Landlord And Tenant - Summary Of Experience Flashcards
Please tell me what information is required from the client at commencement of the instruction?
- Agreed terms of engagement
- An understanding of your client’s strategy and objectives.
- A copy of the existing lease and any plans attached to the lease.
- Copies of any licences e.g. LTA’s, improvements, deeds of variation.
- Copy of any rent review memorandums.
- Contact details from the tenant to arrange an inspection of the property or details of the landlord/agent.
- Copy of the Property Management file.
- Details of any comparable evidence.
What are the main differences between a Lease and a Licence? (There are 3)
1) A Lease provides an occupier with an estate in the relevant land, a Licence is a permission to make it lawful for them to use the land.
2) A Lease can be assigned, a Licence is normally a personal right that cannot be assigned.
3) A Lease cannot be terminated until it expires (unless there is a break clause,) A Licence cause usually be revoked at any time.
If exclusive possession is granted of a defined area for over 6 months, it is likely to be a lease.
Can you name any case law linked to Leases and Licences?
Street v Mountford 1985
Sets out the differentiation between a lease and a licence.
What are the FOUR requirements of a lease?
1) Exclusive occupation
2) Payment of rent
3) Duration for a specified term
4) If more than 3 years, the terms must be in writing, signed as a deed.
Tell me what is included your Term’s of Engagement in respect to Rent Reviews & Lease Renewals.
Our fees in respect to Rent Reviews and Lease Renewals are based on:
- A Fixed Fee in two stages. Stage 1 - report and Stage 2 - negotiations.
- An hourly rate for A Director, Chartered Surveyor, Graduate Surveyor.
Also a copy of our PI Insurance and CHP
What actions are required by the surveyor in respect to a new instruction?
- Undertake a Conflict of Interest & competency check.
- Agree terms of engagement with the client.
- Understand the Client’s objectives.
- Read the lease packet and any licences carefully.
- Check whether time is of the essence for a rent review.
- Undertake a site inspection & measurement in accordance with RICS Surveying Safely.
- Undertake a market rent valuation.
- Prepare a report to your client setting out your recommendations
What does ‘Without Prejuice mean’?
Means that during the period of negotiations, the opposing party cannot subsequently rely upon any document or discussions held which are labelled ‘Without Prejudice.’
The information is therefore privileged.
What are some of the common Lease terms?
- Names of parties involved (including company number)
- Term / Dates of Lease
- Rent payable
- Service Charge payable
- Landlord’s Obligations
- Tenant’s Obligations.
What could be seen in a rent review clause?
A Rent Review clause may be positioned in a Lease as a ‘Schedule’
It will included how the Rent is going to be ascertaining i.e.:
- RPI
- Upwards only
- On Market Evidence.
Talk me through your discussion and approach to dealing with this matter? (New Century Road Example)
Our firm was instructed by a new client to conduct a rent review in Basildon.
I approached the tenant after receiving contact details from the client and made arrangements to inspect and measure the property at a date that was convenient
After collecting the correct floor areas. I complied comparable evidence and considered an uplift by £6k p.a.
I entering a dialogue with the tenant stating this amount who agreed terms in writing and the RRM was sent out to be signed.
What is a Calderbank Offer?
A Calderbank offer is an offer settled at a given level of rent within a certain time period and if it is not accepted then a third-party surveyor will look at the matter for determination.
Used mainly in rent reviews.
Costs usually awarded to successful party.
Why did you consider the rent to be increased? (New Century Road Example)
The evidence that I collated showed signs that the market rent was higher in Ballisdon local agents backed up my evidence.
What was the square footage of the property (New Century Road Example)
1151 square feet.
What is a Tenancy at Will?
A form of licence created by written agreement for unspecified time in which the landlord may evict the tenant at any time.
Not a legal interest in land with no renewal right.
What is a Wayleave?
A temporary right and receives an annual payment e.g right for an electricity company to install and retain their apparatus.
