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APC > Landlord and Tenant L3 > Flashcards

Landlord and Tenant L3 Flashcards

1
Q

What is the basic difference between a lease renewal and a rent review?

A

A lease renewal is a statutory procedure laid down by the Landlord and Tenant Act 1954 Part II (as amended)

A rent review is a contractual procedure contained within a lease

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2
Q

To what tenancies does the 1954 Act apply?

A

Section 23: Tenancies to which the Act applies:
- Premises must be occupied by T for business purposes
- Business includes trade, profession or employment

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3
Q

When was the Landlord and Tenant Act 1954, Part II last amended?

A

The Landlord and Tenant Act 1954, Part II (as amended)
- Amendments came into effect on 1st June 2004.

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4
Q

Name the tenancies to which the 1954 Act does not apply.

A

Section 43: Tenancies to which the Act does not apply:
- Agricultural holdings
- Mining leases
- Residential tenancies
- Tenancies granted as a condition of employment
- Tenancies not exceeding 6 months unless; there is a provision for extension or, T has been in occupation for more than 12 months

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5
Q

What is a Section 25 Notice?

A

Section 25 is a Landlord’s notice of termination

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6
Q

When can a landlord serve a Section 25 Notice?

A

This must be served between 12 and 6 months prior to:
(a) the contractual end of the tenancy, or,
(b) the date specified in the notice i.e.
- if a tenancy has less than 6 months to run
- T is holding over under Section 24
- the tenancy is on a periodic basis
A minimum of 6 months but not more that than 12 months’ notice must be given

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7
Q

What must a landlord’s Section 25 Notice contain?

A

If L does not oppose a new tenancy (sometimes referred to as a friendly notice) the Notice must state
- the property comprised
- the rent
- the other terms
A health warning would explain to T
- that Ls proposals are for the purposes of negotiation
If L opposes a new tenancy (sometimes referred to as a hostile notice) the Notice must state
- the ground(s) under Section 30(1) upon which he would oppose Ts application for a new tenancy.

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8
Q

What advice would you give to a Landlord client in respect of a lease renewal where a property is significantly over-rented?

A

It would depends on the clients intentions,

Risky - Do nothing at all- this would mean that the landlord would continue to gain rent at the overrented value but would be risky as the tenant could serve a section 27 notice providing three month notice or hand keys back upon expiry. If the property is overrented then this may indicate a depressed market with a high void risk which could result in the landlord incurring additional costs (rates, utilities etc).

Risk averse - The landlord could serve a S25 notice to grant a tenancy which will maximise income over a fixed period. This would mean that the unit would be let at a lower rent but it would be let to a tenant with higher covenant strength resulting in a better investment.

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9
Q

When is the best time to serve the Section 25 notice; 12 months or 6 months before lease expiry?

A

Depends on client intentions:

Notice at 12 months
- you have time on your hands, 25 notice - looking to vacate and then will get them to make a decision and minimise the void.
- Disadvantage = unsure rent in the next 12 months and negotiation with uncertainty.

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10
Q

Why would a Landlord give 12 months’ notice when he could give 6 months’?

A
  • Minimise risk of void property
  • If the property is overrented and you can maximise the time with that income
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11
Q

What action should a landlord take if he/she requires possession of a property at the end of a lease?

A

Object to any new tenancy under section 30 of the landlord & tenant 1954 act

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12
Q

What can Landlord do if he cannot get a response from T to his friendly Section 25 Notice?

A

Send them a letter saying that if they have not replied within x date we will apply to the courts to determine a new lease and you can pay all of the costs.

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13
Q

What advice would you give to a tenant when a landlord’s Section 25 Notice is due to expire in two weeks’ times and an agreement for a new lease has not yet been agreed?

A
  • Request time extension from landlord
  • If not granted, apply to the court before the end of the notice. (if not completed by the end of the notice, lose security of tenure)
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14
Q

Name the grounds under Section 30(1) of the Landlord and Tenant Act 1954 under which a landlord can obtain possession.

A
  1. Failed to undertake repairs
    2.Tenant has consistently delayed paying rent
  2. Tenant is in substantial breach of other continent
  3. LL offers suitable alternative accommodation
  4. Tenancy created by sub let and building let as whole would produce higher value than separate lettings
    6.LL wants to demolish/refub and cannot do so without possession.
  5. LL occupy for own purpose
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15
Q

A lease of a shop property is due to expire in 12 months’ time. You are instructed for the first time by the landlord to negotiate a new lease with the tenant. Explain how you would deal with this instruction.

