Landlord & Tenant 2.0 Flashcards
What are the implied Landlord covenants under a lease?
Quiet enjoyment for the Tenant
What is a modern form lease?
A lease that reflects new legislation
e.g EPCs needed for marketing so Landlord has ability to gain access to carry out EPC
What is an old lease?
A lease pre 1st January 1996 with privity of contract
→ Landlord and Tenant Covenant Act 1995
Are Heads of Terms legally binding?
→ If you put subject to contract, then no
→ Not legally bound unless engrossed (signed by both parties)
Rent review types?
- OMRV - Open Market Rental Value
- RPI
- Turnover rent
When you conduct a rent review, what documents do you want to see?
→ Existing lease and any plans
→ Any Licence for Alterations, improvements, subletting or assignment
→ Any deeds of variation
→ Contact details for tenant
→ Copy of the property file for any relevant background information which could assist your negotiation
When you conduct a rent review, what documents do you want to see?
→ Existing lease and any plans
→ Any Licence for Alterations, improvements, subletting or assignment
→ Any deeds of variation
→ Contact details for tenant
→ Copy of the property file for any relevant background information which could assist your negotiation
How can you tell if time is of the essence?
United Scientific Holdings v Burnley Borough Council
→ Time is of the essence if expressly stated in the lease
AI Saloom v Shirley James Travel
→ Connected lease event. E.g break clause can make time of the essence
Deeming provision → such as need to respond to a notice by a certain time
What is a deeming provision?
Assumption of acceptance
What is the hypothetical term?
The length of term to be valued
What case law is there with respect to the hypothetical term?
Basingstoke and Deane v The Host Group
→ Ambiguity of hypothetical term → therefore, residual term
Canary Wharf v Telegraph (2003) → “from grant thereof” → if silent, presume residue of term
What are the standard assumptions in a Rent Review?
Vacant possession
Available for immediate occupation and use
Covenants in lease have been observed
WIlling tenant and willing Landlord
What are the standard disregards in a Rent Review
Goodwill
Improvements → if no disregard, value what you see
Occupation
What would happen if you had a rent review you couldn’t agree?
→ Serve a Calderbank letter
→ 3rd Party determination (IE or Arbitrator)
→ no point in servicing Calderbank letter if lease states IE and they do not have the power to award costs
What should you include within a Calderbank letter
→ Without prejdice save as to costs
→ Unconditional offer to settle
→ Time frame
When would you use a Calderbank?
- Genuine offer to settle
- Use at any stage of negotiation, usually once other avenues exhausted and considering 3rd party
- An offer to settle → aim to prompt settlement from other side and protect Client from costs
What would you do if a tenant did not respond to a rent review?
Serve Calderbank letter of instruct 3rd party
How do you appoint an Arbitrator?
Apply to president of RICS → £369
How would you adjust for a restrictive clause?
- Rent reductions
- Depends on state of the Market → look to comparable evidence
How do you adjust rent if you have a longer rent review pattern than 5 years?
Need higher rent at start of rent review period to recoup inflation → add 1% to rent for each extra year
→ advantageous to Tenant to have longer rent review period
What options are there at lease expiry?
Qualified tenancy continues under S.24 after expiry until terminated under the Act → same terms / holding over
On lease expiry:
→ Tenant vacates by expiry
→ Landlord serves S.25 hostile and they lease by expiry (6-12 months prior)
→ Tenant stays after expiry and serves S.27 (3 month notice of leaving)
→ Tenant serves S.26 to start new lease negotiations
What is a Tenancy at Will?
Grants temporary occupation of business premises
What is the Land Registration Act 2022?
→ Formal documents to be executed electronically
→ Leases over 7 years must be registered with land registry
What determines terms for a new lease?
Sections 32-35 Landlord and Tenant Act 1954
S.32 - Demise (same property as before)
S.33 - Term (max 15 years)
S.34 - Consider disregards
S.35 - Any other terms
O’May v City of London (1983) → tests to be satisfied before ammending terms of old lease
Justifiable reasoning?
Adequate compensation?
What sections of the Landlord and Tenant 1954 Act are there?
S.23 - Meaning of business tenancy
S.24 - Continuation tenancy unless terminated (security of tenure)
S.24a - Interim rent
S.25 - Landlord to terminate or review
S.26 - Tenant to review
S.27 - Tenant notice to vacate (3 months)
S.28 - Freedom to agree new lease
S.29 - Court applications
S.30 - Landlord grounds for opposition
S.37 - Disturbence compensation
S.38 - Contracting out
What is the valuation date for a lease renewal?
set by when you apply to court
otherwise, the day after lease end
On what grounds can a 1954 Act protected lease be terminated ?
Section 30, grounds A-G
A- breach of repair covenant
B- Persistent delay in rent payment
C- Other substatial breach
D- Suitable alternative accomodation
E- Uneconomic subdivision
F- Redevlopment
G- Owner occupation
Can a tenant lose their 1954 Act rights?
If no new lease terms have been agreed by the lease end date, or tenant hasn’t applied to court to agree terms or extension, they can lose their rights
What is the process for contracting out of S.24-28 of the 1954 Act?
Regulatory reform order 2003 simplified the process so that it rarely requires a court influence
→ Landlord serves health warning stating consequences of contracting out
→ Simple declaration if Tenant waits 14+ days
→ Statutory declaration if less than 14 days
You served a S.25 notice - what would you find in the notice?
