Landlord and Tenant Flashcards
Basic difference between lease renewal and rent review?
Lease Renewal: A statutory process under the Landlord & Tenant Act 1954.
Rent Review: A contractual process contained within a lease.
Contracted Out Lease? No statutory renewal rights!
To what tenancies does the 1954 Act apply?
Tenancies occupied for business purposes
When was the LL&T Act 1954 last amended?
1st June 2004
Name the tenancies to which the 1954 Act does not apply
Agricultural holdings
Mining leases
Residential tenancies
Tenancies granted as a condition of employment
Short tenancies (≤6 months) (Unless extendable or occupied >12 months)
Tell me about your understanding of the Landlord and Tenant (Covenants) Act 1954
An act that provides business tenancies with security of tenure
What is a s25 notice?
Landlord notice to terminate or renew a lease at expiry.
Cannot terminate before expiry date.
Can offer a new lease (friendly) or oppose renewal (hostile, under s30).
When can a LL serve a s25 notice?
Between 6-12 months before lease expiry.
Notice must be at least 6 months.
What must a LL s25 notice contain?
If L does not oppose a new tenancy (sometimes referred to as a friendly notice) the Notice must state:
- Name and address of landlord and tenant
➢ 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 landlord opposes new tenancy:
The ground(s) under section 30(1) upon which he would opposed the tenants application for a new tenancy
What advice would you give a LL in respect of a lease renewal where a property is significantly over rented
Option 1: Do nothing, keep rent, tenant holds over (risk: T can leave with 3 months’ notice).
Option 2: Serve s25 notice & agree a new lease at lower rent (lower rent = higher property value).
Key risk: Tenant may apply to court for rent adjustment.
When is the best time to serve the s25 notice: 12months or 6months before lease expiry?
12 months before: More time, tenant decides sooner.
6 months before: Rent negotiations closer to market conditions.
Risk of waiting: Tenant may delay response & leave last minute.
Why would a LL give 12 months’ notice when he could give 6 months?
If over-rented, get 6 extra months at higher rent.
More time to re-let if tenant is likely to leave.
What action should LL take if require possession of a property at end of lease?
Serve s25 notice & object to renewal under s30 grounds.
What can a LL do if cannot get response from T to friendly s25 notice?
LL can write demanding a response within 14 days.
If no reply, LL can apply to court (T liable for costs).
Court likely to push for mediation.
Advice to a Tenant if s25 Notice Expires in 2 Weeks & No Lease Agreed
Ask LL for a time extension to apply to court.
LL does not have to agree.
If no extension, T must apply to court for a new lease.
If s25 expires & no action taken → Tenant loses security of tenure.
s30(1) Grounds for LL to Obtain Possession
1️⃣ T failed to repair
2️⃣ T persistently delayed rent payments
3️⃣ T breached another covenant
4️⃣ LL offers suitable alternative accommodation
5️⃣ LL can get higher rent by letting whole building instead of sub-tenancies
6️⃣ LL intends to demolish or redevelop
7️⃣ LL intends to occupy (must have owned for 5+ years)
(Last 3 are “no-fault” grounds, triggering tenant compensation.)
Steps to Negotiate a Shop Lease Renewal (12 months left)
In the following order
Need copy of lease
agree terms of engagement - only act for client after that
Inspect the property to a) measure, b) carry out rental valuation, c) see if there any breaches of tenants covenants (EG unauthorised alterations, breach of user, unathorised sub-let to another tenant, failure to repair)
then serve s25 notice and state the tenant can stay
When Does T Get Compensation if LL Opposes Lease Renewal?
💰 Only if LL relies solely on no-fault grounds (e, f, or g).
💰 If combined with other grounds (a, b, or c) → No compensation!
How is Tenant Compensation Assessed?
🏢 Occupation <14 years: 1x Rateable Value
🏢 Occupation ≥14 years: 2x Rateable Value
What can a court decide on in a lease renewal, what are their powers?
🏛 Court can decide:
s32: Property included in lease
s33: Term
s34: Rent
s35: Other terms
s24a: Interim rent
What do you understand s34 rent to be?
S34 - rent disregarding the tenants previous occupation, any good will, certain improvements and any licence to sell intoxicating liquor if the licence belongs to the tenant
How is Interim Rent Assessed?
The determined market rent from the start of the interim period.
How is Interim Rent Assessed?
📆 Based on market rent at the start of the interim period.
📑 Default: Same rent as new lease unless reasons to vary.
📝 On the old lease terms.
What circumstances should a T Serve a s26 Notice?