What is an Easement?
This is a permanent right and receives a capital payment, it allows a right enjoyed by one party over the land of another.
What is Adverse Possession?
The process by which a person who is not the legal owner of the land can become the legal owner through possession of the land for a specified period of time without the owners permission.
Registration Act came into effect in 2003.
10 or 12 years time frame.
What is the basis of a rent review?
- Normally upwards only to the market rent using standard assumptions.
- Other bases of rent review include indexation (often RPI or CPI with caps & collars), turnover rents and stepped increases.
- Time is not normally of the essence (United Scientific Holdings Ltd v Burnley Borough Council 1977)
What are the FOUR usual assumptions of a Rent Review?
1) Property available to let on the open market by willing tenant to a willing landlord for a term of years as stated.
2) Property is fit and available for immediate occupation and use.
3) All covenants observed by landlord and tenant
4) Property may be used for purpose set out in lease
What are the THREE usual disregards with a Rent Review?
1) Any effect of goodwill on tenant’s occupation
2) Ignore goodwill attached to the property
3) Tenant’s improvements if landlord consent has been granted for the works.
What are Headline Rent Review Clauses?
Headline Rent ignores all incentives / concessions granted on a letting, whether they be for fitting out, pure incentive or in lieu of dilapidations / works.
What is the difference between a Lease Renewal and a Rent Review?
A Lease Renewal occurs when the Lease agreement comes to an end.
A Rent Review is normally scheduled in the lease and can lead to an increase or decrease in rent depending on evidence supported / what the lease clause says.
Talk to me about your discussions with the Tenant (Scarborough Example)
The discussions for this example took longer than what I had in mind when approaching the situation. As the evidence was clear that there was an increase in the rental value and according to local agents the demand for small industrial units with access to a service yard had risen since the lease start date.
The Tenant was Scarborough Borough Council who were going through a large restructuring which is why I think the negotiations took longer than expected.
What was included in the Rent Review Memorandum? (New Century Road Example)
- Name of Landlord and Tenant
- Address of the property
- Date of the lease and rent review
- Confirmation of the new rent agreed
- Signed and dated by both parties.
Why did you advise your client to offer the tenant a new lease despite them being in rent arrears? (East Ham Example)
I advised that our client should only offer a new lease on the condition that the service charge arrears were paid in full, either in one sum or a payment plan is agreed in writing. By keeping the tenant in occupation, it would allow for our client to maintain their income and avoid the liability of void costs if the unit became vacant.
What rights does the tenant have given the lease was outside the L&T Act 1954?
The tenant has no rights to a new lease at the end of the term.
Talk me through your discussions with the solicitors? (East Ham Example)
After agreeing Heads of Terms with the tenant, I sent these to the solicitor via an email and backed this up with a telephone making sure they had received my email. I stated to the solicitor of the conditions of granting a new lease (service charge arrears needed to be paid off)
Why did you suggest a payment plan for the tenant to pay off his arrears?
I met the tenant in person to discuss his arrears and acted professionally by understanding the tenant’s financial position. After speaking with my client and reporting on my discussion with the tenant, we thought this was the best solution for the tenant to pay over a period of time to assist him in what was a difficult time for his business.
Do you have a duty of care to your tenants as well as to your client?
We as management surveyors have a duty of care so far as to what the lease states. However, I always say to the tenants that I am the ‘bridge’ between Landlord and Tenant and thus if they have any queries then I am on hand to assist in the most professional way I can by keeping a rep-our and reporting any queries to my client.
What did the lease state in respect to the Skylight? (Scrutton Street Example)
Under the tenants obligations in the lease, the tenant at all times during the term is to repair and maintain the interior of the premises including the fixture and fittings, doors, window glazing and all appurtenances.
What is the cases involved in relation to Time Of The Essence?
United Scientific Holdings v Burnley Borough Council (1978) provides that the general presumption is that time is not of the essence unless indicated otherwise.
