Landlord And Tenant L3

Question 1

What are commercial leases governed by?

Answer 1

Landlord and Tennant Act 1954

Question 2

What is the definition of a business tenancy?

Answer 2

Section 23
The definition in effect states that the business is for a business I.e not for residential/agricultural.
The tenant must be in occupation at the end of the lease, otherwise the tenant does not have security of tenure. So a tenant not in occupation may not have rights of renewal.

Question 3

Heads of terms (12)

Answer 3

Names and address - landlord and tenant
Demise - area of unit, outside space (parking/garden/communal area) rights of way, often a map
Guarantors
Deposit
Rent (and discussed payment period)
Length of term - often between 5 to 15 years
Repairs - FRI/IRI
Alienation - sublet/assignment + terms of this arrangement
User clause - I.e dairy manufacturers/planning use B2 & B8 generally
Service charge
Legal costs - usually both parties to bear their own legal costs - unless L is in a strong negotiation position

Question 4

What are the repairing liabilities?

Answer 4

FRI - Fully Repairing and Insuring
IRI - Internal Repair and Insuring

Question 5

What section is contracting out and what is it now known as?

Answer 5

Now known as a “Health Warning Notice”, previously a section 38.
This allows the L to contract out of the LTA54 - allowing the lease to be determined without the tenant’s security of tenure.
Should serve 14 days before new lease.

Question 6

What is a AGA?

Answer 6

Authorised Guarantee Agreement

Original tenant can be liable when assignee then assigns to somebody else.

Question 7

What is a Section 27 Notice?

Answer 7

Under the LTA 1954 a tenant can serve a section 27 notice to bring the tenancy to an end.

Question 8

What is a Section 25 Notice?

Answer 8

A Notice serviced by the landlord on the tenant to either terminate the tenancy or offer a new tenancy on different terms.

Question 9

If a landlord wishes to terminate a tenancy under a Section 25 Notice, on what grounds can they oppose a new lease?

Answer 9

The Section 30 grounds, failure to repair, persistent delay in paying rent, substantial breach of other obligations, alternative accommodation, subletting of part, where higher rent be obtained by single letting of whole, landlords’ intention to demolish or reconstruct which cannot reasonably be done without obtaining possession, landlords’ intention to occupy the holding for their own business / residence.

Question 10

What is a Section 26 Notice and how should it be served (and in what notice period?)

Answer 10

A tenant may initiate a Section 26 Notice to request a new tenancy. Service needs to be in a form prescribed by the Court. Form needs to be submitted between 12 to 6 months of the tenancy coming to an end.

Question 11

How should a Section 27 Notice be served?

Answer 11

There is no prescribed form of Section 27 Notice.

Question 12

What two ways can you contract out of the 1954 Act?

Answer 12

Statutory declaration or simple declaration.

Question 13

What is the difference between a lease and a licence?

Answer 13

A lease is a right to exclusively occupy premises, a licence is right to use premises.

Question 14

What is a Calderbank letter?

Answer 14

A Calderbank letter is an offer of agreement between parties to achieve resolution without costly fee escalation.

Question 15

What needs to be included in a Section 25 Notice?

Answer 15

Name and address of Landlord and tenant, address of the property, notice of the date to end tenancy (a hostile or friendly notice), confirmation whether a new lease is to be opposed or granted, confirmation of date when response is required, proposals for new tenancy, if hostile notice grounds for opposition must be included, strong recommendation to seek professional advice.

Question 16

What are the implications of the Landlord and Tenant Act 1995?

Answer 16

Abolishes privity of contract and brings in AGA (authorised Guarantee Agreement). Section 17 needs to be served within 6 months.

Question 17

What are the key documents relating to Landlord and Tenant matters?

Answer 17

Sections 24-28 of The Landlord and Tenant Act 1954,
Landlord and Tenant Act 1927,
Landlord and Tenant (Covenants) Act 1995,
Landlord and Tenant Act 1988,
Law of Property Act 1925,
RICS Code for Leasing
Business Premises Professional Statement,
Leasehold Property Repairs Act 1938.

Question 18

What are they key sections of the Landlord and Tenant Act 1954?

Answer 18

Sections 24-28

Question 19

What does the serving of a Section 40 notice do?

