Landlord and Tenant (Level 2 and Level 3) Flashcards
Explain the provisions of Section 18 of the Landlord and Tenant Act 1927?
Limits the amount of damages a Landlord can recover for breach of repairing covenant.
Protects tenants
If the disrepair does not reduce the property’s value, no damages can be claimed
If the landlord intends to demolish or carry out development, then no damages for disrepair can be claimed.
What is the difference between a schedule of condition and a schedule of dilapidations?
A schedule of condition records the state of a property at the start of the lease
schedule of dilapidations outlines breaches in lease covenants (repairing obligations etc)
What are the grounds of opposition for a new lease under Section 30 of the Landlord and Tenant Act 1954?
a) Breach of repairing covenant
b) Persistent delay in paying rent
c) Other substantial breach
d) Landlord provides suitable alternative accommodation
e) Uneconomic subdivision (compensation payable)
f) Demolition or reconstruction (compensation payable)
g) Owner occupation (compensation payable)
Explain the difference between an “interim” and a “terminal” schedule of dilapidations?
An interim schedule of dilapidations is served during the lease term to address breaches that need immediate remedy
A terminal schedule of dilapidations is issued near or after lease expiry
Final schedule may follow after lease expiry if breaches remain unresolved
What is a Scott Schedule
A document used in legal proceedings, particularly in property disputes, to identify and clarify the key issues and allegations in a structured, item-by-item format, helping the court understand the parties’ positions
When can a landlord occupy their own building under Section 30 (g)?
The landlord intends to occupy the premises for their own business or residence.
The landlord must have owned the property for at least five years before serving notice.
The intention to occupy must be genuine and proven (i.e., not just to remove the tenant).
The landlord must be an individual or a company with a legitimate reason for occupation.
S Francis vs Cavendish Hotel Ltd 2005
How would a Section 38 Notice be served?
Simple Declaration - The landlord must serve the notice at least 14 days before the lease is entered into.
Statutory Declaration - If less than 14 days notice is given. Must be signed before an independent solicitor
Must be served with a clear health warning - outlining to the tenant that they will not have the automatic right to a new lease when the current one expires.
What is the maximum term of a new lease granted by the court at lease renewal (1954 Act)?
15 years
What is an Arbitrator?
Can you appeal to Court? In how many days and on what grounds? (3)
Governed by the Arbitration Act 1996
Cannot be sued for negligence
Power to award costs
Appointed by the RICS President and Chartered Institute of Arbitrators
Investigates using information provided to them
Can appeal to court within 28 days on 3 bases:
A challenge to the tribunal jurisdiction
On a point of law
Serious irregularity
What is an Independent Expert?
RICS Guidance Note: Surveyors acting Independent Expert Determination (2016)
Appointed by RICS President
Makes their own investigation
Bound by the terms of the lease
No judicial function
No appeals but can be sued
Hearing or written
No power of disclosure
Power over their own costs
Level Properties v Balls Brothers (2007) Independent Expert found to have misinterpreted the Rent review clause and so discussion was non binding.
What is interim rent?
Interim rent is the rent payable between the expiry of a lease and the start of a new lease under the Landlord and Tenant Act 1954.
It is payable from the earliest date specified in a Section 25 or Section 26 notice until the new lease is agreed or determined by the court.
It is the lower value of the new agreed rent or the market rent
Tenants may be entitled to compensation under the Landlord and Tenant Act 1927 if:
The improvements were carried out with the landlords consent
The improvements add value to the property
The tenant quits the premises at the end of the lease without renewal
What does the Landlord and Tenant Act 1988 state?
Governs the assignment of leases and obligations of landlords in granting consent.
Landlord Duty to Act Reasonably
Must respond in a Reasonable Timeframe
Landlord must provide written reasons if consent is refused
An outgoing tenant remains liable unless released by the landlord
How much does RICS dispute resolution scheme cost?
£425
What are the Jackson Reforms?
Set of changes introduced in 2013, aimed at reducing legal costs, improving access to justice and encouraging ADR.
Key reforms include introduction of fixed costs, success fees, after the event insurance premiums and a focus on proportionality in legal costs.
