Landlord and Tenant Flashcards
What is security of tenure?
Security of tenure is the tenants statutory right under the 1954 act to remain in their business premises
Do you know any case law that backs up modernising lease terms?
O’May v City of London Real Property Company
1. The landlord must have a valid reason on estate management grounds
2. Change proposed must be capable of being compensated by a change in rent
3. Change must not materially adversely affect the tenants security of tenure
4. It must be reasonable
Talk me through the Section 30 grounds
a. A breach of a repair covenant
b. Persistent late payment of rent
c. Any other substantial breach
d. Suitable alternative accommodation
e. Un-economic subdivision
f. LL plans to redevelop
g. LL plans to occupy
How do you calculate compensation?
Over 14 years occupation is 2 x ratable value
Under 14 years occupation is 1 x ratable value
What is an Easement?
An easement is a permanent right over a piece of land, this can be registered with th land registry and is paid for with a capital payment
What is a Wayleave?
A temporary right over a piece of land and is payable through an annual payment. It is personal to the company and cannot be automatically transferred.
What the timings of a S.27 notice?
A tenant doe not have to serve a notice period if the lease has not expired.
If the lease has expired, the tenant must serve 3 months notice
How long does a LL have to respond to a S.26 notice?
If the landlord opposes, a counter notice must be served within 2 months
What does a S 25 notice include?
Name and address of LL & T
Address of the property
Conformation if the notice is hostile or non-hostile
Hostile - Date of termination, grounds for opposition
Non-hostile - Date of the propose new lease, new rent
Both - A strong recommendation to seek professional advice
What is a section 37 notice?
Compensation provisions
Are you aware of any case law for ground F?
S Franses V The Cavendish Hotel 2-17
The supreme court held that a landlord must prove a firm and settles intention to carry out the works.
What is the difference between a lease and a licence?
Lease - creates an interest in land and provide the tenant with exclusive occupation. There is a set term and an annual rent is payable. The tenant is able to assign the lease.
License - does not create an interest in land and the licencee does not have exclusive possession. There is no set term and either party can usually bring the license to an end at any time.
What constitutes a lease?
Exclusive possession
Payment o rent
Duration of a specified term
If more than 3 years, it must be in writing, signed and registered as a deed
Any case law for lease and license?
Street V Mountford 1985
What is time of the essence?
A prescribed time frame for exercising a lease right
Any case law for time of the essence?
United Scientific Holdings V Burnley Council 1977
What is a calderbank letter?
Used to achieve an early resolution of a dispute and prevent costs escalating. It is a letter that sets out all the terms to settle the dispute and a time limit for the other party to accept the offer
How would you label a caldrbank letter?
Without prejudice and subject to cots
Is a caulderbank letter binding?
Yes, if agreed by the other party
Can you appeal an arbitrator?
There is no right of appeal.
However, an appeal could be made to the high court within 28 days for:
A challenge to the tribunal jurisdiction
A point of law
Serious irregularity
What section of the act is contracting out?
Section 38A
What are the 4 principles to modernise a lease?
- There must be a genuine estate management reason
- Change must be capable of being compensated through the rent
- Change must not matrially impact the tenants security of tenure
- It must be reasonable
What are the options if you can’t agree terms for a lease renewal?
Third party determination
County Court
Professional Arbitration on Court Terms (PACT)
- Out of court PACT should only be used when no court application has been made by
either party
- Faster, court is avoided, decision by a surveyor not judge
Can a tenant withdraw a section 26 notice?
Yes, provided the agreement has not be signed. Compensations may b due depending on the status of negotiations
Can a LL serve a 25 after a T served a 26?
No, they are mutually exclusive
How would you serve a notice?
As per the instruction in the lease
Usually by recorded delivery in the post and via email
What are the benefits of staying holding over?
Saves on professional fees
Tenant can establish themselves in the location
In a rising market, T may be able to secure a lower rent for a longer period of time
In a declining market, LL may b able to secure a higher rent for a longer period of time
How would you contract out of the act?
S.38A
Simple declaration - used if there is more than 14 days to the start of the new lease
Statutory declaration - used if there is less than 14 days, must be signed in front of an independent solicitor
Disregards and assumptions for a rent review?
Assumptions - Open-market letting, willing lessor and willing lessee, the property can be used as described in the lease, property is fit and available for immediate occupation
Disregards - Any good will attached to the property and to the tenant, any tenant alterations
Why would you contract out of the act?
- A requirement of the head lease to grant any sub-letting out of the act
- The landlord will want to re-occupy
- The landlord wishes to redevelop at the lease end
- The rent may be lower
- The landlord wants more flexibility
What lease terms impact value?
Term
Rent
Rent Review
Breaks
Alienation
54 Act
Are you aware of the government plans to stop publishing the RPI?
The Government has announced that RPI will be replaced by CPI (consumer price index), being phased out by 2030
Oxford RR
How did you calculate RPI?
How often is RPI updated?
Monthly
What is included in a RR memorandum?