📉 If current rent is above market → Secure new lease at lower rent.
📜 Even if rent rises, ensures T has a lease (avoiding relocation risks).
When Are Tenant’s Improvements Disregarded at Lease Renewal?
🔧 If done within last 21 years or during old lease
🔧 Improvements must add value (not just any alteration)
🔧 NOT disregarded if it was a lease obligation
Tenant Wants to Vacate with 6 Months Left & No s25 Notice from LL
🚪 Serve s27 Notice
📢 They will ideally give minimum 3 months’ notice if they are handing keys back.
⏳ If still in occupation after lease expiry → Tenant must give 3 months’ notice
Key Elements of a Rent Review Clause
🔹 How rent review is triggered (LL, T, or both)
🔹 Dispute resolution (arbitrator or independent expert)
🔹 Basis of valuation (e.g., open market rent)
What is a Trigger Notice?
⚡ A notice that initiates a process (e.g., rent review).
What is ‘Time of the Essence’?
⏳ If time is of the essence, time scales in the lease must be strictly adhered to.
📜 Generally, not of the essence unless lease says so.
When is Time Likely to be of the Essence?
✅ Lease explicitly states it
✅ T serves notice making it so (Barclays Bank case)
✅ If linked to other clauses (e.g., break clause)
✅ If lease contains deeming provisions
What are Deeming Provisions?
When stated in the lease that the Landlord must service notice to propose a new rent, the tenant is required to serve a counter notice. If no counter notice is served, the tenant is DEEMED to have accepted the proposed rent.
What Lease Terms Affect Rent at Review?
📄 Rent review clause (assumptions, disregards, review frequency)
📊 Restrictions on use, subletting, repairs, insurance
🏢 Protected tenancy inside 1954 Act → Higher rent (security of tenure)
What are the two landmark cases in respect of ‘time of the essence’
The Burnley and The Cheapside cases
Common Rent Review Assumptions
🏠 Property is fit for immediate occupation/use
📉 Rent assumes market conditions post rent-free period
🛠 Tenant’s alterations do not reduce value
📜 T complied with lease terms
What is the Hypothetical Term?
the assumed lease length used during a rent review or lease renewal valuation. It reflects the term that a willing landlord and tenant would agree on in the open market, rather than the actual time left on the existing lease
Common Rent Review Disregards
🚫 Tenant’s previous occupation
🚫 Goodwill
🚫 Certain improvements
🚫 Liquor licence (if owned by tenant)
Where do the usual disregards originate from?
Derived from s34 LL&T Act 1954 but applies to rent reviews
How to Resolve a Rent Review Dispute?
⚖️ Arbitrator or Independent Expert (per lease terms)
Arbitrator vs. Independent Expert (Common Question!)
📝 Arbitrator:
Relies on evidence & arguments presented
Can only make an award between the proposals of both parties.
Can award costs to winning party but generally split.
Governed by Arbitration Act 1996
📊 Independent Expert:
Can investigate & use own knowledge
Cannot award costs
Governed by RICS rules
Can be sued for negligence (unlike arbitrator!)
What is the purpose of a Calderbank letter/offer? COMMON QUESTION
A written offer to settle a dispute privately. It’s marked ‘without prejudice save as to costs,’
What does ‘without prejudice, save as to costs’ mean?
Prejudice - cannot be used in further negotiation
Save as to costs - apart from the cost element
What Must a Calderbank Letter Contain?
✉️ Unconditional offer to settle rent review
💰 Proposal on costs incurred up to that date
📅 Deadline for acceptance (usually 21 days)
📜 Statement that it is “without prejudice save as to costs”
(Can be sent at any time, before or after arbitration starts.)
What is the difference between a lease and a licence?
Lease can be fixed term or periodic, and gives T exclusive right of possession - all other parties can be excluded. Licence gives someone permission to do something on the owner’s land (or in property) that would other constitute a trespass.
Key Case on Lease vs. Licence?
📌 Street v Mountford (1985)
Licence to occupy a furnished room without services → Held to be a lease.
If services (e.g., cleaning, meals) are provided → More likely a licence.
Examples of When a Licence Might Be Used
🚗 Car parking
📡 Telecoms kit on rooftops
🍺 Pavement seating outside pubs
🐴 Grazing land
🍦 Ice cream/hot food vans
Letting Options for a Property Pending Redevelopment?
🔹 Short-term:
Let for ≤6 months → s43 of 1954 Act excludes protection
Example: Two consecutive 6-month tenancies
🔹 Long-term:
Contract out of s24–s28 of 1954 Act (must be 1+ year lease).
