Landlord and Tenant

Question 1

What information is required to initiate a rent review or lease renewal?

Answer 1

Terms of engagement
Understanding of client strategy and objectives.
Copy of existing lease
Any licences - alterations, sub-lets, assignments, deeds of variation
Tenant contact details to arrange inspection

Question 2

What should be included in Terms of Engagement for a rent review or lease renewal?

Answer 2

That you are competent
No conflicts of interest
Complaints Handling Procedure
Outline calculation of fees.

Question 3

What can fees for rent reviews or lease renewals be based on?

Answer 3

Percentage of new rent agreed
Percentage of the saving made from the quoting rent
A fixed fee
An hourly rate
Incentive fee

Question 4

What actions might be required in a rent review or lease renewal?

Answer 4

Conflict on interest and competency check
Agree terms of engagement
Understand clients objectives
Obtain information from client (lease, licences, variations)
Review lease packet
Check security of tenure provisions
Check rent review mechanism
Site inspection
Market rent valuation
Serve notices or instruct legal
negotiations
HOTs for renewal

Question 5

What is a licence?

Answer 5

A right to enter property
A personal arrangement between the licensor and licensee
Licensee acquires no interest in the property
It is a personal right that can be terminated by either party

Question 6

What are the 4 requirements of a lease?

Answer 6

Exclusive occupation
Payment of rent
Specified term
If longer than 3 years, it must be in writing, signed and registered as a deed

Question 7

What are the 3 main differences between a licence and a lease?

Answer 7

1. A lease provides an occupier with an estate in the relevant land. A licence is a permission for them to use the land.
2. A lease can be assigned, a licence is a personal right
3. A lease cannot be terminated until it expires unless there is a break clause. A licence can be terminated at any time.

Question 8

What is a tenancy at will?

Answer 8

A form of licence created by written agreement for an unspecified time in which the landlord can evict the tenant at any time. Tenant has no legal interest or renewal right.
Often used to allow tenant early entry for fit out works or whilst tenant is agreeing a new contracted out lease after lease expiry.

Question 9

What is a wayleave?

Answer 9

It is a temporary right and receives annual payment. It is personal to a company and can be transferred.
Example is a right for an electricity company to install and retain their apparatus.

Question 10

What is an easement?

Answer 10

Allows one party to use the land of another for a specific purpose.
It is a permanent right and receives annual payment.
Can be registered at LR
Can be a prescriptive right of way or prescriptive easement or a permissive right of way.

Question 11

What is a prescriptive right of way or easement?

Answer 11

They can be obtained with proof of 20 years continuous and uninterrupted use.

Question 12

What is a permissive right of way?

Answer 12

Permissive right can be granted by landowner to allow access over land. They are not public rights of way and public doesn’t have the right to use them, they are just allowed by the landowner.

Question 13

What is adverse possession?

Answer 13

It is the process by which a person who is not the legal owner of the land can become legal owner through possession of the land for a specified period of time without owners permission.

Question 14

What are the rules for adverse possession?

Answer 14

If the land is registered the squatter needs to prove 10 years of possession.
If unregistered they need to prove 12 years of possession.
Need to prove factual possession and exclusive control e.g fencing, maintenance and treating land as own.

Question 15

What are the different basis of valuation of a rent review?

Answer 15

Usually upward only
Market rent
Indexation to RPI or CPI
Turnover rent
Stepped increased
Time is not normally of the essence.

Question 16

What is CPI and RPI Indexation?

Answer 16

It means valuing the rent review inline with inflation.
RPI Retail Price Index is linked to inflation for retails goods, services and housing costs.
CPI Consumer Price Index only measures the average prices pay for consumer goods, not housing.
RPI usually has higher returns but more volatile. CPI more predictable and widely accepted.

Question 17

What 4 assumptions are usually made prior to rent review valuation

Answer 17

1. Property is available to let on open market by willing tenant and willing landlord for a term of years as stated (notional or hypothetical)
2. Property is fit and available for immediate occupation and use
3. All covenants observed by landlord and tenant
4. Property used for purpose set out in lease

Question 18

What 3 disregards are usually made for rent reviews?

Answer 18

1. Any effect of goodwill on tenants occupation
2. Ignore goodwill attached to the property
3. Tenant’s improvements if LL consent has been granted for works.

Question 19

What is the notional term of the lease?

Answer 19

The length of term to be valued in rent review. if this is silent then assume the residue of the term.

Question 20

What is a headline rent review clause?

Answer 20

This is when the basis of the valuation cannot consider any incentives agreed when analysing a comparable of a letting to arrive at a net effective rent.

Question 21

What are high in hierarchy of evidence in rent reviews?

Answer 21

Open market lettings
Rent reviews and lease renewals
Independent expert determinations

Question 22

What is lower in the hierarchy of evidence for rent reviews?

Answer 22

Sale and leasebacks
Surrender and renewals
Inter-company arrangements.

Question 23

What third party determination can be used for a rent review?

Answer 23

Independent expert
Arbitrator
Can be assigned by RICS as part of dispute resolution service.
Can also be specified as method of determination in rent review clause.

Question 24

What is the difference between independent expert and arbitrator?