Bello v Ideal View (2008) related to a lease where the landlord had not initiated the rent review for 13 years. The court held that time was not of the essence and the rent review could proceed.
What does “Without Prejudice save as to costs” mean?
Is an offer to afford a party to dispute some protection against the high costs of dispute resolution.
Explain Section 24 of the Landlord and Tenant Act 1954?
At the end of the fixed term of a business tenancy to which the act applies, the tenancy will not come to an end if the tenant remains in occupation for business purposes until either L & T serves a notice.
Explain what Section 25 covers in the Landlord and Tenant Act 1954
Section 25 is the LANDLORD’S notice to grant or end a/the lease.
Not more than 12 months, not less than 6 months.
Tactics - is the rent rising or falling and who benefits
A landlord can either issue a hostile (ending) or friendly (granting) notice
Can you tell me the contents of a Section 25 notice?
- Name and address of the landlord and tenant.
- Address of the property.
- Notice of the date to end the tenancy (hostile or friendly)
- Confirmation of the date by which the tenant must ask the court for a new tenancy.
- Landlord’s proposal for a new tenancy.
- A strong recommendation to seek legal advice.
Explain to me a Section 26 notice?
Section 26 is the TENANTS notice to renew.
Not more than 12 months, not less than 6 months.
Tactics - is the rent rising or falling and who benefits
If the landlord wants to oppose a s26 notice, L must serve a valid counter-notice within 2 months specifying grounds for opposition.
Explain Section 27 of the LTA 1954 ?
Section 27 is the TENANTS notice to end the tenancy .
3 months notice of the tenant leaving after expiry - S.27 (1)
Tenant has no obligation to inform the landlord they intend to vacate.
What should you always check in respect to notices when acting for a client?
The validity of the notice.
Explain the grounds for opposition of a new lease under section 30 (7)? (LANDLORD opposing new lease)
1) Breach of repairing covenant
2) Persistent delay in paying rent.
3) Other substantial breach
4) Provide suitable alternative accommodation.
5) Uneconomic subdivision (compensation payable)
6) Demolition or reconstruction (compensation payable)
7) Owner occupation (compensation payable)
Summarise the key sections of the 1954 Act?
23 - Application of the Act
24 - Security of tenure provisions & continuation of tenancy.
24a - Interim Act
25 - Landlord’s notice to end the lease or seek a new lease
26 - Tenant’s notice to seek a new lease
27 - Tenant’s notice to end the lease.
28 - Renewal of tenancy by agreement
29 - Order by Court for a new tenancy.
30 - Landlord’s grounds for opposition of a new lease.
32-35 - Terms of the new lease
What are the proposed changes in respect to the LTA 1954?
- In March 2023, the Law Commission announced that it intends to review Part II of the LTA 1954
- The stated aims of the review are, “Ensuring Part 2 of the Landlord and Tenant Act 1954 works for today’s commercial leasehold market”
- As at January 2024, the next steps are stated to be “The Commission aims to publish a consultation paper as soon as possible in 2024”
Talk to me about Contracting Out (Lease Renewals Outside the Act)
Section 38A of the Act sets out the procedure which must be followed to contract outside the Act.
When the lease comes to an end, the tenant has no statutory right to remain in occupation.
Landlord must ensure the premises are vacant or ensure new lease is in place at the lease expiry date. If they accept rent, then a protected tenancy may be created.
What are the TWO types of declaration?
1) Simple Declaration - given when the parties have at least 14 days or more prior to committing to the lease.
2) Statutory Declaration - given when the parties have less than 14 days prior to committing to the lease. If this is the case, a Statutory Declaration must be made before an independent solicitor.
Tell me the various ways to terminate a lease?
- Forfeiture
- Surrender and negotiation
- Merger
- Disclaimer (due to insolvency)
- Break Clauses
- Lease expiry and services of notices under the LTA 1954.
