serving a s 26 notice?

Answer 26

1. Must state date on which tenant wants new tenancy to begin and must contain tenant’s proposals for the new tenancy
2. Notice must be served no less than 6 months and no more than 12 months before termination date in notice

Question 27

If a landlord wishes to terminate the tenancy but the protected tenant has served a s 26 notice, what should they do?

Answer 27

Serve counter-notice on the tenant within 2 months of their service of the s 26, stating the landlord’s s 30 ground(s) of opposition

Tenant must then ensure they apply to court for a new lease or they will lose their rights under the 1954 Act

Question 28

What are the s 30 fault grounds for opposition and are they mandatory or discretionary?

Answer 28

(a) Tenant’s failure to repair (discretionary)
(b) Tenant’s persistent delay in paying rent (discretionary)
(c) Tenant’s substantial breach of other obligations (discretionary)
(d) Landlord has offered alternative accommodation (which must be suitable to the tenant’s needs and on reasonable terms) (mandatory)

Question 29

What are the s 30 no fault grounds for opposition and are they mandatory or discretionary?

Answer 29

(e) Tenancy is an underletting of part (rarely used) (discretionary)
(f) Landlord intends to demolish or reconstruct and could not reasonably do so without obtaining possession – most commonly used (mandatory)
(g) Landlord intends to occupy the holding for its own business or as a residence (mandatory)

Question 30

What are the restrictions on the use of ground (g)?

Answer 30

Landlord must have owned interest for at least 5 years if bought with tenant in occupation before exercising right

If bought with vacant possession and then tenant brought in by landlord, landlord can only exercise ground (g) within first 5 years of ownership

Note that landlord must have firm and settled intention and must demonstrate at the date of the court hearing has considered and taken practical steps to occupy the property; must also have a reasonable prospect of achieving its intention, although does not have to show success prospects

Question 31

What situation does ground (e) “tenancy is an underletting of part” relate to?

Answer 31

When a landlord is serving a s 25 notice to bring an underlease to an end (not relevant when serving notice to bring whole lease to an end)

Question 32

If the landlord successfully opposes a new tenancy under any of the s 30 no fault grounds, how much compensation is the tenant entitled to?

Answer 32

Rateable value of the holding

UNLESS tenant and their predecessors in the same business have been in occupation for at least 14 years, then 2 x rateable value

Question 33

What must a landlord show in order to rely on ground (f) “intends to demolish or reconstruct and could not reasonably do so without obtaining possession”?

Answer 33

1. Firm and settled intention to carry out the relevant work (eg that it has obtained the necessary planning permission and the financial arrangements are in place) AND
2. Intends to demolish or reconstruct the premises (or a substantial part of them), or to carry out substantial works of construction on the holding or a part of it AND
3. Cannot reasonably carry out the work without obtaining possession

Question 34

What are the standard terms of the new lease which is granted under the 1954 Act?

Answer 34

1. Tenant is only entitled to a tenancy of the “holding” – i.e. property comprised in current tenancy, but excluding any part not occupied by the tenant such as underlet
2. Landlord has right to insist that any new tenancy will be a tenancy of the whole of the originally demised property, including parts underlet
3. Term of new lease cannot exceed 15 years
4. Term will not commence until 3 months after proceedings are “finally disposed of”
5. Rent is open market rent
6. Court can insert rent review clause into lease even if not present previously