Landlord and Tenant Flashcards
What information is required to initiate a rent review or lease renewal?
Terms of engagement
Understanding of client strategy and objectives.
Copy of existing lease
Any licences - alterations, sub-lets, assignments, deeds of variation
Tenant contact details to arrange inspection
What should be included in Terms of Engagement for a rent review or lease renewal?
That you are competent
No conflicts of interest
Complaints Handling Procedure
Outline calculation of fees.
What can fees for rent reviews or lease renewals be based on?
Percentage of new rent agreed
Percentage of the saving made from the quoting rent
A fixed fee
An hourly rate
Incentive fee
What actions might be required in a rent review or lease renewal?
Conflict on interest and competency check
Agree terms of engagement
Understand clients objectives
Obtain information from client (lease, licences, variations)
Review lease packet
Check security of tenure provisions
Check rent review mechanism
Site inspection
Market rent valuation
Serve notices or instruct legal
negotiations
HOTs for renewal
What is a licence?
A right to enter property
A personal arrangement between the licensor and licensee
Licensee acquires no interest in the property
It is a personal right that can be terminated by either party
What are the 4 requirements of a lease?
Exclusive occupation
Payment of rent
Specified term
If longer than 3 years, it must be in writing, signed and registered as a deed
What are the 3 main differences between a licence and a lease?
- A lease provides an occupier with an estate in the relevant land. A licence is a permission for them to use the land.
- A lease can be assigned, a licence is a personal right
- A lease cannot be terminated until it expires unless there is a break clause. A licence can be terminated at any time.
What is a tenancy at will?
A form of licence created by written agreement for an unspecified time in which the landlord can evict the tenant at any time. Tenant has no legal interest or renewal right.
Often used to allow tenant early entry for fit out works or whilst tenant is agreeing a new contracted out lease after lease expiry.
What is a wayleave?
It is a temporary right and receives annual payment. It is personal to a company and can be transferred.
Example is a right for an electricity company to install and retain their apparatus.
What is an easement?
Allows one party to use the land of another.
It is a permanent right and receives annual payment.
Can be registered at LR
Can be a prescriptive right of way or prescriptive easement or a permissive right of way.
What is a prescriptive right of way or easement?
They can be obtained with proof of 20 years continuous and uninterrupted use.
What is a permissive right of way?
Permissive right can be granted by landowner to allow access over land. They are not public rights of way and public doesn’t have the right to use them, they are just allowed by the landowner.
What is adverse possession?
It is the process by which a person who is not the legal owner of the land can become legal owner through possession of the land for a specified period of time without owners permission.
What are the rules for adverse possession?
If the land is registered the squatter needs to prove 10 years of possession.
If unregistered they need to prove 12 years of possession.
Need to prove factual possession and exclusive control e.g fencing, maintenance and treating land as own.
What are the different basis of valuation of a rent review?
Usually upward only
Market rent
Indexation to RPI or CPI
Turnover rent
Stepped increased
Time is not normally of the essence.
What is CPI and RPI Indexation?
It means valuing the rent review inline with inflation.
RPI Retail Price Index is linked to inflation for retails goods, services and housing costs.
CPI Consumer Price Index only measures the average prices pay for consumer goods, not housing.
RPI usually has higher returns but more volatile. CPI more predictable and widely accepted.
What 4 assumptions are usually made prior to rent review valuation
- Property is available to let on open market by willing tenant and willing landlord for a term of years as stated (notional or hypothetical)
- Property is fit and available for immediate occupation and use
- All covenants observed by landlord and tenant
- Property used for purpose set out in lease
What 3 disregards are usually made for rent reviews?
- Any effect of goodwill on tenants occupation
- Ignore goodwill attached to the property
- Tenant’s improvements if LL consent has been granted for works.
What is the notional term of the lease?
The length of term to be valued in rent review. if this is silent then assume the residue of the term.
What is a headline rent review clause?
This is when the basis of the valuation cannot consider any incentives agreed when analysing a comparable of a letting to arrive at a net effective rent.
What are high in hierarchy of evidence in rent reviews?
Open market lettings
Rent reviews and lease renewals
Independent expert determinations
What is lower in the hierarchy of evidence for rent reviews?
Sale and leasebacks
Surrender and renewals
Inter-company arrangements.
What third party determination can be used for a rent review?
Independent expert
Arbitrator
Can be assigned by RICS as part of dispute resolution service.