A
  • Ask for the lease
  • Agree terms of engagement
  • Inspect the property, are there any breaches of covenant = no
  • Agree to serve section 25
  • Conduct the necessary negotiations
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16
Q

In what circumstances is a tenant entitled to compensation when a landlord successfully opposes a new lease under the 1954 Act?

A

Under no fault grounds of section 30(1)

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17
Q

How is tenant’s compensation assessed under the 1954 Act?

A

Section 37:
2x rent value if greater than 14 years
1x rent value if less than 14 years

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18
Q

Explain the power that the Court has in ordering a new lease?

A

Court under section 33 can grant a lease (no longer than 15 years) and determine: 1. Property comprised - S32
2. Length of lease - S33
3. Rent - S34
4. other terms - S35
5. and interim Rent - S24A

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19
Q

What do you understand a Section 34 rent to be?

A

the rent that a property may reasonably be expected to let at in the open market by willing lessor and lessee DISREGARDING:
1.previous occupation
2.Any goodwill
3. improvements carried out by Tenant
4. Any licence to sell intoxicating liquor if the licence belongs to T

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20
Q

What do you understand an Interim Rent to be?

A

This would be the market rent at the expiry of the lease term.

Both parties would agree the market rent.

Either landlord or tenant can apply to court for an interim rent. (S24A)

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21
Q

How is the Interim Rent assessed?

A

The rent payable under the new lease unless either party can show otherwise

Refer to Section 34 of the Act – market rent or higher

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22
Q

In what circumstances would you recommend a tenant to serve a Section 26 Notice?

A

Property is over rented or tenant wants security of fixed terms

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23
Q

Explain when tenant’s improvements are disregarded at lease renewal.

A

Improvements are to be disregarded if: - Carried out by tenant during the old tenancy
- over 21 year old
- specified in the lease obligations

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24
Q

Explain what action a tenant should take if there are 6 months of the lease remaining and he/she wants to vacate at expiry. The landlord has not served a Section 25 Notice.

A

Serve a section 27 notice at least 3 months in advance or just hand the keys back on expiry

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25
Q

What are the key elements of a rent review clause?

A
  • machinery (trigger notices)
  • basis of valuation
  • means for settling disputes
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26
Q

What is a trigger notice?

A

notice that triggers a predetermined sequence of events implementing the rent review.

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27
Q

What do you understand by the expression time of the essence?

A

A rent review has certain time constraints in which to be actioned which is specified in the rent review clause.

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28
Q

What are the two landmark cases in respect of time of the essence?

A

United Scientific Holdings Ltd v Burnley Borough Council [1977]
Cheapside Land & Development Co Ltd v Messels Services Ltd [1977]

29
Q

In what circumstances is it likely that time is of the essence?

A
  • when the lease says so
  • the lease makes it clear that time limits are strict
  • There are deeming provisions
  • when Tenant serves notice making time of the essence
30
Q

What are deeming provisions?

A

Deeming Provisions are where the lease expressly states:
➢ L to give notice proposing a new rent
➢ T to serve counter-notice with a counter proposal within a stated period of time
➢ If T fails to serve counter-notice in time, T is deemed to have agreed Ls rent
➢ L could be deemed to accept Ts counter proposal if lease states so

31
Q

What lease terms affect the rent at review?

A
  • Rent review clause
  • Definition of rent
  • Assumptions
  • Disregards
  • RR Frequency
  • lease terms (insurance, repair, use, alienation, in/outside act)
32
Q

What assumptions are usually made in determining the rent at review?

A

1.Property is fit for immediate occupation
2.The market rent will be that payable after the expiry of any rent free period for T’ fit out works
3. No work has been carried out by T to reduce rental value
4.Tenant has complied with its covenants of the existing lease
5: If the property has been destroyed or damaged it has been reinstated

33
Q

What is the hypothetical term?

A

The hypothetical term can be:
- The unexpired term
- A stated term
- The original term.

34
Q

Is the hypothetical term more advantageous to the landlord or to the tenant?

A

It depends upon the length of the hypothetical term
- Short = landlord
- Long = tenant

35
Q

What are the usual disregards?

A

It is standard to state that in assessing the market rent
➢ those matters in Section 34 of the Landlord and Tenant Act 1954 should be disregarded
(i) Ts previous occupation
(ii) any goodwill
(iii) certain improvements
(iv) any licence to sell intoxicating liquor if it appears that the licence belongs to T
Commonly referred to as the usual disregards

36
Q

Where do the usual disregards originate from?

A

1954 act section 34

37
Q

How may a rent review be resolved if a landlord and tenant cannot reach agreement?

A

By what ever the lease says but usually going to independent 3rd party through arbitration or intendant expert

38
Q

What are the differences between an expert and an arbitrator?