Name of landlord and tenant
Address of the property
Date of lease and rent review
Conformation of new agreed rent
Signed and dated by both parties
What does ‘not to be unreasonably witheld or delayed’ mean?
There is a statutory duty on the landlord to deal with consents, failure to do so can result in claims for damages - Landlord and Tenant Act 1988
What do dispute resolution procedures involve?
Negotiation
Mediation
Adjudicative process (ADR / litigation)
What act covers AGA?
Landlord and Tenant (Covenants) Act 1995
What is an AGA?
Authorised Guarantee Agreement
It gives landlords more scope for setting conditions regarding the approval of an assignee
What are the advantages to the LL for having a lease inside the LTA 1954 Act?
Tenant may pay a premium
Possible stronger investment value
How do you analyse net effective rents?
Straight line basis until the end of the lease or until the next review / lease event.
Normally a 3 month fitting out period is deducted from the rent free period before devaluation
What is A/10?
Zone A divide by 10
Often used for basements / first floor depending on comps
What adjustments for a return frontage (Zoning)?
Usually 10% uplift - depending on comparables
Are you aware of any changes to the LTA 1954 Act?
The Law commission announced in March 2023 the intention to review the act.
The review is expected to cover a variety of topics, including security of tenure, interim rents and the process of serving notices. The aim is to publish a consultation paper by Dec 2023
What is the case law for modernising a lease?
O’May v City of London Real Property Company
What is an advocate?
An advocate represents their client in court
Need to only disclose all matters which they wish to do so
Must act with integrity
Duty to the client
What is an expert witness?
The evidence must be impartial and objective
Duty is to the court (overrides any obligations to the client
Evidence must be the independent work of the surveyor
Surveyor must believe the facts and that their opinions are correct
What is an Arbitrator?
An arbitrator acts on the evidence provided and arguments submitted
There is limited right of appeal
Not liable for negligence
Acts in accordance with the Arbitration Act 1996
Outcome is called an award
What is an independent expert?
Has a duty of investigation to discover relevant facts and comparables not just consideration to evidence provided.
No right of appeal, in limited circumstances the court may set it aside if the decision is based on misinturpritation
Can be liable for negligence claims
No relevant legislation
Outcome called a determination
When would a LL want an arbitrator or independent expert?
In a falling market a LL would want an arbitrator
In a rising market a LL would want an independent expert
What is a section 40 notice?
A request for information from either party.
Either part can serve in the last 2 years of the tenancy to request details of the name and registered address of the other party.
Failure to do so (within 1 month) is a breach of statutory duty
Why would you contract out of the 54 act?
Flexibility
LL wants to reoccupy at the end of the tenancy
LL wants to redevelop at the end of the tenancy
Rent may be lower
A requirement of the head lease to grant any subletting outside the act
When is the ratable value for compensation taken?
The date the hostile S 25 notice is served
What is the case law for lease and licence?
Street v Mountford
What is the difference between a RR memorandum and side letter?
Side letter supplements something in the lease
RR Memorandum records an uplift in rent
What are the benefits of PACT over court?
Decision made by surveyor not judge
Saves on costs
Faster
Greater flexibility and control
RR OXFORD
How would it impact on rent if there was a shorter hypothetical lease?
In the rent calculations, I included a 2.5% discount to the rent to account for the 10 year hypothetical lease term as this is not the market norm. If there was a shorter hypothetical lease term say 5 years which is line with the market norm this discount would not have been applied.
RR OXFORD
If the matter was heading to third party, how would you protect your clients costs?
I would utilise a caulderbank letter and mark it as a without prejudice, save as to costs
LR NEWMARKET
What were the risks and benefits?
The risks relate to the tenant being able to serve a section 26 notice at any time to renew the lease at a lower rent. The tenant could also serve a section 27 notice to vacate which would leave the premises vacant in a tricky market. If the client was looking to sell the property, this would have a negative impact on the investment value.
The benefits are that the client can secure a higher rental income for a longer period of time. They also save on costs associated with a lease renewal.
RR OXFORD
How would you zone the property?
I printed of the floor plans and adopted 6.1m depth zones from the frontage. I halved back for each zone and applied a rate of A/20 for the staff and storage areas on the first floor.
RR OXFORD
What do you mean by RPI annual equivalent?
For this review the RPI was worked out for each year from the start of the term to the rent review date, rather than looking at the average equivalent of this time period.
RR OXFORD
What would you find in a RR memo?
Name of the LL and T
Name and address of the property
Date of lease and RR
New agreed rent
Signed and dated by both parties
LR SWINDON
How did you know it was inside the act?
I read the lease and identified that there was no declaration to exclude the lease from the 1954 act
LR SWINDON
Why both, why not just NIA?
I measured to both measurement basis because it is mandatory under the RICS property measurement professional statement, 2018 to measure to IPMS 3 for office properties. However, this has not yet been adopted by the market and as such NIA measurements are required to compare on a like-for-like basis.