Can also be specified as method of determination in rent review clause.
What is the difference between independent expert and arbitrator?
Evidence - Arbitrator acts on evidence provided, IE investigates and can use own knowledge
Appeal - cannot appeal IE limited right with arbitrator
Negligence - IE can be liable, Arbitrator cannot.
Law - Arbitrator bound by Arbitration Act, no legislation for IE
When is it preferable for a landlord to use either independent expert or arbitrator?
For a landlord arbitrator is preferable in a falling market and a independent expert in a rising market.
What is an advocate?
Represents their client in court, duty is to client but must act with integrity.
Not obliged to disclose all matters.
What is an expert witness?
Must be impartial and objective
Duty to the court, not to client
Evidence must be independent.
Surveyor must believe the facts the rely on are complete and true.
Contingency/incentive fees not allowed. Fee basis must be clearly stated in TOE
What should be included in a rent review memorandum?
Name of LL and tenant
Property address
Date of lease and rent review
Confirmation of new rent agreed
Signed and dated both parties
What does S.23 of L&T 1954 state for tenancies to be protected by the act?
Must be a business tenancy with 6 elements:
1. It is a tenancy
2. must be used as business
3. Must be occupied or at least part by the tenant
4. Must be occupancy for more than 6 months
5. Must not be exempted or excluded tenancy (tenancy at will)
6. Must be a competent landlord
What is the landlord and tenant act 1954?
The act provides security of tenure to business tenants, giving them the right to lease renewal and remain in occupation at the end of a lease.
When does the Landlord and tenant Act 1954 not apply?
Contracted out leases
Licences
Tenancies at will
Term of lease is 6 months or less
If tenant’s total period of occupancy is less than 12 months.
What is S.24 of the act?
Outlines that if no notice is served, lease is holding over until either party serves notice
What is in S.25 of the L&T Act?
Outlines the rules for landlord to serve notice to either grant or oppose a new lease.
Notice cannot be served more than 12 or less than 6 months before termination of the tenancy
Must include proposed terms of new lease
OR grounds for opposing new lease
Must be given to tenant by competent landlord.
What is a hostile and non hostile notice?
Hostile notice is when a landlord opposes a new lease
Non hostile notice is where the landlord is prepared to grant a new lease.
What is outlined in section 26 and L&T 1954?
Tenant can serve a notice requesting a new tenancy no more than 12 months and no less than 6 months before the new tenancy begins
It must state the tenants proposals for a new lease including proposed rent.
Landlord must serve counter notice within 2 months if opposes lease.
What is outlined in S.27 of L&T 1954
Notice can be served by tenant anytime if they want to leave with 3 months notice after lease expiry. If tenant moves out before lease expiry, no notice needs to be served.
What are some of the 7 grounds for refusal of a new lease in Section 30?
- Breach of repair covenant
- Persistent delay in paying rent
- Other substantial breach
- Provision of suitable alternative accommodation
- Uneconomic subdivision (compensation)
- Demolition or reconstruction (compensation)
- Owner occupation (compensation)
What must a landlord do to refuse tenancy for redevelopment?
Must prove firm intention. funding, planning, substantial work and necessity to gain vacant possession
What must the terms of the new lease be under L&T 1954?
Must be market rent
Ignore previous occupation, goodwill and landlord approved improvements by tenant
Court can grant maximum 15 years terms.
What happens at lease expiry outside of the Act?
Tenant has no statutory right to remain or seek compensation.
Landlord must ensure premises are vacant or new lease in place at expiry of term or a protected tenancy may be created.
If new lease not finalised but tenant is to remain, tenancy at will is created.
No rent to be collected at end of tenancy to prevent protected new tenancy.
What is the procedure to contract outside the act?
Landlord required to serve ‘health warning’ notice on prospective tenant warning lease will not be protected.
Proposed tenant must make a declaration accepting terms
What are the 2 types of declaration for leases outside the act?
Simple declaration - if more than 14 days to lease
Statutory declaration - if less than 14 days, declaration must be made before an independent solicitor.
What are the different ways a lease can be terminated?
Forfeiture
Surrender and negotiation
Merger
Disclaimer
Break clause
Lease expiry and service of L&T 1954 notices.
What is meant be landlord consent (not to be unreasonably withheld or delayed)
Means consent is required but can be refused arbitrarily or unfairly. Need to give reasons for refusal, tenant can seek legal remedies.