Answer 24

Evidence - Arbitrator acts on evidence provided, IE investigates and can use own knowledge
Appeal - cannot appeal IE limited right with arbitrator
Negligence - IE can be liable, Arbitrator cannot.
Law - Arbitrator bound by Arbitration Act, no legislation for IE

Question 25

When is it preferable for a landlord to use either independent expert or arbitrator?

Answer 25

For a landlord arbitrator is preferable in a falling market and a independent expert in a rising market.

Question 26

What is an advocate?

Answer 26

Represents their client in court, duty is to client but must act with integrity. Not obliged to disclose all matters.

Question 27

What is an expert witness?

Answer 27

Must be impartial and objective Duty to the court, not to client Evidence must be independent. Surveyor must believe the facts the rely on are complete and true. Contingency/incentive fees not allowed. Fee basis must be clearly stated in TOE

Question 28

What should be included in a rent review memorandum?

Answer 28

Name of LL and tenant Property address Date of lease and rent review Confirmation of new rent agreed Signed and dated both parties

Question 29

What does S.23 of L&T 1954 state for tenancies to be protected by the act?

Answer 29

Must be a business tenancy with 6 elements: 1. It is a tenancy 2. must be used as business 3. Must be occupied or at least part by the tenant 4. Must be occupancy for more than 6 months 5. Must not be exempted or excluded tenancy (tenancy at will) 6. Must be a competent landlord

Question 30

What is the landlord and tenant act 1954?

Answer 30

The act provides security of tenure to business tenants, giving them the right to lease renewal and remain in occupation at the end of a lease.

Question 31

When does the Landlord and tenant Act 1954 not apply?

Answer 31

Contracted out leases Licences Tenancies at will Term of lease is 6 months or less If tenant's total period of occupancy is less than 12 months.

Question 32

What is S.24 of the act?

Answer 32

Outlines that if no notice is served, lease is holding over until either party serves notice

Question 33

What is in S.25 of the L&T Act?

Answer 33

Outlines the rules for landlord to serve notice to either grant or oppose a new lease. Notice cannot be served more than 12 or less than 6 months before termination of the tenancy Must include proposed terms of new lease OR grounds for opposing new lease Must be given to tenant by competent landlord.

Question 34

What is a hostile and non hostile notice?

Answer 34

Hostile notice is when a landlord opposes a new lease Non hostile notice is where the landlord is prepared to grant a new lease.

Question 35

What is outlined in section 26 and L&T 1954?

Answer 35

Tenant can serve a notice requesting a new tenancy no more than 12 months and no less than 6 months before the new tenancy begins It must state the tenants proposals for a new lease including proposed rent. Landlord must serve counter notice within 2 months if opposes lease.

Question 36

What is outlined in S.27 of L&T 1954

Answer 36

Tenant must serve minimum 3 months notice if want to leave on lease expiry and also if holding over after lease expiry.

Question 37

What are some of the 7 grounds for refusal of a new lease in Section 30?

Answer 37

1. Breach of repair covenant 2. Persistent delay in paying rent 3. Other substantial breach 4. Provision of suitable alternative accommodation 5. Uneconomic subdivision (compensation) 6. Demolition or reconstruction (compensation) 7. Owner occupation (compensation)

Question 38

What must a landlord do to refuse tenancy for redevelopment?

Answer 38

Must prove firm intention. funding, planning, substantial work and necessity to gain vacant possession

Question 39

What must the terms of the new lease be under L&T 1954?

Answer 39

Must be market rent Ignore previous occupation, goodwill and landlord approved improvements by tenant Court can grant maximum 15 years terms.

Question 40

What happens at lease expiry outside of the Act?

Answer 40

Tenant has no statutory right to remain or seek compensation. Landlord must ensure premises are vacant or new lease in place at expiry of term or a protected tenancy may be created. If new lease not finalised but tenant is to remain, tenancy at will is created. No rent to be collected at end of tenancy to prevent protected new tenancy.

Question 41

What is the procedure to contract outside the act?

Answer 41

Landlord required to serve 'health warning' notice on prospective tenant warning lease will not be protected. Proposed tenant must make a declaration accepting terms

Question 42

What are the 2 types of declaration for leases outside the act?

Answer 42

Simple declaration - if more than 14 days to lease Statutory declaration - if less than 14 days, declaration must be made before an independent solicitor.

Question 43

What are the different ways a lease can be terminated?

Answer 43

Forfeiture Surrender and negotiation Merger Disclaimer Break clause Lease expiry and service of L&T 1954 notices.

Question 44

What is meant be landlord consent (not to be unreasonably withheld or delayed)

Answer 44

Means consent is required but can be refused arbitrarily or unfairly. Need to give reasons for refusal, tenant can seek legal remedies.

Question 45

What are sections 24-28 of L&T 1954?

Answer 45

Provide that a business tenancy will not automatically come to an end at expiry of fixed term. Gives tenant security of tenure. These sections outlines the rules and requirements for renewing or rejecting a new lease.

Question 46

What is an overriding lease?

Answer 46

A new tenancy granted to a former tenant or guarantor who has made a qualifying payment to the landlord to cover a current tenants default.