Section 23 L+T Act 1954
Application of the Act - Business Tenancy
It is a tenancy
Used for business
Occupation of at least part
More than 6 months
No exempted or excluded tenancy
Competent Landlord
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, building regulations, planning, service charge implications, landlord consent, RAMS, insurance
You are managing a property for your landlord client and have received a request from a tenant to carry out improvements. The tenant has requested that improvements are “registered” under the 1927 Act. What advice would you give to your client?
I would advise my client to review the lease to check if tenant improvements are allowed and whether consent is required. Under the 1927 Act, improvements can be registered, which may entitle the tenant to compensation at lease end.
I would recommend:
Assessing the impact of the improvements.
Seeking legal advice on eligibility for compensation.
Ensuring proper consent is given and works are compliant with regulations.
Documenting the works via a Licence for Alterations.
How is compensation for tenants improvements calculated?
If they have occupied for less than 14 years - 1x rateable value
If they have occupied for more than 14 years 2x rateable value
What is Section 19 of the Landlord and Tenant Act 1927?
Section 19 of the Landlord and Tenant Act 1927 allows tenants to make improvements to the property with the landlord’s consent, which cannot be unreasonably withheld.
If the lease ends, tenants are entitled to compensation based on the increase in the rateable value of the property due to the improvements, typically calculated over a period of up to 14 years.
What legislation needs to be considered in the assignment of a lease?
What is a Section 17 notice?
Landlord and Tenant (covenants) Act 1995
Landlord and Tenant Act 1988
The Act abolished privity of contract for ‘new’ leases
A section 17 notice (1995 Act) must be served upon a guarantor within 6 months of the tenant defaulting to require the former tenant who has entered into an AGA to pay the arrears
Introduced AGA’s
What do you understand by the expression “authorised guarantee agreement” or AGA?
An Authorised Guarantee Agreement (AGA) is a legal agreement where the outgoing tenant guarantees the incoming tenant’s performance of lease covenants after assignment.
In what circumstance is it appropriate to have restrictive user covenants in leases?
Restrictive user covenants in leases are appropriate when the landlord wants to control the type of business activity, protect the property’s value, or prevent competition between tenants.
What do you understand a “conditional break clause” to be?
A conditional break clause is a provision in a lease that allows a tenant or landlord to terminate the lease early, but only if specific conditions (e.g., rent paid up to date, vacant possession) are met.
What “conditions” are usually attached to break clauses?
Rent and payments up to date – All rent, service charges, and other payments must be fully paid.
Vacant possession – The tenant must leave the property empty of people, belongings, and any ongoing business operations.
Repair and maintenance compliance – The tenant must meet repair and reinstatement obligations.
No material breach – The tenant must comply with all lease terms.
Notice period compliance – Proper written notice must be served within the required timeframe.
What are the likely consequences if a tenant serves a break notice giving the correct time period but the notice expires one day before it should?
It would invalidate the break
What are Calderbank Letters used for?
Unequivocal offer to settle (Calderbank v Calderbank 1975)
Served without prejudice and save as to costs
Rent reviews and other disputes
What is a hypothetical lease?
Case Law?
A hypothetical lease is a fictional lease created for the purpose of determining the market rent during a rent review. It outlines assumed terms (such as length, use, and repairing obligations) that may differ from the actual lease terms, enabling a fair and consistent rent assessment.
In a rent review, the “hypothetical lease” term, which determines the rent, is often assumed to be the unexpired residue of the original lease term unless the lease specifies otherwise, such as a defined term or the full original term
Case Law: Basingstoke and Deane Council v Host Group 1987
Name the four assumptions and three disregards at rent review?
Assumptions
Property available to let on open market by willing tenant to a willing landlord for a term of years as stated
Property is fit and available for immediate occupation and use
All covenants observed by the landlord/tenant
Property must be used for purpose set out in the lease
Disregards
The effect on the rent of the tenants occupation
Ignore goodwill attached to the property
Tenant’s improvements if landlord consent has been granted for the works
Tenants licences - liquor licence for example
Tell me about a challenging Landlord and Tenant case you have dealt with?
My case study
Tell me about when and why you have served a Calderbank offer or other offer to settle?
In a recent lease renewal negotiation, I advised my client on serving a Calderbank offer to the tenant. The lease was due to expire, and both parties were negotiating new terms, but the tenant was disputing the proposed rent increase.
