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RICS-APC > Landlord & Tenant > Flashcards

Landlord & Tenant Flashcards

1
Q

What is Privity of Contract?

A

Tenant can assign his interest in the tenancy but not his relationship with the Landlord.

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2
Q

What was the procedure prior to the Landlord & Tenant (Covenants) Act 1995

A

Under Privity of the first tenant remains liable throughout the tenancy regardless of assignment. An assignee fault at any time meant the original tenant is liable for rental payments etc.

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3
Q

What was the effect of the Landlord & Tenant (Covenants) Act 1995?

A

Introduction of AGA’s for the most recent former tenant only to guarantee the lease obligations of the immediate assignee as a voluntary arrangement to be agreed by LL & T.
s.17 notice can be served on the guarantor within 6 months of the tenant defaulting.

Common practice to include AGA provisions within lease AGAs may not be required if the assignee is financially strong enough and can place surety on the lease.

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4
Q

What does the 1954 Landlord & Tenant do?

A

Provides tenants with ‘security of tenure’

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5
Q

What is s.24?

A

A business tenancy contracted inside the Act does not expire by effluxion of time- but when one party serves notice.

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6
Q

What is Security of Tenure?

A

The right for a tenant to remain in occupation after its lease term expires. An inside the Act lease needs to formally be bought to an end through serving notice.

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7
Q

What is a s.25 notice?

A

Notice served by LL on T to terminate the lease.
- Cannot terminate before contractual expiry
- would either be friendly or hostile.

12 to 6 months before contractual expiry. Must be at least 6 months.

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8
Q

What is s.26 notice?

A

Tenant request for new tenancy not more than 12 months not less than 6 months until lease expiry. Proposed terms of new tenancy. LL has 2 months to counter.

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9
Q

What is a s.27 notice?

A

A tenants notice to terminate. 3 months notice after lease expiry date. If tenant provides VP before lease expiry no notice is to be served.

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10
Q

On what grounds can a Landlord oppose a new lease?

A
  1. Breach of repairing covenant
  2. Persistent delay in paying rent
  3. Other substantial breach
  4. Provide suitable alternative accommodation
  5. Uneconomic subdivision (comp payable)
  6. Demolition (comp payable)
  7. Owner occupation (comp payable)
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11
Q

Impact on break clauses with contracted inside the act leases?

A

LL to serve s.25
Reasoning under s.30

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12
Q

Dispute resolution for Rent Reviews?

A

Depends on the lease-usually an arbitrator or Independent wittness. RICS have an ADR section which costs £425.

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13
Q

Would you rather an arbitrator or independent witness

A

Falling market- arbitrator - relies on submitted evidence

Rising market- independent expert would be preferable.

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14
Q

What is an arbitrator?

A

Used for third party determination of rent reviews.
Sets out a timetable for the parties to present their evidence and arguments. The arbitrator will consider both sides cases and to make an informed decision.

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15
Q

What is an Independent Expert?

A

Third party determination of a rent review.
Someone with detailed knowledge of the market as a valuer. They can make their own investigations and form their own opinion.

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16
Q

Key differences?

A
  1. Arbitrator can act on evidence provided.
  2. Independent Expert has a duty of investigation to discover the facts and can does not have to consider evidence provided and can use their own knowledge.
  3. Arbitrator governed by Arbitration Act 1996. 4. Expert is governed by what it says in a lease.
  4. Arbitrator has power over all costs
  5. Independent Expert only has power over own costs.
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17
Q

What is PACT

A

Professional Arbitration on Court Terms.

ADR for determination of unopposed Lease Renewal.

Parties agree which points are agreed and which is to be decided by third party.

Avoids full court hearing.

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18
Q

What parts of the LTA govern pact

A

s.29- order by court for new tenancy
s. 32-35 terms of the new tenancy

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19
Q

What are the other sections of the Act not mentioned?

A

s.30 LL grounds for opposing.
s.34 basis of valuation for new rent.
s.37- Compensation provisions
s38A- contracting out
s.40- Notice RFI on either party
s.44- Definition of competent LL

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20
Q

What goes into a rent review memorandum?

A

Contracting parties, address of property, date of the lease and rent review, confirmation on new rent agreed, signed and dated by both parties.
Can also be recorded as expert determination or arbitrators award or written acceptance of Calderbank Offer

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21
Q

What is a Calderbank Offer?

A

-Used for early resolution of a dispute to prevent costs escalating.
- Letter must be served ‘without prejudice save as to costs’.
- Is a negotiation tool for rent reviews as the losing party will pay both parties costs.
- The offer must set out terms to settle the dispute and a time limit to accept (21 days)
- Arbitrator makes award for costs

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22
Q

What is included within the Agreed Facts for third party determination

A

Summary of points agreed between both parties, lease terms, floor areas and comparable.

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23
Q

Can you appeal an expert determination?

A

No but can sue for negligence

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24
Q

What is included in s.25 notice

A
  1. Name & Address of the Landlord & Tenant.
  2. Address of property
  3. Notice of the date to end the tenancy
  4. Friendly or hostile?
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25
Q

Section 23 states that to gain protection under the act, what 6 basic elements are required under a business tenancy?

