Landlord and Tenant Flashcards
What is the difference between a lease and a licence
A lease - exclusive possession for a term at a rent
A licence - allows something otherwise illegal
What is the case law regarding lease v licence
Street v Mountford (doesn’t matter what you call the agreement its the content that matters)
Explain s.23 of the Landlord and Tenant Act 1954
This relates to business tenancy. To gain protection from the act there must be a business tenancy. Principles are - is a business -is a tenancy - tenant must occupy the premises - occupy for over 6 months - Must not be an exempted or excluded tenancy -must be a competent landlord
Explain s.24 of the Landlord and Tenant Act 1954
Leases can ‘hold over’, this section describes that leases do not end automatically but only when relevant notices are served
Explain s.25 of the Landlord and Tenant Act 1954
This is the landlords notice to end a tenancy
Explain s.26 of the Landlord and Tenant Act 1954
This the tenants notice to end current tenancy and request a new one
Explain s.27 of the Landlord and Tenant Act 1954
This the tenants notice to end current tenancy
Explain s.28 of the Landlord and Tenant Act 1954
This section details agreeing on a new lease by agreement
Explain s.29 of the Landlord and Tenant Act 1954
Order by court to a new tenancy
Explain s.30 of the Landlord and Tenant Act 1954
Landlords grounds for opposition to renewal
Explain s.37 of the Landlord and Tenant Act 1954
Compensation
Explain s.38 of the Landlord and Tenant Act 1954
Leases contracted out of the 1954 act - prescribed form
List the grounds for opposition under s.30 of the L&T Act 1954
a - Breach of repair
b- persistent delay in paying rent
c - other substantial breach
d - suitable alternative accommodation
e - uneconomic subdivision - Landlord could get more rent from renting out the property as a whole (compensation payable)
f - demolition or redevelopment (compensation payable)
g -Owner wishes to occupy - (compensation payable)
Name the relevant case law related to ground f of s.30 of L&T 54 Act
S Frances v Cavendish Hotel
Landlord must show intention to redevelop, prove funding, planning etc
Which of the grounds under s.30 of the L&T 1954 Act are mandatory
f & g
Which of the grounds under s.30 of the L&T 1954 Act are discretionary and the court will decide whether it is reasonable
a -e
Under ground g what must the Landlord show to have done?
Owned the building for more than 5 years an d prove intention to own or run a business from it.
Tell me about the timescales relating to serving a s.25 notice
Must be no more than 12 months and no less than 6 months before the date of termination specified.
Tell me a few things which is included in a s.25 notice
- name and address of landlord and tenant
- Address of the property
- notice of the date to end the tenancy
- confirmation if a new tenancy is opposed or granted
- Confirmation of date of response required
- Landlords proposal of a new tenancy inc new rent (friendly notice)
- OR Landlords opposition grounds (hostile notice)
- A strong recommendation to seek professional advice.
How must a s.25 notice be presented
In prescribed form and from a competent landlord
If the lease renewal goes to court, what is the maximum term the court can grant.
15 years
Tell me about the timescales relating to serving a s.26 notice
Tenant can serve notice on the landlord requesting a new tenancy no more than 12 months and no less than 6 months after making the request.
What must be included in a s.26 notice
The tenants proposal for a new lease including the rent
Tell me about a counter offer to a s.26
The landlord can counter offer the s.26 notice, this should be served within 2 months.
If acting for landlord in a downward market would you serve a s.25?
You’d consult your client and understand their objectives. If the MR is less than the passing rent the landlord may not want to serve notice and let the tenant hold over.
If acting for landlord in an upward market would you serve a s.25?
Yes as you would most likely be able to achieve a higher rent than the passing rent.
Under s.37 of the L&T Act tell me the levels of compensation payable?
no compensation payable for grounds a-d (tenants breach)
e,f,g - compensation
14 years plus occupation = 2 x rateable value
Less than 14 years occupation = 1 x rateable value
Explain s.40 of the Landlord and Tenant Act 1954
Request for information
What is a s.146 notice?
A notice issued under section 146 of the Law of Property Act 1925 that warns a tenant who is in breach of covenant (other than the covenant to pay rent) of the landlord’s intention to forfeit the lease.
When can a S.146 be served
The notice is given by the landlord to the tenant and requires the tenant to remedy a breach of covenant of the lease. The landlord must serve a section 146 notice on the tenant before it forfeits the lease for a breach of a covenant, unless the breach is non-payment of rent.
What is the Landlord & Tenant Act 1954?
It gives security of tenure for business, must be a business tenancy (s.23)
Under S.24-28 gives the tenant rights to renew
What are the usual things you see in a lease- content, form and structure?
- Landlord and Tenant name
- Guarantor
- Dates such as term commencement, expiry, rent commencement
- Demise
- Lease plan
- Payment terms
- Rent review provisions
- Tenant and Landlord covenants
- Determination
- Services
- Schedules
- Documents annexed to it such as Schedule of Condition
What are the four requirements of a lease?
- Exclusive possession
- Specified term
- Payment of Rent
- Documented by Deed in form of a lease if more than 3 years
What is the relevant case law for lease v licence?
• Street v Mountford, (1985)
What is “Contracting Out”?
When the lease agreement does not have security of tenure and the tenant has no rights to renew at the end of the term.