What advice would you give to a tenant wanting to take an FRI lease of a property in disrepair but suiting his business?
Could negotiate with LL - either request rent free period for doing the repairs, or ask LL to do repairs before T moves in (and then T could sign FRI lease afterwards)
identify the defects, say to the LLL you put the property in good repair and then we can chat. T can do the repairs but want compensation for the costs by way of rent free period, reduced rent.
Could complete a schedule of condition to limit repairing liability
A tenant has entered into a full repairing and insuring lease of a property in disrepair. The LL requires T to remedy this disrepair. What advice would you give T?
A tenant that agrees to ‘keep in repair’ must ‘put in repair’ unless standard of repair is limited by a Schedule of Condition.
💡 Advice to T:
Negotiate repair obligations (based on condition of similar properties).
Consider cost vs. lease length.
What action can a LL take when a tenant is in breach of repairing covenant?
⚖️ Options:
1️⃣ s146 Notice - legal notice that demands compliance with covenants.
2️⃣ Sue for damages (limited by s18 of 1927 Act).
3️⃣ LL repairs & recharges T (if lease allows).
4️⃣ Forfeiture (termination of lease).
What action can a tenant take when a LL is in breach of repairing covenant
🔹 Request repairs.
🔹 Apply for injunction (court order forcing LL to act).
🔹 Self-repair & deduct costs from rent (after notifying LL).
What does the Jervis v Harris case mean?
Where a LL enters property and carries out repair, in accordance with lease terms, the LL can re-charged the tenant
T says LL should have served T with 146 Notice, rather than suing me for damages
This is a claim for DEBT not damages, so avoids legislation
How are damages assessed when a tenant is in breach of repairing covenant?
S18 LL & T Act 1927 - damages are limited to the diminution of value in the LL interest (IE reduction in value as a result of the tenants breach = the cost of the works. There are instances where it is something different)
LL can only claim their loss
How are damages assessed when a LL is in breach of repairing covenant?
Difference in property value (in/out of repair).
Rent/service charge reductions if T loses use of part of property.
Explain the provisions of S18(1) of the LL & T Act 1927
Says LL damages in respect of T disrepair, is limited to the diminution in the value of its reversion
Usually the cost of the works sublet
Explain difference between Schedule of Condition and Schedule of Dilapidations
Schedule of Condition is statement describing physical state of building, usually prepared by T surveyor to limit repairing liability (needs to be agreed with LL surveyor)
Schedule of Dilapidations is a record of alleged breaches of repairing covenant, usually prepared by L surveyor
Explain difference between interim and terminal schedule of diplidations
📆 Interim: Served 3+ years before lease ends.
📆 Terminal: Served ≤3 years before lease ends.
(LL serving s146 notice triggers Leasehold Property Repairs Act 1938 protections for T.)
If there is 3+ years to run, it is a waste of time as can get relieif under 1938 Act
What is a Scott Schedule?
Used if the matter is going to court - Schedule of Dilaps is turned into a Scott Schedule as this is the recommended form (recommended by RICS) of which a Schedule of Dilaps should be presented in court. Both LL and T can add their comments
Alteration vs. Improvement?
🛠 Alteration = Any physical change.
📈 Improvement = Alteration that adds value
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
📜 Check lease – May prohibit alterations or require LL consent.
📆 Lease term left? (Short lease = risky investment in alterations).
💰 Impact on rent review? Whether improvements are to be disregarded (If silent, T pays rent on improvements).
📝 s1927 Act: Register improvements (LL has 3 months to object).
You are managing a property for your LL client and have recieved a request from a T to carry out improvements. The T has requested that improvements are registered under the 1927 Act. What advice would you give the LL?
✅ Confirm works add value (qualifies as improvement).
✅ LL can do works & increase rent instead.
✅ If LL/T disagree, case goes to court.
✅ If T spends a lot, stronger security for LL (T less likely to leave).
How is compensation for tenant’s improvements calculated?
📊 Lower of:
1️⃣ Value added to property
2️⃣ Cost of works - disrepair costs
(If improvements are registered under the 1927 act, T gets compensation even if they leave voluntarily)
What lease terms are implied under s19 of the LL & T Act 1927?
📜 LL cannot unreasonably withhold consent for:
Assignment
Alterations
Subletting
💡 Even if not explicitly stated in lease, LL must not delay or unreasonably withhold consent.
Explain the legislation that needs to be considered in an assignment of a lease
📌 s19 LL & T Act 1927 – LL cannot unreasonably withhold consent.
📌 LL & T Act 1988 – LL must respond within a reasonable time.