To avoid protracted negotiations or potential legal action, I recommended issuing a Calderbank offer on a “without prejudice save as to costs” basis. This outlined a reasonable rent proposal aligned with the current market and included flexible lease terms, such as a break clause and a rent review mechanism.
The purpose of the offer was to encourage the tenant to settle amicably, while also protecting my client’s position on costs should the matter proceed to court. Ultimately, the tenant accepted the offer, allowing us to agree the new lease terms quickly and avoid unnecessary legal expenses.
Tell me about a time when you have assisted with a third party process?
In a recent case, I assisted a client in resolving a commercial lease dispute with a tenant through Alternative Dispute Resolution (ADR). The tenant had raised concerns regarding the condition of the property, arguing that necessary repairs had not been carried out by the landlord, which resulted in a breakdown of the landlord-tenant relationship.
Rather than pursuing litigation, I recommended mediation as a more efficient and cost-effective method for resolution. I helped facilitate the mediation process by gathering all relevant documentation, including repair schedules, the lease terms, and correspondence between both parties. During the mediation, I represented my client, ensuring they clearly communicated their position while also being open to negotiating terms that could resolve the dispute amicably.
Through ADR, both parties were able to reach a mutually agreeable settlement. The tenant received a reduction in rent for a defined period, and the landlord agreed to carry out the required repairs within a set timeframe. This resolution allowed both parties to avoid the expense and time involved in court proceedings, preserving the professional relationship and protecting my client’s interests in the long term.
Why do you need clients instructions before submitting a third party application?
You need client instructions before submitting a third-party application or engaging in ADR to ensure the actions align with their goals, legal position, and interests, avoiding unintended outcomes or acting outside their authority.
How do you collate, analyse and adjust comparable evidence?
To collate, analyse, and adjust comparable evidence, I first gather relevant data from various sources such as public records, property databases, and market reports.
I then assess the comparability of each property based on factors like location, size, condition, and lease terms. Adjustments are made for differences between the comparables and the subject property, such as market conditions or specific features, to ensure an accurate comparison.
Finally, I synthesize this information to provide a clear, reasoned conclusion.
What is hierarchy of evidence?
The relative weight attached to comparable evidence.
Open market lettings
Lease renewals
Rent Reviews
Independent expert determinations
Arbitrators awards
Court determinations under L+T Act 1954
Heresay evidence
Sale and Leasebacks
Surrender and renewals
Inter-company arrangements
What is hierarchy of evidence for Landlord and Tenant?
The relative weight attached to comparable evidence.
Open market lettings
Lease renewals
Rent Reviews
Independent expert determinations
Arbitrators awards
Court determinations under L+T Act 1954
Heresay evidence
Sale and Leasebacks
Surrender and renewals
Inter-company arrangements
Index linked Rent Review, Retail Unit, London
How did acquire the RPI figures?
Office for National Statistics
What is the difference between RPI and open market rr?
An open market rent review adjusts the rent based on the current market conditions while an RPI rent review links the rent adjustment to changes in the Retail Price Index (RPI), reflecting inflation.
Can the tenant refuse the RPI increase at rent review?
No, a tenant generally cannot refuse an RPI increase if it is specified in the lease agreement as the method for rent review. However, the tenant may dispute the calculation or the accuracy of the RPI figures used.
How did you present the workings of the RPI increase to the tenant?
Clearly outline the rent review clause in the lease, explaining the basis for the RPI increase.
Provide the relevant RPI figures from a reliable source, such as the Office for National Statistics (ONS)
Explain the calculation method, showing the percentage increase in RPI over the agreed period and how it applies to the current rent.
Present the new rent based on the RPI adjustment, demonstrating the updated figure.
Provide supporting documentation, including the RPI data and any calculations, for transparency
What is the purpose of a rent review memorandum?
It is a formal document that records the agreed revised rent following a rent review, ensuring clarity and providing a legal reference for both parties.
Assignment, Portobello Dock
What is your understanding of ‘not to be unreasonably withheld or delayed’
Means that a landlord cannot refuse or delay giving consent (e.g., for an assignment or alterations) without valid reasons
How do you assess a tenants covenant strength?
Review company accounts (or recommend that these are reviewed by a qualified accountant)
Complete the profits test - net profit must be 3x the annual rent for 3 consecutive years
Dun and Bradstreet report - score 80-100 minimal risk
What other checks do you undertake when checking an assignee?
