Property - Commercial rental Flashcards
(12 cards)
Why would rent review clause ask to exclude improvements from market rate assessments?
To prevent LL from penalizing T by allowing them to make improvements then immediately increasing rent
Can a tenant benefit from a rent review if the market rate has decreased?
Yes if they have an upwards/downwards clause in the rent review terms. U
Generally, two types of rent review provisions are used in commercial leases:
i. upwards only where the rent payable will either remain the same or will increase – it can never
decrease, or
ii. upwards or downwards where, depending on market conditions at the date of review, the rent
payable under the lease can either increase or decrease.
Upwards only rent reviews are seen as being onerous on tenants (e.g. where property prices are falling,
such as in a recession, the tenant’s rent will never decrease). The Lease Code suggests that landlords
should consider alternatives to upwards only rent reviews, such as upwards and downwards reviews or
linking rental increases to annual inflation. Such “fairer” provisions are rarely seen
When must a LL notify of a rent review and how long does a tenant have to object to a rent review?
At least six months before the deemed rent review date and 30 days to object
What would a tenant prioritise when negotiating a lease? (4)
- Minimal restrictions
- Easy to assign
- Rent control
- Minimal costs eg repair covenants
What would the LL prioritise when negotiating a lease? (3)
- T has to insure and pay for it
- Repair covenants
- Only used for permitted purposes
- Control over assignment and underleasing.
What are the steps for assigning a lease?
What are the steps for subletting?
Who can LL claim against under an assignment? Under a sublet?
What are the rules around LL consent not being reasonably withheld for a) Sublet b) Assignment
What is an AGA and when would it be used?
What is a full repairing and insuring lease?
What is an alienation clause?
If a lease allows a sublet or assignment with LL consent then this cannot be unreasonably withheld unless it is a post 1996 lease AND the conditions to refusing are specified in the lease. LL must explain refusal in writing. LL of a post-96 lease can protect from assignment by putting conditions in the lease and these do not have to be reasonable and can include a mandatory AGA.
If LL grants consent for alienation LL will ask assignee or sub-tenant to enter into a licence to gain privity of contract between them and the LL which allows contractual remedies if issues arise.