📌 LL & T Covenants Act 1995 – May require AGA (Assignor guarantees Assignee).
(If X assigns to Y, then Y assigns to Z → Y is liable, but if Y defaults, X must pay.)
When Could No Assignment/Subletting Restrictions Be Appropriate?
🏗 Difficult-to-let property (e.g., bad location, asbestos)
📜 Flexible lease terms (e.g., 25-year lease, 5-year breaks)
🏢 Large units harder to let than small units
Reasonable Grounds for Refusing Assignment
❌ Poor tenant covenant strength
❌ Risk of reducing rental/capital value (weaker covenant strength would reduce rental value)
❌ Assignee’s accounts don’t meet expectations
Usual LL Requirement for Assignee’s Business Profits?
📊 3x annual rent + service charge, business rates, insurance
What is an Authorised Guarantee Agreement (AGA)?
Agreement that places obligation on outgoing tenant to guarantee performance of covenants
Comes from LL & T covenants act 1995 section 16, and came into effect 1 Jan 1996 (if lease starts before this date, the AGA does not apply)
Assignor guarantees performance of assignee (as per s16)
Act releases assignor on lease expiry or on further assignment
When Are Restrictive User Clauses in Leases Appropriate?
🏬 To protect investment value
🍽 Avoid excessive competition (e.g., 1 Chinese takeaway, 1 Indian takeaway per retail scheme)
📉 Too much competition = tenant failure = vacant units
What is a Conditional Break Clause?
📌 Tenant can only break lease if conditions are met.
Common Break Clause Conditions
📆 Minimum 6 months’ notice
📜 T must have complied with all lease terms
💰 T must pay a fine/premium (e.g., 3 months’ rent)
🔍 LL may instruct surveyors to find breaches, making break ineffective
Give 2 examples of situations where it was held in court that a break notice was invalid/ineffective?
📌 Osborne Assets Ltd vs Britannia Life Ltd
T missed 3rd coat of paint required in lease.
Break not valid.
📌 Riverside Park vs NHS Property Services
Break required ‘vacant possession’.
T left demountable partitions → Break failed.
What Factors Affect Lease Value?
💰 Rent
📆 Lease term
📜 Other lease terms (e.g., inside/outside 1954 Act)
🛠 Repairing clause (T not responsible = higher rent for LL)
What is an Internal Repairing & Insuring (IRI) Lease?
📌 T only responsible for internal repairs.
📌 LL handles external repairs & building insurance.
How Does Rent Review Impact Value?
📈 Frequent rent reviews = More value to LL
Which is More Valuable: Rent Review or RPI?
📉 RPI for retail (as market struggles, landlords prefer index-linked increases).
Methods of Dispute Resolution
🤝 Mediation
⚖ Litigation
📜 PACT (Professional Arbitration on Court Terms)
🏛 Court
What is PACT?
✅ Cheaper & faster than court
✅ Run by property professionals (not judges)
If ran by a mediator, they help parites make a decision - nothing they say is binding
What Does the 1954 Act Do?
🏢 Gives tenants security of tenure
🏗 Right to stay after lease ends unless LL serves notice
How Can LL Terminate a Lease?
📜 Serve a s25 Notice
What does LL & T (Covenants) Act 1995 do?
Provides Authorised Guarantee Agreements, and abolished Privity of Contract
🚫 AGAs apply only to assignments, not sub-lettings
What is the Main Section of the LL & T Act 1988?
📌 Consent must be given within a reasonable timeframe
What Does the Law of Property Act Say?
📌 s146 – Forfeiture process for lease breaches
Procedure for Rent Review
1️⃣ Receive client instructions
2️⃣ Check competency/conflicts of interest
3️⃣ Agree terms of engagement and fee basis
4️⃣ Request legal pack (lease, legal docs)
6️⃣ Check rent review clause including assumptions and disregards
7️⃣ Inspect & measure property
If Open Market - Collect comparables
Make recommendation to client
Trigger notice is served
Negotiate
Instruct Solicitor to document via memorandum
Explain Zoning?
📏 Retail valuation method
📌 Standard depth: 6.10m per zone
📌 More weight to front zones, halved per further zone
🚽 Toilets, columns, etc. excluded
What is Included in a Rent Review Clause?
Mechanism – how the rent review is triggered and notified
Basis of valuation – how the new rent is calculated (e.g. open market)
Dispute resolution – how disagreements are resolved (e.g. arbitrator or expert)
Standard Rent Review Assumptions
📌 Open market
📌 Willing LL & T
📌 Tenant complied with lease terms
📌 Vacant possession assumed
Standard Rent Review Disregards
🚫 Tenant’s alcohol licence
🚫 Tenant’s goodwill
🚫 Tenant’s previous occupation
🚫 Certain improvements
What are “Certain Improvements”?