I review financial accounts, obtain trade references, check credit ratings, verify company structure, and confirm previous landlord references.
Assignment - Portobello Dock
If a tenant was of weaker covenants, how would you approach this?
I would negotiate additional security measures, such as a rent deposit, guarantor, or AGAs, and ensure the lease terms reflect appropriate safeguards to protect the landlord’s position.
Landlord and Tenant Covenants Act 1995 - introduced AGA’s
Section 17 notice must be served on a guarantor within 6 months of the tenant defaulting
Abolished privity of contract for new leases
What is privity of contract?
Privity of contract means that only the parties to a contract have rights and obligations under it.
What is the difference between a sublease and assignment and why would you rather sublet than assign?
An assignment transfers the entire lease to a new tenant, while a sublease creates a new lease between the original tenant and a subtenant.
You might sublet instead of assigning to retain control, earn profit rent, sublet part, or keep a future right to reoccupy.
For assignment would you request character references?
Yes as It helps to gauge their reliability and ability to meet lease obligations, especially if their financial standing or covenant strength is uncertain.
Advantages and disadvantages for ADR - 3rd party determination
Advantages of ADR for rent reviews and lease renewals include cost-effectiveness, faster resolution, and less formal than court proceedings.
Disadvantages include limited binding power, potential for an unsatisfactory outcome, and reliance on both parties’ willingness to negotiate.
How could MEES impact your advice on a landlord and tenant case?
Mees could affect the value of property and the rent. For example an occupier could be willing to pay a higher rent for a unit that has strong ESG credentials and a strong EPC (lease renewal)
Whereas a unit with a lower EPC rating could affect the amount of rent/uplift a tenant is willing to pay
Rent Review Pall Mall East (Open Market)
Was time of the essence and tell me your assumptions and disregards?
Timing was not of the essence
Assumptions
Property is available to let on open market
Property is fit and available for immediate use
All covenants observed
Property may be used for purpose as set out in the lease
Disregards
Any effect on goodwill on tenants occupation
Ignore goodwill attached to the property
Tenants improvements if landlord consent has been granted for the works
For the open market rent review (Pall Mall) where did you obtain comparables from?
Online resources and recently completed transactions - Costar and EGI
Validation from agents
Industry reports
Tell me about your valuation that ascertained the property was under rented?
From market research and comparable evidence - gathered recent comparable date - similar location, building type size etc
validated this with agents in the market
Used reports to benchmark
Rent Review
Was the tenant represented? Would you advise the tenant seek representation?
They were. Always (Code for leasing business premises) - mandatory.
For a rent review, I would advise a tenant to seek representation from a chartered surveyor specializing in commercial property.
Speak to the RICS or find a Chartered Surveyor
Lease Renewal High Holborn - Inside the Act
How long was left on the unexpired term?
12 months - It was protected under the L+T Act 1954
Must be between 6 and 12 months
Lease Renewal High Holborn
How did you ascertain the passing rent was the market rent?
Researched and acquired comparable evidence
Checked with agents and reviewed market insight reports
Lease Renewal High Holborn
Did you advise the solicitor on the terms to include in the Section 25 notice?
Yes
Confirmation of lease expiry and that the tenant is within the protection of the Landlord and Tenant Act 1954.
Market Rent analysis to confirm that the current rent is in line with the market rate.
Proposal of lease terms, including the proposed lease length (e.g., 5 years), rent, and any other relevant terms
Tenant’s desire to remain in occupation, once confirmed.
Property inspection details to ensure no alterations have been made.
Lease Renewal High Holborn
Why did you inspect and measure if there was no uplift in rent? i.e open market?
To ensure that the tenant had abided by their lease obligations
Lease Renewal High Holborn
Did you advise to issue Section 25 notice prior to inspection
No - I inspected before and after.
What is the difference between a Lease and Licence?
Lease - Exclusive occupation, legally binding between Landlord and Tenant, Right to use the property for a specified period in exchange for rent, can be transferred
Licence - Personal agreement between a licensor and licensee to use the land, Can be revoked at any time
Case Law - Street vs Mountford
What is the difference between a Lease and Licence?
Lease - Exclusive occupation, legally binding between Landlord and Tenant, Right to use the property for a specified period in exchange for rent, can be transferred
Licence - Personal agreement between a licensor and licensee to use the land, Can be revoked at any time
What is adverse possession and what are the timings?
