Landlord annd Tenant Flashcards
What is the difference between a lease and a license?
A lease provides exclusive possession with a legal interest
License is non-exclusive, often temporary, no legal interest
What is a dilapidation and how do you calculate that?
Dilapidation = Failure from the tenant to repair or restore the property to its original condition as stated in the lease agreement.
Damages to remedy dilapidations are calculated the reasonable cost to the Landlord of doing the works plus loss of rent for the period until the works have been completed.
What is compensation?
If you are unsure of whether an applicant can afford a rent, what may you request?
You may request them to provide you with a guarantor, who would be liable for costs if the tenant failed to pay rent, or caused significant damage
What is a guarantor and who would make a good guarantor?
A person who gives/acts as a guarantee (agrees to pay rent, repairs if the tenant fails to do so)
Good guarantor should have a good, stable income, good credit rating, and assets.
What are the initial checks when considering a new tenant?
Financial check/income, credit check
Criminal record
Check for fraud and confirm ID (passport/address/current occupancy)
Consider meeting the tenant face-to-face during viewings
What cant you do when selecting a tenant?
unconscious bias, request information on personal information (e,g. religion, race, sexuality, gender)
What do you need to do before arranging a new residential tenant and signing the lease?
-Landlord Registration
-Property needs to meet the repairing and tolerable standards
-Legionellers, EPC, Asbestos, EICR, Gas safety,
-Compile inventory/RoC
-Advertise for tenant, arrange viewings
-Provide tenant with copy of documentation
What are the key changes between an LDT and MLDT?
MLDT introduced in 2016 Legislation
LDT introduced in 2003 Legislation
can contain:
- Mutually agreed break clause for new entrants, 5 years after commencement
-Landlord can contract out of obligation to renew/replace FE
-If not terminated, it will continue for another 7 years, on continuous cycle. Whereas an LDT only continues on 3 year cycle.
What key changes were introduced from the 2016 Land Reform (Scotland) Act?
-MLDT Introduced (min. 10 years)
-Repairing Tenancy (min. 35 years, initial 5 year repairing period
-Tenants right to buy ‘requirement to register’ removed
-Rent review moved away from ‘open market rent’ to show ‘fair rent’
-1991 Act tenants can relinquish their tenancy to the landlord in exchange for compensation (half the difference between the value of the holding with a sitting tenant and the VP value)
-Landlord must provide written notice before undertaking an improvement, the tenant can object.
Talk me through serving the appropriate Rent Review Notices?
Initiate RR by serving section 13 (more than one, but less than two years before RR date)
Inspect farm and begin discussions (not less than 6 months before)
Written proposal (not less than 4 months before due date) detailing rent, comparbale
Written response from Tenant (not less than 2 months before due date) either accepting or seeking clarification
If not agreed:
Proceed with further discussion, lodge application with land court, professional mediation, sometimes by expert determination, binding arbitration
What is the minimum rent review cycle for Agricultural tenancies?
3 years, or commencement of the new tenancy
What must NOT be taken into consideration when compiling a ‘new rent’ at a rent review?
-The ‘scarcity of lets’ which could distort value
-Any increase in value due to tenants improvements on the holding
-Any impact on rent due to the occupation of the tenant on the farm
-Improvements executed by the landlord which see the landlord receiving grants/payments from their improvement
-dilapidations/deterioration from the tenant does NOT bring down the rental value
What MUST be taken into consideration when compiling a ‘new rent’ at a rent review?
-Well presented, well analysed comparable data of similar holdings, preferably recently settled rents.
-Current economic conditions in relevant section of Agriculture
-Terms of the tenancy, relating to rent
If a rent review cannot be decided, what is the next step?
Determination by land court, to settle dispute ideally with negotiation rather than litigation
What is the difference between Mediation and Arbitration?
Mediation, involved a 3rd party who will help to facilitate discussion and come to a conclusion that all parties agree to. The individuals will still maintain control over the process and final decision. Mediation is less formal.
Arbitration, involves an independent/neutral 3rd party who will assess the data and stories, and will make the final decision, which is legally binding.
What is the ‘productive capacity’ of the holding?
The sustainable yield of agricultural products that would reasonably be expected from the agricultural holding under a system of farming suitable when farmed by: a competent, efficient and experienced tenant farmer; with adequate resources
When does the rent review date take place?
No longer has to take place on the anniversary date, and instead simply a ‘rent agreement date’
Tell me about the different options for managing a conflict in an Agricultural tenancy situation?
- Communication
- Hear both sides of story
- Manage expectations of both parties
- Act as the mediator if both parties agree
- Aim to discuss/hold meeting in person with all members
If all else fails:
-3rd party mediator
-Consider arbitration if the situation is stagnant
What legislation created the appointment of the TFC?