📌 Improvements done under current lease or within last 21 years
Arbitrator vs. Independent Expert
⚖️ Arbitrator
📜 Governed by Arbitration Act
📌 Decides based on evidence submitted
📌 Can only be sued on a point of law
🎓 Independent Expert
📌 Uses own knowledge
📌 Makes a determination
📌 Can be sued for negligence
What Do You Mark a Calderbank Offer With?
✉️ “Without Prejudice Save as to Costs”
📌 Means cannot be used as evidence unless discussing costs
How Long is a Calderbank Offer Open?
📅 21 days
Is a Calderbank Offer Binding?
✅ Yes, if in writing
❌ No, if verbal
If Landlord client notes lease is coming to end, what would you recommend?
📌 Confirm lease expiry date
📌 Ask if LL wants T to stay
📌 If yes → Serve Friendly s25 Notice
📌 Inspect, measure, gather comparables
📌 Advise client on potential rent uplift
If you serve s25 3 months before expiry, when would new lease start?
3 months after old lease expires
What does Friendly Notice include?
📌 Terminates lease & proposes new lease
📌 Includes rent & key terms
📌 “Health warning” - non binding
📌 May specify response deadline (but if none, no strict deadline!)
Why would you advise that your client serves S25 12 months before rather than 6 months before?
📉 Market declining? Serve early to lock in higher rent.
📈 Market improving? Delay to get better rent.
How might you settle lease renewal if you cannot agree rent?
1️⃣ Try mediation, PACT, negotiation
2️⃣ Serve Part 36 Offer
3️⃣ If unresolved → Court
What Does Court Consider When Granting a New Lease?
📜 The old lease terms
Why can Court only grant lease of up to 15 years?
Typical term for hypothetical lease as it falls in line with standard 5 yearly upward only rent reviews
Give Case Law example when it comes to Court deciding new lease at renewal?
O’May vs City of London
LL Doesn’t Want to Grant New Lease – What to Do?
📌 Clarify reason
📌 Serve Hostile s25 Notice
📌 Include grounds under s30
What Are the 7 Grounds Under s30 to Oppose Renewal?
1️⃣ T hasn’t paid rent
2️⃣ T hasn’t met repairing obligations
3️⃣ T hasn’t met other obligations
4️⃣ Suitable alternative accommodation available
5️⃣ Uneconomic subletting – better to let whole
6️⃣ LL intends to demolish/redevelop
7️⃣ LL intends to occupy
(Last 3 = No-Fault Grounds, requiring compensation.)
Last three are no-fault grounds, what does this mean?
📌 T entitled to compensation if lease renewal refused
📆 1x RV if occupied <14 years
📆 2x RV if occupied 14+ years
What are owner-occupation rules?
Must have been LL for 5+ years (competent landlord)
How long does LL have to respond to S26 request?
2 months
If you have been doing lease renewal for some time, and gone beyond contractual lease expiry date, how do you protect client position?
📌 Call for Interim Rent under s24A
📌 Calculated based on market rent
What is a lease renewal
A statutory procedure laid down by the Landlord and Tenant Act 1954
What was the reason for Landlord and Tenant Act 1995
Before the Act and original tenant remained liable for lease obligations even after assigning the lease.
What are sections 24-28 of the L and T Act 1954?
24 - gives security of tenure
24a - application to court for interim rent
25 - LL notice to terminate the lease
26 - T request for new tenancy
27 - T notice to terminate the lease.
28 - Agreement for new tenancy results in existing tenancy losing protection.
What order governs contracting out of the 2954 Act?
The regulatory reform (business tenancies) order 2003
What is the process of contracting out of the Act?
- Agree to Contract Out (Pre-lease stage)
- Serve Warning Notice (Regulatory Reform Order 2003)
- Tenant Signs Declaration - simple or statutory, depending on timing. If less than 14 days then stat in front of solicitors
- Lease is granted with no security of tenure.
What is a tenancy at will?
a flexible and informal agreement where a tenant occupies premises with the landlord’s permission, but without a fixed term or security of tenure.
When is a tenancy at will used?
- while negotiating a new lease
- during a lease renewal process
- for short term occupation
What is charged during a tenancy at will?
Tenancy at will rent
What is mesne profit?
Mesne profits are damages for unlawful occupation without landlord consent, usually after lease expiry.
