Landlord & Tenant Flashcards by Nico Haritou

Can somebody tell me about the salient factors that affect value you would find in a lease?

Inside the Act
Rent
Term length
User clause
Repairing covenant

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Why is being inside the act a factor that might affect value?

less flexibility to landlord if they wish to obtain vacant possession

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Explain more about how repairing covenant affects value

If tenant has less repairing obligations, landlord will have higher obligations – more cost to landlord and therefore reducing value

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How would you describe a lease where tenant has less repairing obligations?

IRI

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How does the rent review provision affect value?

As it gives the landlord the ability to increase the rent in line with the market or index

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What is more valuable in this market, open market rent review or RPI/fixed increase

Depends on the property
Industrial doing well so open market is better
Retail is not doing well so RPI is better

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In Landlord and Tenant, what are the various methods of dispute resolution

Arbitration
Independent expert

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If there is a general landlord dispute, what is available then? How might you seek resolve?

Mediation
Conciliation
Litigation
PACT

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What process has the RICS introduced to deal with disputed lease renewals?

PACT

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What is the foundation of PACT? What is it supposed to do? How does it differ from a court hearing?

More cost effective
Less time consuming
Expert decisions

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How is a dispute settled in mediation?

Mediator cannot make a decision, they simply help parties come to a resolution

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Specifically, what does the 1954 Act do?

Provides security of tenure to business tenure in occupation

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What is security of tenure

A right awarded to the tenant to request a new lease and remain in the unit if a lease is not opposed

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How does a landlord terminate a lease in the Act?

Section 25 hostile notice, providing ground for opposition under section 30

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What does the landlord and tenants covenant act 1995 do?

Removes privity of contract for an assignment and introduces AGA.

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What is an AGA?

Authorized Guarantee agreement

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Does an AGA also affect sublettings?

No, the landlord has no relationship with the subtenant

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What is the main principle or section of the landlord and tenant act 1988?

In relation to alienation, landlord cannot unreasonable delay consent

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Law of property Act 1925, what is it?

Section 146 – forfeiture of business tenancies for breach in lease covenant

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Talk me through how you went through your rent review

Receive client instruction
Competent check
Conflict of interest check
Terms of Engagement
Gather information (lease and licence to alter)
Inspect and measure
Gather comparable evidence

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Why is it important to see if there has been a licence to alter?

Ensure you cannot rentalise the improvements / alterations – they are lawful

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What specifically did you look at in the lease for the Rent review?

The rent review clause

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What was the rent review mechanism in your example?

Open market to market rent – upward only

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Was there anything specifically stated in the rent review clause that you had to consider?

Whether time is of the essence or not

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What did the rent review clause say bout time is of the essence?

It was silent and therefore assumed time is not of the essence – united scientific holdings vs burnley borough council

What else did you look at in the rent review clause that you would have had to report on to your client

Dispute resolution Assumptions and disregards

What are the standard assumptions you might find in a rent review

Willing landlord and willing tenant Vacant possession Property is available for immediate occupation Complied with other lease terms

What are standard disregards in a rent review?

Lawful improvements – improvements made in the current lease or less than 21 years ago Goodwill Occupation Alcohol licence

In your example what was you dispute resolution procedure

Independent expert however they could award costs

Can you tell me what are the main differences between an independent expert and an arbitrator?

Arbitrator is governed by Arbitration Act 1996 Arbitrator uses evidence to make decision whereas IE acts on own expertise IE can delegate duties Arbitrator is not liable for negligence other than on a point of law

What was the relevance of the fact that the IE could award costs?

Usually an Arbitrator determines who/how fees are paid – this is why a calderbank is usually served IE cannot usually determine costs

What would you mark a calderbank offer with?

Without prejudice save as to costs

What does without prejudice actually mean?

Information cannot be used as evidence

How long is a calderbank available for acceptance?

21 days

If you were to accept a Calderbank offer, is it binding?

Yes, if acceptance is in writing. If it is not in writing, you are not bound by it

A Client approaches you and advise that the lease is coming to an end, how would you advise you Client landlord?

First understand when the lease is ending – review the lease

Why is when the lease comes to an end relevant in a lease renewal?

Relevant for notices under the 1954 act

If you served the section 25 notice 3 months before expiry, when would the new lease start?

3 months after expiry (6 months from service of notice)

The landlord has advised you that there is 12 months until the lease expires and wants the tenant to stay, how would you advise your Client?

Competency check Conflicts check Terms of Engagement Then inspect and measure to value the property and determine if it is over or under rented

You have established that the unit is under-rented, how would you advise your Client in a rent review?

Serve S.25 friendly notice

What does a S.25 friendly notice actually contain/what does it actually do?

Does a tenant have a timescale to respond to a S.25 notice?

Unless stated otherwise, there is no timescale for a tenant to respond to a s.25 notice. However they must respond before the new lease suggested start date

Tell me if the lease is coming to an end in 12 months time, why would you advise your Client to serve a s.25 12 months before, or wait until 6 months before, at the latest possible opportunity

In a falling market, to secure highest rent possible

Tenant accepts all s.25 terms apart from rent. How might you settle a lease renewal in the event you cannot settle rent?

PACT Mediation Part 36 offer – civil procedure rules 1998

What is a part 36 offer?

Genuine, unconditional offer to settle for a lease renewal Civil Procedure Rules 1998

What happens if the Tenant doesn’t respond or accept the part 36 offer?

Goes to Court

When the court determines the terms of the new lease, to what do they have regard to?

The existing lease

What is the maximum length of time that a court can grant a new lease

15 years

Why is the maximum length lease a court can grant 15 years?

Typical term for a hypothetical lease – falls in with a standard rent review provision of being 5 yearly and upward only

Can you give me any case law that refers to courts deciding on a new lease at lease renewal?

O’May vs City of London The new lease should be the same as the old lease. If a party wanted to change any terms, they must show that it is fair and reasonable

Landlord doesn’t want to give a new lease, how would you then advise?

First establish why the Landlord doesn’t want to offer new lease – relevant as it’s required for reasonableness under section 30 Section 25 hostile notice, providing opposition to renewal under section 30 grounds

What are the 7 grounds for opposition under section 30?

Persistent late payer in rent Breach in repair Breach of other covenant Alternative accomodation Owner occupation Refurbishment/redevelopment Uneconomic subdivision

What is the relevance of grounds e f and g in section 30?

Tenant due compensation

What is the compensation in a lease renewal based on?

1x RV if under 14 year occupation 2x RV if over 14 years

Under the owner occupation grounds, when is it permissible to effectively not grant a new lease because you want to occupy the premises yourself

Be a competent landlord and own the property for 5 years

In a lease renewal negotiation and you’re going through mediation to determine rent, if you’ve gone beyond the contractual lease expiry date, how might you protect your Clients position?

Apply to court for interim rent under section 24a of 1954 act

What is the interim rent calculated on / based on?

Market Rent

To what type of tenancy does the 1954 act apply to?

Business tenancy in occupation

What RICS guidance is there on expert witness or arbitrators ?

Surveyors Acting as Expert Witnesses 4th edition, 2014, amended August 2020 Surveyors acting as Arbitators in Commercial property rent reviews 2013 - both guidance notes

Tell me about RICS Surveyors acting as Expert Witness 4th edition

- Guide for surveyors who provide expert evidence to be relied upon in civil proceedings

What actually is a S.25 notice

Statutory document served by solicitors and rawn up by the law society

Who does the court appoint if a lease renewal goes to court (to advise on rental value)

Expert witness