Landlord and Tenant - Summary of Experience Flashcards
What is the difference between a lease and a licence?
Lease = Fixed term/periodic and gives T exclusive right of possession
Licence = Gives permission for someone to do something on owners land which would otherwise constitute as trespass
Name three situations where licences are appropriate
- Licence to alter
- Licence to assign
- Licence to sublet
What is the basic difference between a lease renewal and a rent review?
Lease renewal = Statutory procedures laid down by L&T act 1954 (not statutory if not in L&T act)
Rent review = Contractual procedure contained within a lease
Please can you take me through the receiving of the break notice at Unit 6, Merton Road and the steps you undertook once it was received?
1) Break notice was received by LL
2) Reviewed lease - check conditions required for validity (all payments to be made/vacant possession) - Confirmed position with solicitors
4) Findings relayed to my client and I confirmed the break should be accepted subject to the preconditions being met
3) I attended on the break date and confirmed conditions had been satisfied - Took keys from tenant and break was activated
What does the Landlord and Tenant Act 1954 do?
Provides security of tenure for business tenant if the lease is inside the act
When was the Landlord and Tenant Act 1954 last amended?
1st June 2004
To what tenancies does the 1954 act apply?
All tenancies occupied for business purposes
What is section 23?
Tenancies to which part 2 of the act applies (Business tenancies)
Names the tenancies to which the 1954 act does not apply
- Residential tenancies
- Agricultural holdings
- Mining leases
- Tenancies granted as a condition of employment
- Tenancies not exceeding 6 months unless provision for an extension or T has been in occupation for more than 12 months
What is section 24?
Gives the tenant security of tenure, landlord or tenant can apply to court to determine the terms of the new tenancy
What is a section 25 notice?
Notice serviced by LL to tenant to terminate the lease at its contractual expiry:
- LL may want possession
- LL may want new tenancy (Serve notice with certain terms or s.30 served to object tenant having new lease)
When can a landlord serve a section 25 notice?
- With a minimum of 6 months notice but no more than 12 months before contractual expiry
What must a section 25 notice contain?
- Landlord name
- Tenant name
- Property name (but notice is served on T)
- Date of notice
- Date of tenancy termination
- Friendly OR hostile notice
What advice would you give to a landlord client in respect of a lease renewal where a property is significantly overrented?
Tell client what you think the rent would be for a new tenant
1) Do nothing - Carry on getting rent as tenant is holding over. T could terminate by giving 3 months or serve S.26 to request new tenant
2) Serve S.25 - Enter new lease at lower rent (value of prop would still be high as unit is let)
Tenant could apply to court for interim rent if giving 12 months notice (As T would have to pay high level of rent for 12 months) - T would suggest paying for 6 months as this is the minimum time LL could have given
No right answer - depends on landlords aims
What is a hostile notice?
Under s.25 LL is stating they are not willing to give a new tenancy when it expires
What is a friendly notice?
Under s.25 LL is stating they are willing to give a new tenancy when it expires and sets out terms the landlord would accept
What action should a landlord take if they require possession of a property at the end of a lease?
Serve a S.25 to terminate tenancy and object to new tenancy under ground(s) of section 30
Explain what action a tenant should take if there are 6 months of the lease remaining and they want to vacate at expiry (no s.25 has been served)?
- T can hand back keys on last day of term
- T can also stay (hold over) as per act
- T should ideally give minimum 3 months notice
- If T in occupation 1 day after expiry also must give 3 months notice
When is the best time to serve the section 25 notice: 12 months or 6 months before lease expiry?
12 months
- Maximum time for both parties - Good if T is going but if they are likely to stay you would have to agree rent far in advance (unsure of rent in 12 months time)
6 months
- Negotiating terms close to renewal date
- Risk tenant may not reply for a few months and then leave on the last day of the tenancy
Why would a LL give 12 months notice for s.25 when they can give 6 months?
- If the unit is overrented as you get 6 months extra rent
- If you are confident the tenant is leaving it gives more time to find a new tenant
What action should the LL take if they require possession of a property at the end of the lease?
Serve s.25 to terminate tenancy. State objection to tenancy under ground(s) of s.30
What can a LL do if they can’t get a response from T to friendly section 25 notice?
