Landlord and Tenant

Question 1

What is a lease?

Answer 1

Legal agreement between two parties for a right to an asset in exchange for payment

Question 2

Lease vs license?

Answer 2

A license does not grant exclusive possession

Question 3

What is the leading case regarding lease vs. license?

Answer 3

Street v Mountford

Street granted a ‘license’ to Mountford to occupy two rooms at a weekly rent subject to 14 days’ notice termination.

A lease must grant exclusive possession of the property for a fixed or periodic term at a rent. It is the nature of the rights created which are important. Superficial labels are irrelevant.

Question 4

What contents need to be present in a lease?

Answer 4

• Certain term
• Rent
• Grant exclusive possession

Question 5

What is a deed?

Answer 5

It transfers ownership of a property

Question 6

What is a covenant within a lease?

Answer 6

• Repairing liabilities
• Parties
• Rent
• User clauses
• Demise
• Lease term
• Rent review clause
• Alienation

Question 7

What is the difference between assignment and subletting?

Answer 7

Assignment = disposal of the whole lease

Subletting = subsidiary lease created

Question 8

What are the 6 parts of a lease?

Answer 8

1) Premises
2) Rent (Reddendum)
3) Term (Addendum)
4) Party details
5) Covenants and restrictions
6) Exceptions

Question 9

What is a break clause?

Answer 9

Right to terminate the lease by notice

Question 10

What is a rent review?

Answer 10

Re-assessment of the rent

Question 11

What mechanisms are there for reviewing the rent?

Answer 11

• RPI - indexed,
• Market rent
• Percentage of turnover

Question 12

What is the primary legislation for Landlord and Tenant?

Answer 12

Landlord and Tenant Act 1954

Question 13

How many parts does the LTA 1954 consist of?

Answer 13

4

Part 1 - Residential security of tenure
Part 2 - Professional tenants and businesses security of tenure
Part 3 - Compensation for improvements
Part 4 - Miscellaneous

Question 14

What is the impact of contracting outside of the 1954 Act?

Answer 14

Generally a discount to rental value although this depends on the use and location and what the norm is for that market

Question 15

What is the impact of repairing obligations on rental value?

Answer 15

The more repair obligations a tenant has, the higher the discount on rental value

Question 16

What impact would different review patterns have on rental value?

Answer 16

There would be a higher rent on a longer review pattern as more secure for the tenant

Question 17

What are the two key features of Part 2 LTA 1954?

Answer 17

1) Statutory continuation - doesn’t automatically expire provided they remain in occupation

2) Right to renew

Question 18

What does ‘holding over’ mean?

Answer 18

This is when the lease expires, the tenant remains in occupation and has security of tenure so they continue to pay the rent agreed

Question 19

Why would you contract in/out of the LTA 1954?

Answer 19

In = security for future plans

Out = pay a lower rent

Question 20

What is Section 23 of the LTA 1954?

Answer 20

Qualifying tenancies
- must be in occupation
- not a licence
- not contracted outside the Act
- not for agricultural/mining purposes

Question 21

What is Section 24 of the LTA 1954?

Answer 21

• Statutory continuation of the lease unless either party wants to end after the lease expiry
• Interim rent - what you pay in the interim period of holding over

Question 22

What is Section 25 of the LTA 1954?

Answer 22

Landlord’s notice to end or grant a new lease

Question 23

What is Section 26 of the LTA 1954?

Answer 23

Tenant’s notice to renew (must serve notice 6-12 months before expiry)

Question 24

What is Section 27 of the LTA 1954?

Answer 24

Tenant wishes to end the tenancy (must service notice 3 months before expiry)

Question 25

What is Section 30 of the LTA 1954?

Answer 25

Grounds the landlord can refuse the granting of a new lease (a) the tenant has obligations in relation to repair and maintenance under the current lease and the property is in disrepair; (b) there has been a persistent delay in the payment of rent; (c) the tenant has been/is in breaches of other terms of the existing lease; (d) the landlord is able to provide suitable alternative accommodation; (e) the tenancy was created by a sub-letting; (f) the landlord intends to demolish or reconstruct the property and it is not possible without the landlord recovering possession; (g) the landlord intends to occupy the property or part of the property for the purposes of its own business or as its residence.

Question 26

When can a tenant claim compensation under LTA 1954?

Answer 26

Grounds (f) and (g) If less than 14 years = RV If more than 14 years = 2 x RV

Question 27

What is Section 35 of the LTA 1954?

Answer 27

- Terms of a new lease - If parties cannot agree, goes to court to decide - Party proposing departure from the terms puts their case forward - Tenant has weaker power of negotiation

Question 28

What can you tell me about dilapidations?

Answer 28

At the end of the tenancy, the tenant must return the property to the landlord in a state referred to in the lease and if it is not, then it is referred to as dilapidations.

Question 29

What other ways are there to terminate a lease?

Answer 29

- Forfeiture - Surrender (tenant's interest is returned to the landlord)

Question 30

What dispute resolution service is there in relation to lease renewals?

Answer 30

PACT - Professional Arbitration on Court Terms RICS service, independent 3rd party, flexible, quick, expert determination

Question 31

Is there RICS guidance for leases?

Answer 31

RICS Professional Standard Code for Leasing Business Premises 1st edition 2020

Question 32

What RICS guidance is there for dilapidations?

Answer 32

RICS Professional Standard - Dilapidations in England and Wales 2016

Question 33

What are the 3 types of dilapidations?

Answer 33

1) Terminal (last 18 months - 3 years of lease) 2) Interim (during lease term) 3) Final (after lease expired)

Question 34

What would a schedule of dilapidations contain?

Answer 34

- details of documents relied upon - itemised numbered reference - relevant clause of the lease - alleged breach - remedy required - cost of remedy

Question 35

What is a surrender of the lease?

Answer 35

A voluntary agreement between landlord and tenant that the tenancy has come to an end and the landlord will take control of the property. Both parties have to agree.