Process by which a person who is not the legal owner of the land can become the legal owner by occupying for period of time.
Registered Land - Before 2003 12 years - After 2003 10 years
Unregistered Land - 12 years
Section 23 of the Landlord and Tenant Act 1954?
Application of the Act
Is it a business tenancy (is it a business/is it a tenancy)
Occupation for at least part
More than 6 months
No exempted or excluded tenancy
Competent Landlord
Section 24 of Landlord and Tenant Act 1954?
Security of tenure provisions - Holding over under the Act
Section 24a Landlord and Tenant Act 1954?
Interim rent
Section 25 notice?
Landlords notice to end lease or seek a new lease. Friendly or hostile.
Must be given by a competent landlord to competent tenant
In the prescribed form
Not less than 6 months and not more than 12 months before date of expiry/date of termination
friendly - includes the proposed terms of the new lease
hostile - grounds for opposition must be stated under section 30
What is the maximum term that can be granted by a county court?
15 years
Section 26 notice?
When should Landlord respond?
Tenants request for a new tenancy - not more than 12 months not less than 6 months before the date of the new tenancy
Must be in the prescribed form and must state tenants proposals for a new lease (including proposed rent)
Landlord must serve counter notice within 2 months if they oppose this
Section 27 notice
Notice to quit
when the tenant does not want the lease to continue beyond the original fixed term
tenant must serve notice giving 3 months notice of termination
tenant only has to serve this after expiry when holding over
Section 28 notice
Renewal of tenancy by agreement
Section 29 notice
Order by court for a new tenancy
Section 30 notice
Landlords grounds for opposition of a new lease
Breach of repairing covenant
Persistent delay in paying rent
Other substantial breach
Provide suitable alternative accommodation
Uneconomic subdivision (compensation payable)
Demolition or reconstruction (compensation payable)
Owner occupation (compensation payable)
Sections 32-35
Terms of a new lease
Section 37
Case Law?
Compensation
Under 14 years occupation - 1x rateable value
Over 14 years occupation - 2x rateable value
Rateable value is the RV at the time the Section 25 notice is served or when the Landlord opposes the Section 26 notice
Case Law : S Francis v Cavendish Hotel 2017
Section 38a
Contracting outside the L+T Act. Landlord must serve a ‘Health Warning’
Simple Declaration - Given when the parties have at least 14 days or more prior to the commencement of the new lease
Statutory Declaration - Served less than 14 days prior to committing to the lease. Must be made in front of an independent solicitor.
Section 40
Notice requesting information about the other party
Section 44
Definition of a competent landlord
What is the caselaw for time is of the essence relating to rent reviews?
United Scientific Holdings v Burnley Borough Council 1978
Time is not of the essence if the lease is silent on it
Different types of rent reviews?
Usually upwards only - open market - can also go down
Indexed (RPI or CPI with caps and collars)
Turnover rents
Stepped increases
fixed increases
What are the key elements of a rent review clause?
Machinery of the rent review (RPI linked, open market)
Basis of Valuation
Settling disputes / ADR
Time of the essence?
Assumptions / disregards
Notice period
Whats the basic difference between a lease renewal and a rent review?
Lease renewal - A statutory procedure
Rent Review - A contractual procedure
What are the dispute resolution procedures that are available to LL’s and T’s in the event a lease renewal cannot be agreed?
PACT
Mediation
Could end up in Court. Maximum term of 15 years. New lease terms set out in O’May vs City of London case to determine terms of new lease
What are the dispute resolution procedures that are available to LL’s and T’s in the event a lease renewal cannot be agreed?
PACT
Mediation
Could end up in Court. Maximum term of 15 years. New lease terms set out in O’May vs City of London case to determine terms of new lease
What is a Calderbank Offer - Calderbank v Calderbank
How must it be served?
It is an unoquivacal offer to settle a dispute, MUST be served in writing and without prejudice and save as to costs.
Would you serve a Calderbank if the third party was an independent expert rather than an arbitrator
No
Arbitrator can award costs. Independent Expert has to go off the lease terms which specify how the costs are awarded.
Explain when a tenants improvements are disregarded at lease renewal?