A
  1. Arbitrator acts on extremes of evidence between parties, but expert has a duty of investigation
  2. Arbitrator cannot decide without receiving evidence, but expert bases on own knowledge and investigations
  3. Regulated by Arbitration Act 1996, but expert is governed by RICS guidelines
  4. Arbitrator not liable for negligence, but expert can be liable for damages
  5. Fees can be determined by the court, expert there is no procedure
39
Q

What is the purpose of a Calderbank letter / offer?

A
  • To avoid costs (litigation)
  • To try to allow parties to settle on specified terms
40
Q

What must a Calderbank letter / offer contain?

A

For a Calderbank offer to be effective it must contain
(a) an unconditional written offer to settle the rent review
(b) a reasonable proposal regarding costs incurred up the date of the offer (usual to propose that each party bears their own costs plus 50% of any arbitrator’s fees)
(c) a time within which to the other party may accept the offer (usually 21 days)
(d) a statement that it is made without prejudice save as to costs

41
Q

What is the difference between a lease and a licence?

A

A lease can be fixed term or periodic
- gives T an exclusive right of possession
- all third parties including L can be excluded
- rent or periodic payment is made in return for possession
A licence gives someone
- permission to do something on the owner’s land that would otherwise constitute a trespass e.g. grazing of horses

42
Q

What is the leading case in the matter of “lease or licence?”

A

Street v Mountford (1985):
- considered by many to be the “leading case” in “lease or licence?”
- a licence to occupy a furnished room in a house
- the agreement conferred exclusive possession at a rent
- the owner provided neither attendance nor services
- the House of Lords ruled that this agreement constituted a tenancy

43
Q

In what circumstances have you granted (or would consider granting) a licence?

A

Erecting of an advertising board
Car parking space
To hire out an event hall
Free standing kiosk in a shopping centre
Burger vans
Ice-creams vans
Market stalls

44
Q

You are managing a property that is going to be redeveloped at some unknown date in the future. What letting options do you have to generate some rental income without giving the tenant security of tenure under the 1954 Act?

A

Grant a lease for a term of less than 6 months (Section 43)
If a tenancy greater than 6 months, agree to contract out of sections 24-28 of 1954 Act (Section 38)

45
Q

A tenant has entered into a full repairing and insuring lease of a property in disrepair. The landlord now requires the tenant to remedy this disrepair. What advice would you give to this tenant?

A
  1. Check the wording of the repair in the lease.
  2. Confirm to the tenant that they are responsible to keep and put the property in repair.
  3. The standard of repair would depend on the age and surrounding areas. It would be unreasonable for the landlord to ask the tenant to resurface the car park if the surrounding units are in the same standard.
  4. Advise the tenant to seek their own independent advice if I am acting on behalf of the landlord.
46
Q

What advice would you give to a tenant wanting to take a full repairing and insuring lease of a property in disrepair but suiting his business.

A
  1. The tenant could look to seek a rent incentive to undertake the works
  2. Ask the landlord to put in repair prior to occupation
  3. Limit repairs by schedule of condition
47
Q

What action can a landlord take when a tenant is in breach of repairing covenant?

A

L must give notice under Section 146 of the Law of Property Act 1925 for forfeiture and claim for damages
- specifying the breach
- requiring T to remedy the breach (if it is capable of remedy)
Ls solicitor would usually serve the Section 146 notice
- its form is of paramount importance
If the lease allows it the landlord can enter the property and undertake the works themselves and make a claim for damages. It becomes a debt as per Jervis v Harris.
or can get an injunction from the court to get the tenant to do the works

48
Q

What action can a tenant take when a landlord is in breach of repairing covenant?

A
  1. Go to court to get an injunction
  2. If Landlord does not respond to notice/court, Tenant can complete the works themselves and claim set-off against the rent
49
Q

What does the Jervis v Harris case mean to you?

A

Exercise Right of Entry to Repair:
Many leases have this provision
Jervis v Harris [1996]
- recovery of cost of works being by way of claim for a debt rather than damages
- avoids Leasehold Property Repairs Act 1938
- avoids Section 18(1) of Landlord and Tenant Act 1927

50
Q

How are damages assessed when a tenant is in breach of repairing covenant?

A

Damages:
Landlord and Tenant Act 1927 Section 18(1)
- damages limited to the diminution in value to Ls reversion caused by the Ts breach

51
Q

How are damages assessed when a landlord is in breach of repairing covenant?

A

Damages:
The difference in value to T between
- the premises in their condition at the time of assessment and
- their value if L had fulfilled his obligations on receiving notice of disrepair

52
Q

Explain the provisions of Section 18(1) of the Landlord and Tenant Act 1927.

