Grant Of A Lease Flashcards
What are the different types of lease?
Leases can be long-term (99 or 999 years) with low rents, assured shorthold tenancies (6 or 12 months) at market rent, and commercial leases (up to 15 years) for various uses.
What are the advantages of a lease from a tenant’s perspective?
Advantages include not needing to spend capital, flexibility to leave at the end of the lease, and access to premises only available as leasehold.
Who are commercial landlords?
Commercial landlords include private investors and institutional investors like pension funds and life assurance companies.
What is the concern of institutional investors regarding leases?
Institutional investors prefer full repairing and insuring (FRI) leases and are concerned about the tenant’s covenant strength.
What is asset management in commercial property?
Asset management involves ongoing legal work for landlords, including granting leases, considering tenant applications, and advising on lease breaches.
What is the definition of a lease according to Woodfall’s Law?
A lease is defined as ‘the grant of a right to the exclusive possession of land for a determinate term less than that which the grantor has himself in the land.’
What is exclusive possession in a lease?
Exclusive possession allows the tenant to exclude others, including the landlord, from the premises, except for specific rights of entry.
What are the formalities for creating a legal lease?
A lease over 3 years must be created by deed; a lease of 3 years or under can be created in writing or orally.
What is the reversion in a lease?
The reversion is the landlord’s interest in the property that returns to them at the end of the lease term.
What are the landlord’s objectives in lease negotiations?
Landlords aim to ensure the premises are insured, kept in repair, used for permitted purposes, control occupancy, and increase rent.
What are the tenant’s objectives in lease negotiations?
Tenants seek to use the premises for intended purposes, have a satisfactory lease term, and avoid onerous restrictions or steep rent increases.
What is the significance of a break clause in a lease?
A break clause allows either party to end the lease early, providing flexibility for tenants uncertain about long-term commitments.
What is the term commencement date in a lease?
The term commencement date is when the lease term starts, which may be the date of completion or earlier/later than the lease date.
How is the expiry of a lease term calculated?
The expiry depends on the lease definition; it typically expires on the day before the anniversary of the commencement date.
What are the two categories of rent in leases?
Leases are typically either short leases with market rent or long leases with ground rent.
What is the typical duration of commercial lease terms?
Typical commercial lease terms are 3, 5, 10, or 15 years, with shorter leases gaining popularity for flexibility.
What are the two categories of leases?
Most leases fall into either a short lease with a market rent or a long lease with a ground rent.
What is a commercial lease typically like?
Commercial leases are usually short leases (up to 15 or 20 years) with a market rent, and a premium is not usually charged.
What is an example of a commercial lease rent?
A commercial tenant may pay a rent of £20,000 per annum, but will not pay a premium to the landlord on the grant of the lease.
What are residential leases typically like?
Residential leases may be long leases (say 99 or 999 years) and often require a premium payment to the landlord.
What is a ground rent?
Ground rent is a low sum, often around £150 per annum, imposed on long residential leases.
What changes occurred regarding ground rents after 30 June 2022?
Most new long residential leases have been restricted to imposing a peppercorn rent only.
How is rent expressed in a commercial FRI lease?
The rent is usually expressed as a yearly figure (e.g., £80,000 per annum) but is payable quarterly.
What are the traditional quarter days for rent payment?
The traditional quarter days are 25 December to 24 March, 25 March to 23 June, 24 June to 28 September, and 29 September to 24 December.
When is rent usually due in a commercial FRI lease?
Rent is usually due in advance on the quarter day, for example, on 25 March for the period up to and including 23 June.
What happens if the lease is silent on rent payment timing?
If the lease is silent, the rent is payable in arrears, which is more common in residential long leases.
What are the types of rent review?
Types of rent review include stepped rent, index-linked rent, turnover rent, and open market rent review.
What is a stepped rent?
Stepped rent may set out a yearly rent of £25,000 for the first two years, then £30,000 for the next two years, and so on.