A

Is it a tenancy?
The premises must be used for business.
6 + months occupancy.

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26
Q

An example of court case in L&T regarding the difference between & lease and a licence

A

Street Vs Mountford. The court deemed that despite being labelled a license agreement, the agreement granted was in fact a lease

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27
Q

Difference between a lease and a license?

A

‘A license passes no interest in land but only makes lawful what otherwise would be unlawful’ Murdoch 1998

License:
A right to enter, personal arrangement, no interest in the property acquired, personal right granted, terminable at anytime.

Lease: Exclusive possessions, rent paid, defined term, 3 years+ to be documented by in writing and registered as a deed.

Lease provides an interest in land, can be assigned, lease cannot be terminated until expiry.

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28
Q

Section 37 - If the Landlord obtains possession, tenant is due compensation for disturbances:

If compensation is payable by the Landlord after they have served a section 25 notice, how is the compensation calculated?

A

Tenant in occupation for less than 14 years, comp payable at rateable value x1 at the time of s.25 notice being served.

14 years + 2x ratable value comp.

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29
Q

If the lease is silent on LTA 54 is it inside or outside?

A

Inside. Tenant must sign stat dec if the lease is contracted out.

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30
Q

Time of the Essence?

A

A party can only request action on an aspect of a lease such as rent review. Failure to trigger review within time limit means the right to review is lost.

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31
Q

What is a Wayleave

A

A temporary right that receives annual. Electricity company with the right to install and retain their apparatus

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32
Q

What does without Prejudice mean

A

During the period of negotiations the opposing party cannot rely upon documents that are labelled ‘without prejudice’

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33
Q

How can a lease be drafted outside the act

A

s.38A: tenant is to make stat dec that they are aware that their lease is not protected.

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34
Q

What is an Expert witness?

A

An expert witness is a person engaged to give an opinion based on experience, knowledge and expertise. The overriding duty of an expert witness is to provide independent, impartial and unbiased evidence to the court or tribunal.

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35
Q

Lease Renewal v Rent Review

A

-Lease renewal is statutory process laid down by LTA 54
- rent review is a contractual procedure contained within the lease.

IF contracted out there is no statutory procedure for renewal

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36
Q

What to do in respect of a lease renewal for property that is over rented?

A
  1. Do nothing and retain a high rent.
  2. Serve 25 notice and enter a lease at a lower rent.

*If served as 12 month notice the tenant can apply for an interim rent.

37
Q

Should a LL serve 12 months or 6 month prior to expiry

A

6 months- negotiate close to renewal date

12 months- Useful if T is vacating but if staying then required to agree a new rent in advance.

38
Q

Why would LL give 12 months notice when could give 6 months notice with S25?

A
  • If over rented- extra 6 months of tenant paying a higher rent
  • If tenant leaving-gives more time to find a new tenant
39
Q

What action should Landlord take if they want possession at end of lease?

A

Serve s.25 notice and object to a new tenancy under 1 or more of the s30 grounds.

40
Q

What should LL do if T is not responding to a friendly s25 notice?

A

Write to tenant stating they have 14 days to respond or else will go to court to determine terms and T will be liable for costs.

41
Q

Shop lease expiring in 12 months and LL wants you to negotiate new lease with T. What would you do?

A
  1. Review lease terms
  2. TOB
  3. Inspect & Measure
  4. Check for breaches of covenant
  5. Rental Valuation
  6. Service of friendly s25 noitce
42
Q

Explain the power of the Court in ordering a new lease

A

The Court can determine:
-Property comprised (s32)
- lease term (s33)
- rent (s34)
- Other terms (s35)
- Interim rent (s24A)

LL bound to grant lease on terms determined by the court

43
Q

What is s34 rent?

A

Market rent disregarding:
-tenants previous occupation
-any goodwill
-certain improvements
- Premises License

44
Q

What is interim rent?

A

Rent payable between the end of the old lease and start of the new lease.

45
Q

Rent Review clauses and the basis of valuation?

A
  1. Open market upwards only to ‘Market Rent’
  2. Linked to indexation - CPI or RPI with caps & collars
46
Q

They Key elements of a review clause

A
  1. Mechanism- frequency
  2. Basis of value
  3. Means of settling disputes
47
Q

When is time of the essence?

A
  1. When a lease says so
  2. If tenant serves notice to make time of the essence
  3. If RR clause interrelates with another clause
  4. If there are deeming porvisions
48
Q

What are deeming provisions

A

Where a lease explicitly states that T is ‘deemed’ to have accepted LL rent

49
Q

What lease terms affect the rent at review?

A
  1. RR clause
  2. Frequency
    3.Restrictions on Alienation
50
Q

Usual assumptions for determining a rent review?

A
  1. Premises fit for immediate occupation
  2. Market rent payable after any rent free period
  3. No work carried out by T is relevant
  4. T complied with lease
  5. If premises has been damaged or destroyed, they have been reinstated.
51
Q

Hypothetical term

A

A term other than the unexpired lease term.