2016 Agricultural Holdings Legislation
What is the purpose of the TFC?
To promote and improve relationships between Landlords and Tenants and to provide guidance.
If you do not have a physical lease in place, what do you fall back on?
The Agricultural Holdings Legislation
What is the minimum term for an MDLT or LDT
A minimum of at least 10 years
How does a landlord or tenant terminate a 1991 Act Tenancy?
They serve a notice to quit, but an incontestable notice to quit from the landlord is extremely limited
What are the ways a 1991 Act can form?
The landlord and tenant willingly entered a 1991 lease after the Act came into force
The landlord and tenant entered into a lease before the Act came into force, but the Act now applies to that lease
The landlord leased an Agricultural holding to a tenant prior to 27th November 2003 without a written lease
The landlord and tenant entered into a grazing lease before 27th November 2003, and remained in occupation for 365+ days or cropped the land.
How many 1991 Act tenancies are there in Scotland?
4,000 - 5,000
What legislation governs each Agricultural lease type?
91 Act Tenancy - 1991 Act
Grazing Let - 2003 Act
SLDT - 2003 Act
LDT - 2003 Act
MLDT - 2016 Act
What happens if a tenant has a 5 year SLDT and remains in occupation (agreed) after the expiration date?
The lease convers to an MLDT for a period of 10 years commencing on the START date of the original SLDT.
What is defined as a ‘new entrant?’
A person who has not, in the 5 years before entering into an MLDT been a tenant under any other Agricultural or crofting lease
Give an example of a time when you have had a difficult conversation with an Agricultural Tenant?
I have had difficult conversations with the client and tenant, when erecting a new shed. A concrete apron, and concrete Difficult discussions on what constitutes to a landlords improvement when erecting a new shed and resultant tenant contribution.
Other than MLDT, what other tenancy was introduced in the 2016 Agricultural Holdings legislation?
Repairing Tenancies, which is a tenancy let for a period not less than 35 years, with a repairing period of not less than 5 years.
What are the two key conditions of a grazing let?
- It must only be used for the purpose of Grazing
- The period of use must last no longer than 364 days and stock must be removed.
What are the landlords obligations in regards to FE in 1991 Act tenancies?
- Provide FE to allow a reasonably skilled farmer to maintain efficient production, for the ‘use’ stipulated in the lease (e.g. arable)
-Must be provided at the start of tenancy - Replace and renew FE rendered necessary by fair wear/tear
What is fixed equipment?
Equipment which belongs to the landlord but is provided to and used by the tenant for the purpose of farming efficiently.
What are the Tenants obligations in regards to FE in 1991 Act tenancies?
Tenant is thereafter responsible for maintaining the FE in that condition, fair wear and tear excepted
When must the landlord provide adequate FE in SLDTs, LDTs, and MLDTs?
Within the first 6 months of the commencement of the lease
What is the current level farmhouses and cottages need to meet in Agricultural tenancies, and what changes are ahead?
Currently only need to meet the Tolerable standards.
However, 2019 update stated:
All agricultural properties will need to meet Repairing standard from 28 March 2027, so landlords have had 8 years to implement.
When was the tenants amnesty?
2017 - May 2020 but was extended to December 2020
What alterations did the 2016 AHA make to Assignation to 1991 Act tenancies?
Previously, 2003 AHA only permitted near-relatives, but 2016 expanded this to non-near relatives (nephews, brothers in law, spouses or civil partners of near relatives)
What justification can a landlord withhold consent for a near relative of a 1991 Act assignation?
- Person not of good/sound character
- Person does not have sufficient resources to enable the person to farm with reasonable efficiency
- Insufficient resource to pay for the rent
- Lacks the skills/experience to maintain farm in line with good husbandry
What can the assignee do if the landlord withholds consent due to lack of experience?
Assignee must begin relevant training within 6 months of the date of the notice
If the landlord wishes to withhold consent to an assignation, when do they need to respond to the tenant by?
The landlord has 30 days to respond from the date of receiving the notice of assignation
Can you assign an SLDT?
No it is not permitted
If the tenant wishes to sell their 1991 Act tenancy on the open market, who can buy it
- New entrant to farming
- Someone who is progressing in farming
Under what circumstances can a landlord evict a tenant?
- If the tenant owes more than 6 months rent
- If the tenant becomes bankrupt
- If the tenant breaks an irritancy clause within the lease (unlikely to result in eviction)
What are the 3 ways of passing on a 1991 Act Tenancy?
- Testate Transfer on death (means of a bequest in a Will)
- Lifetime assignation to an eligible assignee
- Intestate transfer on death (if tenant died without having bequeathed the tenancy in a will)
If the landlord serves a ‘notice to quit’ what can the tenant do?
Tenant can serve a counter-notice in writing within 30 days of receiving.