When establishing the new rent at lease renewal
If licenced
Improvements carried out within the last 21 years should not be rentalised.
What lease terms affect the rent at review?
The rent review clause (definition of rent, assumptions and disregards)
Rent review frequency
Repairing liability
Insurance liability
Alienation (assignment etc)
What do you understand by the expression ‘time is of the essence’?
Whats the main case for this?
Parties must complete their obligations on time
Burnley Borough Council vs United Scientific Holdings Ltd 1978
time is of the essence when the lease says so, T serves notice making time of the essence, deeming provisions
Whats a premium?
A one off payment usually made by a tenant to a landlord - separate from rent
What does the Landlord and Tenant Act 1927 state?
The Landlord and Tenant Act 1927 gives tenants the right to claim compensation for certain improvements made to the property
What are the different types of covenant?
Absolute Covenant – Strictly prohibits certain actions (e.g., no alterations allowed).
Qualified Covenant – Prohibits actions unless the landlord gives consent (e.g., no alterations without consent).
Fully Qualified Covenant – Allows actions with landlord’s consent, which cannot be unreasonably withheld or delayed (e.g., tenant may assign with landlord’s reasonable consent).
Restrictive Covenant – Prevents a party from doing something (e.g., no subletting).
What is the difference between a Part 36 offer and a Calderbank Letter
A Part 36 offer is for lease renewals
You can appeal to the High Court for an arbitration within 28 days of the award on THREE specific grounds
A challenge to the tribunals jurisdiction
On a point of law
Serious irregularity
What is the difference between CPI and RPI?
RPI includes mortgage payments
What is a deeming provision in a rent review clause?
The clause states that if the tenant does not serve a counter notice to a LL trigger notice within the specified time, the tenant will have deemed to accept the new rent.
What is a periodic tenancy?
A rental agreement that continues indefinitely until either the landlord or tenant provides proper notice to end it
What is adverse possession?
By which the person who is not the legal owner of the land can become the legal owner through possession of the land
Registered land 12 years - 10 years if after 2003
Unregistered land 12 years
What is a tenancy at will?
A form of licence created by written agreement for an unspecified time in which the landlord may evict the tenant at any time.
Not a legal interest in land with no renewal right
Is the Landlord and Tenant Act currently being reviewed?
What are the proposed changes?
Yes currently being reviewed by the law society
ESG and Sustainability
Lease Renewal Process: Review of tenant protections and procedures under the 1954 Act, including the ability to oppose or grant lease renewals.
Rent Review Clauses: Focus on fairness and transparency in rent review mechanisms, including market-based reviews and how rent increases are calculated.
Tenant’s Right to Assign or Sublet: Reviewing clauses that govern tenant flexibility to assign or sublet leases, with an emphasis on ensuring that landlords cannot unreasonably withhold consent.
What’s the difference between a TAW and a periodic tenancy
A tenancy at will can be revoked at any time by both parties
What is the hypothetical term at a rent review?
The hypothetical term at rent review is the notional lease length assumed when determining the market rent, as specified in the lease.
Case Law: Basingstoke and Deane Council v Host Group 1987
What are the benefits of an LTA?
Landlord can reinstate the premises at lease end
Tenant is protected at rent review
What is a sweeper clause?
In a lease, a sweeper clause for landlords or property managers covers unexpected costs or liabilities that aren’t specifically listed, allowing them to recover additional expenses from the tenant.
What are the consequences if a tenant serves a break notice giving the correct time period but the notice expires one day before it should?
It would be invalid
Landlords discretion
Mamai Investments v Eagle Star Life Assurance Co Ltd (1997)
When are the following used?
Without Prejudice
Subject to contract
Without Prejudice subject to contract
Without prejudice save as to costs
Without Prejudice - Rent reviews. Cannot be relied upon in court.
Subject to contract - outside the act renewals (non-legally binding)
Without Prejudice subject to contract - Inside the act
Without prejudice save as to costs - Calderbank’s
What is a Calderbank Offer?
How must it be served?
Case Law?
What is the timing for a reply?
Used for rent review disputes
An unequivocal offer to settle
Must be made in writing - Without prejudice, save as to costs.
Timing for reply is usually 21 days
Can you name some assumptions and disregards at rent review?