Used at review based on terms of lease and assumes property remains in current state.

Eg assume term granted is

52
Q

Preference for Hypothetical lease term?

A

Shorter as higher rent achieved on shorter leases

53
Q

Lease?

A
  1. Exclusive possession
  2. For a rent
  3. For a defined term of years
54
Q

Licence?

A
  1. Permission to make it lawful for them to use the land
  2. Personal right
  3. Terminable at any time
55
Q

Leading case law in Lease v License

A

Street vs Mountford 1985

56
Q

A property you manage is going to be redeveloped soon. What options do you have to generate some rental income without giving Tenant security of tenure under 1954 Act?

A
  1. Short term - grant tenancy of less than 6 months (excluded under S43)
  2. Long term - grant tenancy of more than 12 months but contract out of S24-28
57
Q

What action can Landlord take when Tenant is in breach of repairing covenant?

A
  • Serve s146 under Law & Property Act 1925
  • Exercise right to repair- repair and recharge.
  • Sue for damages
58
Q

How are damages assessed when a Tenant is in breach of repairing covenant?

A

s18 of LTA 1927
- Damages limited to the diminution of value (usually same cost of works)

59
Q

Schedule of Condition

A

Description of physical state of building/demise and appended to lease.

60
Q

Schedule of Dilaps

A

Record of alleged breaches of repairing covenant usually prepared by LL surveyors.

61
Q

Scott Schedule

A

Recommended form of Schedule of Dilaps to be presented to the court
*RICS recommended

62
Q

Aletration

A

Making physical changes to a property

63
Q

Improvement

A

Alteration that adds value

64
Q

What advice would you give Landlord if Tenant requests to have improvements registered under 1927 Act?

A
  1. Do they add value?
  2. LL can do work themselves and increase rent.
  3. Let tenant do the works- more investment in property creates a tie between the tenant and the building
65
Q

How is compensation for Tenant improvements calculated?

A

Lower of either the value added or cost of doing the work

66
Q

Legislation to consider on assignment of leases

A
  1. s19 of LTA 1927
  2. s1 of LTA 1988
  3. LTA (Covenants) 1995
67
Q

Reasonable grounds for not consenting to an assignment?

A
  1. Poor assignee covenant.
  2. Effect of capital value
  3. Poor accounts- bad payers.
68
Q

Usual level of business’ profit that LL will look for before granting consent to assignment?

A

Profits test.

Profit equal to or more than 3x the annual rent and other payments due under the lease.

69
Q

What is an AGA

A

Authorised Guarantee Agreement.

Entered into by Assignor to guarantee the Assignee will comply with all obligations under the lease.

70
Q

When is it appropriate to have restrictive user clause in a lease?

A

Protect investment value.
Non compete in lease e.g. Tesco in 55 Baker St

71
Q

Conditional break clause

A

T can only break if pre conditions are met

72
Q

Conditions attached to a break clause?

A
  1. Minimum 6 months written notice
  2. May be a break penalty
  3. Repairing obligations have been met
73
Q

2 examples of a ineffective break notices?

A

Osborne Assets v Britannia Life - T required to paint 3x coats every 5 years. T only did 2x coats.

Riverside v NHS - Conditional on VP - T did not remove demountable partitioning

74
Q

What factors impact value of a lease?

A

Rent, term, repairing clause, rent review mechanism etc

75
Q

OM Review or Index linked?

A

Down market- little evidence of uplift for Open Market review.

Inflation running high- favour index linked!

76
Q

Dispute resloution?

A
  1. Mediation
  2. PACT
  3. Court/Litigation
77
Q

PACT

A

Professional Arbitration on Court Terms
1. Cheaper
2. Quicker
3. Property professional determines rathe than jusgw

78
Q

If LL served a friendly s25 notice 3 months before expiry, when would new lease start?

A

3 months after contractual expiry of old lease. i.e. 6 months notice**

79
Q

What is a Calderbank offer for lease renewals?

A

Part 36 offer

80
Q

What does court have regard to when granting a new lease

A

The old/existing lease

81
Q

Why can court only grant lease up to 15 years

A

Typical term for hypothetical lease

82
Q

Case law for court deciding new lease at renewal?

A

O May v City of London

83
Q

What does 1954 LTA set out

A
  1. Procedure for termination
  2. Ground for opposing tenancy
  3. Power of courts to award new tenancy.
84
Q

What happens to current tenancy if Landlord and Tenant agree new tenancy under S28?

A
  1. Current tenancy runs until start of new tenancy but no longer protected under the ACT.
  2. No need to issue s25 or s26- can agree under s28
85
Q

When can either party request info about the other?

A

s40 of LTA can request info from other party within last 2 years of term.
Info to be provided within 1 month.

86
Q

When can Court / PACT not be used to determine new lease terms?

A

If contracted out lease

87
Q

Repair

A

Restoration or replacement of parts of the premises

88
Q

Renewal

A

Reconstruction of all or most of the premises

89
Q

User clauses

A
  1. General planning- E Class
  2. Conducted use- hours of trade

RICS-APC (15 decks)

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