Answer 19

This can be served to find out information about the lease.

Question 20

Under grounds E, F and G of the Section 30 grounds for opposition, how much compensation is due to a tenant?

Answer 20

Grounds E, F and G are ‘no fault grounds. This means that, as the ending of the lease is through no fault of the tenant, compensation is due to the tenant.
This compensation is 1x the Rateable Value of the property if the tenant has been in occupation less than 14 years, and 2x the Rateable Value if the tenant has been in occupation for more than 14 years.
This is covered in Section 37 of the Act.

Question 21

Can you talk me through how you would approach a rent review from start to finish?

Answer 21

Undertake a conflict-of-interest check. Also check you are competent to undertake the review. Agree Terms of Engagement after ensuring you have the required Professional Indemnity Insurance to undertake the review. Find out the client’s objectives from the rent review. Read the lease and summarise the position. Is the lease contracted out? Is time of the essence? Are there time limits for the review? Are there notice requirements for the review? What is the basis of review? Inspect and measure the property. Agree the measurements with the other party early (this can often be a cause of dispute). Undertake the valuation for the review on the basis identified. If the review is to Open Market Value, obtain comparable evidence. Report to client and agree the next steps with them. Negotiate with the opposing party. Settle the matter. If the rent cannot be agreed upon, refer the matter to a 3rd party (this will be whatever dispute resolution method is stated within the lease). Document the rent review and instruct solicitors if they are required. Issue invoice. Diarise the next lease event.

Question 22

What are some of the bases for rent reviews?

Answer 22

Open Market value, RPI linked CPI linked.

Question 23

Is time of the essence in rent reviews?

Answer 23

Time is not usually of the essence in rent review unless expressly stated within the lease.

Question 24

Is time of the essence in break clauses?

Answer 24

Time is usually of the essence in break clauses.

Question 25

What must a Part 36 offer contain?

Answer 25

The offer must be in writing, it must make clear that it is made pursuant to Part 36, it must specify a period of not less than 21 days within which the defendant will be liable for the claimant’s costs (the “Relevant Period”), it must state whether it applies to the whole or part of the claim, it must state whether it considers any counterclaim.

Question 26

What are some of the terms the RICS Code for Leasing Business Premises identifies?

Answer 26

Demise, term length, rent deposits, rent, rent review, service charge, alienation, change of use, EPC, landlords title and management and operational performance.

Question 27

What does Section 19 of the Landlord and Tenant Act 1927 introduce regarding improvements?

Answer 27

This implies into qualified covenants against the making of improvements to leasehold premises an obligation on the landlord not to withhold consent to such alterations unreasonably.

Question 28

When can a Landlord reasonably refuse an alteration under Section 19(iii)?

Answer 28

Section 19 (iii) states that if the improvement does not add to the letting value, the landlord can require the tenant to reinstate.

Question 29

What is an ‘old lease’?

Answer 29

A lease granted before 1st January 1996.

Question 30

What is the difference between an assignment and sub-letting?

Answer 30

An assignment disposes of the entire lease to another party, where as a sub-letting creates a subsidiary lease and the tenant in the original lease is still responsible for rent and ensuring other obligations within the lease are fulfilled.

Question 31

What is a Jervis v Harris clause?

Answer 31

This allows a landlord to renter to complete works and claim the costs of the works from the tenant as a debt. This clause must be inserted into the lease to be permitted.

Question 32

What is an Absolute Covenant?

Answer 32

A covenant that prohibits entirely any assignment or underletting (as the case may be) is often described as an absolute covenant. There is no statutory modification of absolute covenants, so they constitute a complete bar.

Question 33

What is a Qualified Covenant?

Answer 33

A qualified covenant means that the landlord has discretion to permit or not permit an action by the tenant. The Landlord and Tenant Act 1927 means this consent cannot be unreasonably withheld.

Question 34

What is a Tenancy at Will?

Answer 34

This is where the tenant occupies with the landlord’s consent for an indefinite period that can be terminated by either party with no notice.

Question 35

What is the form of alternative dispute resolution exclusive to lease renewals?

Answer 35

PACT.

Question 36

What are the time limits relating to Section 25 notice?

Answer 36

Must be served a minimum of six months prior to expiry, and a maximum of 12 months before expiry.