Assumptions
Property is fit to let on the open market
Willing Landlord
Willing Tenant
For the purpose as set out in the lease
All covenants observed
Ready for immediate occupation
Disregards
Tenant’s goodwill
Tenant’s improvements
Goodwill attached to the property
Personal licences attached the the tenant (liquor licence)
What is the hypothetical lease term?
Case Law?
A fictional lease used during rent reviews to determine the current market rent, assuming a new lease would be entered into on the same terms as the existing one.
If the term is silent, the valuation is on the residual term of the lease
Case Law: Basingstoke and Deane Council v Host Group 1987
Case Law for Time is of the Essence?
What did it conclude?
United Scientific Holdings v Burnley Borough Council 1977
Found that time was not usually of the essence unless stated
Deeming Provision?
If the tenant has not responded to the rent review notice within timeframe, it is assumed that the tenant has deemed to have accepted it.
Headline Rent Clauses in rent reviews?
Cannot consider incentives when analysing comparables
Third party determination for rent reviews?
Cost of application for Dispute Resolution?
Independent Expert or Arbitrator
£425
If a tenant doesn’t respond to a section 25 notice?
If friendly, the tenant must still take action — or they will lose their right to a new tenancy under the 1954 Act.
If hostile, the tenancy ends on the termination date. The tenant has no right to occupy.
If a Landlord doesn’t respond to a section 26 notice?
If the landlord doesn’t respond to a Section 26 notice, and doesn’t oppose it on one of the statutory grounds within two months, the tenant has the right to a new lease. If terms aren’t agreed, either party can apply to court before the notice expiry date.
How is interim rent calculated?
Paid in advance or in arrears?
It is the lower value of the new agreed rent or the market rent.
Paid in advance.
What is the Leasehold Property (Repairs) Act 1938?
Protects Tenants
Applies to leases granted for a term of 7 years or more
Has at lease 3 years until the lease expiry
Requires Landlords to serve a Section 146 Notice on the tenant
The Court is only to permit enforcement of the repairing covenant if the Landlord can prove one of the FOUR following points:
1 Immediate remedy is necessary to prevent substantial diminution in the property reversions value
2 Immediate remedy is necessary to comply with current legislation
3 If the tenant does not occupy the whole property, immediate remedy is required in the interests of another occupier
4 The breach is capable of immediate remedy at a relatively small cost compared with the consequences of the postponement.
What is a covenant
A promise written into a lease or deed that requires someone to do (or not do) something related to a property.
What are the 6 principles of the Bribery Act 2010?
Proportionality
Top level commitment
Risk assessment
Due diligence
Communication
Monitoring and review
Who enforces EPC’s
Local authorities - through their Trading Standards departments
How long do you have to respond to a Part 36 Offer?
21 days
What are the different types of covenant?
Absolute covenant - Means the tenant must strictly abide by the terms of the lease and no changes are permitted
Qualified covenant - Tenant can do something with Landlord consent.
Fully Qualified covenant (most common) - What is prohibited may only take place with the landlords consent, which must not be unreasonably withheld or delayed.
What if a section 25 notice is served 3 months before the lease expiry date but still 6 months before the termination date
A Section 25 notice served 3 months before the lease expiry can still be valid as long as the termination date in the notice is at least 6 months after service and not before the contractual end date.
When can an arbitrators award be overturned?
Point of law
Serious irregularity
Jurisdiction
What is a business tenancy under the Landlord and tenant act 1954?
Section 23 of the Landlord and Tenant Act 1954 - Application of the Act
“A tenancy where the property is occupied by the tenant for the purposes of a business carried on by them or for those and other purposes.”
The tenant must be in occupation.
The occupation must be for the purpose of a business (which includes trade, profession, or employment).
It can include part-business use, as long as business use is significant.
What is the limitation act 1980?
The period of time within which a party can claim damages as a result of another parties conduct.
6 years for actions over tort/negligence
12 years for actions based on deeds or actions to recover land
When are tenants improvements disregarded at lease renewal?
Statutory provisions require the rent to disregard improvements carried out by the tenant in the previous 21 years
In the calculation of market rent
When was the landlord and tenant act last amended?
2004
To what tenancies does the 1954 Act apply to?
Business Tenancies
Leases (over 6 months of occupation)
It does not apply to: Contracted out tenancies, tenancies within a term of 6 months, agricultural tenancies, licences, tenancies at will
What action should a LL take if they wish to gain possession of a property at lease end?