The tenant must sign a warning notice
S.38A - sets out procedure must be followed for the landlord to contract out
Talk me through the two types of declarations for contracting out lease
Simple declaration - given when the parties have at least 14 day or more prior to committing to the leas
Statutory declaration - given when the parties have less than 14 days committing to the lease (must go through legal)
What is the difference between FRI, IRI and Effective FRI lease?
- FRI - full repairing and insuring
- IRI - Internal repairs and insuring
- Effective FRI - Landlord is responsible for repairs by way of a service charge
What are the levels of compensation under s.30 LTA?
Grounds a) to d) are DISCRETIONARY and the Court will decide whether it is reasonable
Grounds ef) and g) MANDATORY
- 14 years plus occupation – 2 X Rateable Value
- Less than 14 years – 1 x Rateable Value
What is the information required to initiate a rent review or lease renewal?
- Agreed Terms of Engagement
- An understanding of your client’s strategy and objectives
- A copy of the existing lease and any plans attached to the lease or deeds of variation
- Copies of any licences, for example for alterations, improvements, sub-letting or assignment and any deeds of variation to the lease
- Copy of any rent review memorandums
- Contact details for the tenant to arrange an inspection of the property or details of the landlord/agent
- Confirmation of which party will be responsible for services of notices
- A copy of the property management file – to see if there is any historic rental evidence on the file or relevant background information which could assist my negotiations
- Details of any comparable rental evidence relating to similar property held by the client
Terms of Engagement
What must you check prior to issuing terms of engagement?
- I am competent
- There is no personal interest or conflict of interest
- Include confirmation of your complaints handling procedure details
Could you take me through the process/ mechanics you would follow for a rent review?
- Competence
- Conflicts of interest
- Terms of engagement incl fees
- RTL to check notice date and how to serve it
- Clients objectives
- Leases / Plans / LFA/ RR memos/ Prop Man Files
- Inspection & Measurement
- Collect Comparable evidence
- Recommendation report to client
- Negotiations with opposing party
- Agreement
- Instruct lawyers for RR memo (Name of L&T, prop address, date of the lease and rent review, new rent, signed and dated by both parties)
- Raise uplift
What are the assumptions used in a rent review?
- Property available on open market by willing tenant and willing landlord for term of years as stated
- Property is fit and available
- Tenant overseeing its covenants
- Same use as in lease
What are the usual disregards in a rent review?
- Tenant and landlord goodwill
2. Tenants improvements
What is the hypothetical/notional term
It is the term to be be valued. if silent, assume the residue of the term.
What is the hierarchy of evidence – comparable evidence weighting?
H of E– weighting you apply to piece of evidence • OML • Lease Renewals • RR • Independent expert determinations • Arbitrator determinations • Court determinations – L&T 1954 • Hearsay evidence • Sale & leaseback • Surrenders & renewals • Inter-company arrangements
What is a Calderbank letter?
- Genuine offer to settle – good tactic
- 21 days, if they do not accept the offer falls away
- Always says “without prejudice save as to cost” so cannot be used if goes to 3rd party
- Closed letter, cannot be used in court
without prejudice save as to cost meaning?
The party receiving the “without prejudice save as to costs” offer knows that the offer may be put before a judge as evidence at a costs hearing following trial.
Difference between an arbitrator and independent expert?
Arbitrator Acts on evidence provided and arguments submitted Not liable for negligence Outcome is an Award Can Appeal Binding
Independent Expert
Can use own knowledge and expertise to reach decision
Can be liable for damages because of negligence
Outcome is a determination
Can’t appeal
Binding
How does the market determine which form of ADR to use regarding rent reviews?
Markets: Rising - Landlord would want to use an Independent expert, Tenant Arbitrator
Falling - Landlord Arbitrator, Tenant Independent Expert
If you were doing a rent review and the landlord had paid for the tenants fit-out (i.e. through granting a rent free fitting-out period) how would this affect your assumptions at rent review?
Firstly, I would read the lease, and if it was silent in line with the usual disregards, I would ignore that.
What is PACT?
Professional Arbitration on Court Terms (PACT):
- Joint initiative set up by RICS and Law Society as a form of ADR for lease renewals.
- Offers viable alternative to litigation and can used to resolve disputes (independent expert or arbitrator)
- Parties who use PACT can have their dispute resolved by a professional without court involvement.
What section of the 1954 Act determine the new lease terms?
S.32-35
What section 34 of the 1954 Act ?
Determines the rent
During your rent review at claypits what were the key elements you took note of that could impact the value?
- Rent was in an upwards only direction
- The lease did not specify the rent had to be increased in line with RPI
- Time was not of the essessence
At kingswood civic center what advice did you give regarding a section 25?
That the landlord could serve a section 25 terminating their current lease and oppose a new lease
At kingswood civic center what advice did you give regarding a section 25?
That the landlord could serve a section 25 terminating their current lease and oppose a new lease. Advised this can be a lengthy process and negotiation with the tenant would be advised.
What happens if a tenant doesn’t serve a s.26?
The lease holds over remaining on the same terms. Landlord can serve a s.25 terminating lease.
How would you advise your client if you backdated the rent but tenant could not afford to pay?
- Could offer a stepped rent
- Some sort of payment plan
Name some time of the essence case law?
- United scientific holding v Burnley borough council
- Cheapside development case