A

Landlord and Tenant Act 1927 Section 18(1)
- damages limited to the diminution in value to Ls reversion caused by the Ts breach

53
Q

Explain difference between a Schedule of Condition and a Schedule of Dilapidations.

A

A Schedule of Condition is a statement describing the physical state of a building
Schedule of Dilapidations are a record of alleged breaches of repairing covenant and are usually prepared by Ls surveyor

54
Q

Explain the difference between an Interim and a Terminal Schedule of Dilapidations.

A

Interim Schedule - A Schedule of Dilapidations served where there are more than three years of the lease left to run
Terminal or Final Schedule - A Schedule of Dilapidations served in the last three years of the term. Should be served up 56 days post expiry
The Leasehold Property (Repairs) Act 1938

55
Q

What is a Scott Schedule?

A

If the matter is to go to Court, the Schedule of Dilapidations should be transferred to a Scott Schedule

56
Q

What is the difference between an alteration and an improvement?

A

An alteration is making physical changes to a property
An improvement is an alteration that adds value

57
Q

Your tenant client wishes to extend an industrial property. Explain the factors that need to be considered and the action that needs to be taken.

A
  1. Read the lease and check the alterations clause (if permits)
  2. Apply for improvements to be registered under The Landlord and Tenant Act 1927 to ensure compensation is paid for improvements.
  3. Landlord has 3 months to reject / do the works themselves
  4. Tenant should consider unexpired term (surrender) , the wording of the rent review clause (will improvement be disregarded?), Section 34 LTA 1954 (improvements are to be disregarded), Landlord’s intentions (redevelopment)
58
Q

You are managing a property for your landlord client and have received a request from a tenant to carry our improvements. The tenant has requested that improvements are registered under the 1927 Act. What advice would you give to your client?

A

Landlord can do the works and rentalise the improvements if he does the works himself
Ensure works do not diminish the value of the property
Check whether landlords consent is required
The tenant can register the improvement for compensation. The landlord may believe that the works does not add value to the site

59
Q

How is compensation for tenant’s improvements calculated?

A

The amount of compensation shall not exceed the smaller of:
- the net addition to the value of the property as a whole which is a direct result of the improvement, OR
- the reasonable cost of carrying out the improvement at the end of the lease less the cost of putting the improvement into a reasonable state of repair

60
Q

What lease terms are implied under Section 19 of the Landlord and Tenant Act 1927?

A

Section 19(1)(a) of the Landlord and Tenant Act 1927 implies that where consent can be given by L
- such consent cannot be unreasonably withheld

61
Q

What legislation needs to be considered in an assignment of a lease?

A
  • Section 19 of L&T act 1927 (Consent not unreasonably withheld)
  • L&T Act 1988 (Consent in a reasonable timeframe)
  • L&T Covenants Act 1995 (LL may require AGA)
62
Q

In what circumstances could no restrictions on assignment and subletting be appropriate?

A

when trying to let particularly large properties

63
Q

What are reasonable grounds for refusing consent to assign?

A
  • Covenant strength of assignee
  • Character of proposed assignee
  • effect on rental or capital values
64
Q

What is the usual amount of an assignee’s business profit that a landlord will look for before giving consent to assign?

A

That T annual profits exceed 3x annual rent.

Footware Corporation Ltd vs Amplight Properties ltd

65
Q

What do you understand by the expression authorised guarantee agreement or AGA?

A

Landlord and Tenant (Covenants) Act 1995

Section 16 entitles L to require an assignor to guarantee the performance of the covenants by the assignee T
- called ‘Authorised Guarantee Agreements” (AGA’s)
- the assignor is released upon lease expiry or a further assignment

66
Q

In what circumstances is it appropriate to have restrictive user clauses in leases?

A

provides a balanced T mix
- prevents too much competition between certain trades which could result in voids
- certain trades may not be as profitable as others and are only able to pay a lower rent
- When it affects value

67
Q

What do you understand a conditional break clause to be?

A

An option for the tenant to terminate the lease on the break date so long as the conditions of the break are satisfied.

If conditions are not met then the break is ineffective

68
Q

What conditions are usually attached to break clauses?

A
  • Arrears are cleared
  • Not in breach of the repairing obligations
  • Serves notice
    (Tenant must have complied with all the terms in the lease upon serving the notice and expiry)
69
Q

Can you give two examples of situations where is was held in Court that a break notice was invalid / ineffective?

A

Osborne Assets v Brittania Life Ltd = 3 coats of paint every 5 years

Batts Cables Plc v Spencer Business Park Ltd = sent the break notice to the wrong address and name

APC (15 decks)

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