Serve a section 25 notice (hostile) with grounds under Section 30 (A-G)
Compensation is 2x rateable value for 14 years or more or 1x rateable value for less than 14 years
Section 40 L + T Act?
Request for information from either party
What are the assumptions at rent review
That the property is fit for immediate occupation and use
Vacant possession
Available to let on the open market
Between a willing lessor and willing lessee
That all covenants have been observed
Where would you put subleases in the hierarchy of evidence?
Depends on the terms of the sublease
Review alienation clause in lease and it will say you can sublet at market rent or passing rent
If Market Rent, this is good evidence on open market lettings
If passing rent, this is not such good evidence as may not be reflective of the market.
What type of rent review clause would have a cap and collar
Index linked
What is the process for PACT?
Used for lease renewals
Parties agree to arbitration
Parties present evidence at hearing
Arbitrator makes decision - Award documented
Enforcement submitted to court for confirmation
What documents would you need to lease a property?
EPC
Lease
Heads of Terms
Terms of Engagement
What is a Section 40 notice?
How long to respond?
Notice requesting information from other party
1 month
What is the case law for Section 30 grounds for opposition (Ground f - for redevelopment)?
What must the Landlord provide?
S Frances v Cavendish Hotel 2018
LL must provide firm intention, funding and planning
For owner occupation - Section 30 (ground G), what must the Landlord provide
Must have owned property for 5 years
Must prove intention to occupy/run as a business
What are the 2 functions of a Licence for Alterations?
To protect the parties at rent review
To help with dilapidations claims at the end of the lease
What governs a Part 36 Offer?
Civil Procedure Rules
Case law on break notices / break dates?
NYK Logistics v Ibrend Estates [2011]
Where a break clause is conditional on giving vacant possession, the tenant must ensure the property is entirely empty, with no people, possessions, or substantial interference with the landlord’s use.
What is the structure of The RICS Professional Standard: Code for Leasing Business Premises 2020?
- Introduction
- Mandatory requirements - Must recommend representation by a professional
- Lease negotiation best practice - lease terms - rent reviews, rent deposits, repairs, sc, alienation
- Appendices - Model HOT’s
Lease Terms: Key details like rent, duration, renewal options, and tenant/landlord responsibilities.
Rent & Reviews: Understand how rent is structured and how rent reviews work.
Tenant Obligations: Payment of rent, property upkeep, and compliance with lease terms.
Landlord Obligations: Maintaining the property and ensuring legal compliance.
Repairs & Maintenance: Knowing who handles repairs and maintenance.
Service Charges: How these are calculated and what they cover.
Termination/Renewal: Procedures for ending or renewing the lease.
Security of Tenure: Understanding legal protections and break clauses.
Rent Deposit/Guarantees: Types of financial security from tenants.
Legal Compliance: Knowledge of laws (e.g., health, safety, zoning).
Dispute Resolution: Methods for resolving conflicts.
Insurance: Tenant and landlord insurance responsibilities.
What is disclaiming a lease
Disclaiming a lease is a formal legal process whereby a liquidator or administrator renounces the tenant’s interest in a lease, treating it as an onerous contract, in accordance with the Insolvency Act 1986.
How are damages assessed when a tenant is in breach of their repairing covenant?
Damages are typically assessed based on the cost of carrying out the necessary repairs, subject to the statutory cap under Section 18(1) of the Landlord and Tenant Act 1927, which limits damages to the actual reduction in the property’s value caused by the disrepair.
What is the Leasehold Property (Repairs) Act 1938?
Applies to leases granted for a term of 7 years or more and has at least 3 years until lease expiry.
Requires Landlords to serve a Section 146 Notice on the tenant
Only if:
Immediate remedy is needed to prevent substantial diminuation in property’s value
Immediate remedy is required to comply with current legislation
Immediate remedy is required in interests of another occupier
The breach is capable of immediate remedy at a relatively small cost
What does the Estate Agents Act 1979 do?
The Estate Agents Act 1979 regulates estate agency work by requiring transparency on fees and interests, banning misleading statements, and ensuring client protection through professional standards.
Requires agents to clearly set out terms of engagement, disclose fees and any conflicts of interest, and to properly safeguard client money through the use of separate client accounts