- Write to tenant mentioned if they don’t hear in number of days, client will be applying to court to determine terms of new tenancy (+ T liable for costs)
- Court will advise mediation to meet an agreement
Name the grounds under section 30(1) of the 1954 act under which landlord can obtain possession
- T not paid rent
- T not met repairing obligations
- T not met other obligations
- Providing suitable accommodation
- Plans to demolish
- LL occupation
- Uneconomic sub-letting (can let as whole)
A lease of a shop property is due to expire in 12 months time. You are instructed for the first time by the LL to negotiate a new lease with the T. How would you deal with this instruction?
1) Confirmed with my client 12 months before expiry - They noted that they would like to proceed conversations re renewal
2) Initially reviewed lease and inspected the unit - Confirmed no breaches evident
3) Serve friendly notice (prop, rent, terms)
4) Enter negotiation - Confirm on this
5) Sign new lease (start date year after)
In what circumstances is a T entitled to compensation when a LL successfully opposes a new lease under the 1954 Act?
Section 37- LL succeeding under no fault grounds
How is T compensation assessed under 1954 Act?
Section 37
- 2 X Rateable Value for occupation of 14+ years
- 1 X Rateable Value for occupation of less than 14 years
Court can award compensation for damage or loss
Explain the power of the court in ordering a new lease
Section 32, 33, 34 and 34 - Court determines these
S.32 - What property is comprised in new tenancy
S.33 - Term
S.34 - Rent + (S.24a) interim rent
S.35 - Other terms
What is section 34 of the act?
New rent for the lease disregarding:
1) T’s previous occupation
2) Goodwill
3) Certain improvements
4) Licence to sell intoxicating liquor if licence belongs to tenant
What do you understand as the term interim rent?
Rent payable between end of old lease and start of new lease
- Used when negotiations regarding lease are ongoing (tenant paying old lease during this time)
How is interim rent assessed?
It is the market rent for period from expiry of S.25/2.26 notice (Market rent 6-12 months ago)
Rent under new tenancy unless stated so and under same terms as prior tenancy
In what situation would a tenant be recommended to serve a section 26 notice?
- If T believed lease was overrented to get lower rent on new lease
- To sign a new lease (even if overrented) - To renew
When are tenants improvements disregarded at a lease renewal?
- If improvements carried out within last 21 years (any time during tenancy)
- If it is an alteration (not improvement)
- If improvements were a lease obligation
What are the key elements of a rent review clause?
1) Who can instigate RR (LL or T or either)
2) May mention LL is to give notice and T may be able to serve counter-notice
3) If agreement isn’t made, it will state how rent can be determined
4) Machinery, basis of value, means of settling dispute (ALL OF ABOVE)
What is a trigger notice?
Notice that triggers pre-determined sequence of events.
e.g. First notice by LL or T to trigger rent review
What is meant by the term ‘time of the essence’
Although generally not the case, it states strict timescales that need to be adhered to
Which legal cases relate to ‘time of the essence’
Burnley and Cheapside
- Mention that essence is that rent is reviewed from that specific date
- Although their are strict times, these do not need to be kept to (not the essence of the contract)
When is ‘time of the essence’ likely to be applied?
- If mentioned in lease
- If lease says timelines are strict
- If T makes it so (send letter requesting to organise in specific time period - E.G Barclays case)
- If there are deeming provisions
What are deeming provisions?
Where lease states:
- L to give notice proposing a new rent
- T to serve counter-notice with proposal in stated period of time
- If T doesn’t serve counter notice in time they are deemed to have agreed Ls rent
- L could be deemed to accept Ts counter proposal if lease states so
Which lease terms affect the rent at review?
- Rent review clause (Definition of rent + assumptions/disregards
- Review frequency (more frequent = lower rent)
- Repairing liability, user/alienation restrictions, insurance provision
- More flexible lease is higher rent (in general)
- Tenancies in 1954 act higher rent as T has security upon lease expiry
Which assumptions are usually made at rent review?
- Premises fit for immediate occupation
- No work carried out by T has reduced rental value
- T has complied with terms of existing lease
- Market rent will be that payable after expiry of any rent-free period for Ts fitting out works
- If premises damaged, they have been reinstated