- Name and address of Landlord and Tenant
- Property address
- Notice of date to end tenancy
- Confirmation as to whether a new lease is granted (favourable or hostile)
- Landlords proposal for new tenancy or grounds for opposition
- Strong recommendation for Tenant to seek professional advice
- Signed by Landlord representative
When is the date of receipt of a S.25 notice?
Posted and recieved same day - statutory notices
Can a Landlord serve a S.25 notice after Tenant has served S.26 notice?
No, they are mutually exclusive
Where might S.25 notices go wrong?
Wrong name,
not signed,
not dated
What is the Tenant objects to the terms in the notice?
Serve counter notice → negotiate / through court
What if the tenant wants to renew but it gets to date of new tenancy and terms have not been agreed?
→ Extend time if agreed by both parties
→ Application made to court
If the Tenant wanted to vacate lease halfway through negotiations, what would they need to do?
Serve S.27 and give 3 months notice
If already in Court, withdraw application and negotiate notice period with Landlord and back rent
What is an interim rent?
Rent the tenant pays while the tenancy is continued under S.24
How would you calculate the Interim Rent?
Same as new rent → court may vary this if there is substantial difference between the Market Rent at the date of the new tenancy and date of Interim Date being payable
Who is the competant landlord?
Party that is entitled to serve notice on tenants
S.44 → Freeholder or superior tenant with unexpired term in excess of 14 months
What is a S.40 notice?
Requests information from either Landlord or Tenant
If acting for an external Client, how would you have acted differently for a lease renewal?
Conflicts of Interest Check
Served formal Terms of Engagement, agreeing fees etc
If a tenant approaches you 18 months before lease expiry, what can you advise them?
→ Establish needs of Client
→ Check if contracted out
→ Can wait until lease expiry and hand back keys with vacant possession
→ Serve S.27 notice giving 3 month notice to vacate
→ Serve S.26 if over-rented 6/12 months prior
→ Under-rented do nothing - continuation tenancy created under S.24
→ Do nothing and wait for hostile S.25 notice → Risky but may get compensation
When can the value of improvements be captured?
Rent Review → usually disregarded. May be rentalised if works were a condition of Landlord granting the lease
→ If disregarded, disregard whether works were licences or not
Lease renewal:
→ Can never capture value of improvements at first lease renewal (L&T Act 1954)
→ 21 year rule applies on subsequent renewals (if undertaken more than 21 years ago)
Can you capture improvements done in 1948?
Yes, as this is before the Landlord and Tenant Act 1954
Might a tenant receive compensation for improvements if the lease renewal is opposed?
Yes → governed by the Landlord and Tenant Act 1927, Section 1
Improvements must add value to the property at termination → compensation if the value added as a result of improvements
→ usually offset against dilaps
What are the main issues of Landlord and Tenant Act 1927?
S.19 Alienation, assignment → turns qualified covenants into fully qualified covenants
How would you know if the lease was contracted in?
BOPET
Business - occupied for the purpose of business
Occupation - Part of the premises occupied for 6 months +
Premises - must be defined premises
Excluded - excluded business?
Tenancy - must be a lease
If tenant has contracted in lease but you find out they aren’t in occupation for business purposes, what do you do?
They have no security of tenure, so no renewal rights
What type of break clauses are there?
Tenant only
Landlord only
Mutual
Rolling
Fixed
Linked to otehr clauses
If you want to insert a landlord break for redevelopment, can you contract inside the act?
Yes, but you have to serve S.30 and break on grounds
→ Tenant entitled to compensation
What is administration?
Ad administrator is appointed to rescue an insolvent company protecting it from any legal action
→ creates period of protection for administrator to deal with assets and achieve best returns for creditors before going into liquidation
What is re-pack administration?
Allows the directors of a company to buy out and retain elements of the business which are trading well and placing the remainder in administration
E.g habitat sold London stores to Homebase
What is receivership?
Receiver is appointed by creditors to realise assets and to repay debt whilst administrators are being appointed by court
→ occurs when a company defaults on payments to a lender who has chage over all or most of the assets of a company
What is Company Voluntary Arrangement?
Contract between company and its creditors for when a ocompany is insolvent but the directors believe it has a viable future
→ Creates agreement to pay back debt over period of time
→ Insolvency practicioner overseas implementation strategy
→ Must be approved by at least 75% of creditors in terms of value of debt
What is liquidation?
Company brought to an end → assets sold and distributed to creditors → winding up
Compulsory → creditors liquidation
Voluntary → Tenants liquidation
What is bankruptcy?
Court procedure for an individual
What does the Landlord & Tenant Covenants Act 1995 say?
→ Act abolishes privity of contract for new leases automatically → ends liability of Tenant once lease is assigned
→ Includes AGA
What does Landlord and Tenant Act 1988 say?
Must demonstrate refusal of consent or consent with conditions is reasonable
→ Burden of proof for reasonableness is on Landlord
Can you use a drop in Capital Value as a reason to refuse assignment?
No, proof would take too long → landlord and Tenant Act 1988 says respond in a reasonable time for applications to assign/sublet
→ Blockbuster v Barnsdale Properties
→ Dong Bang Minerva vs Davina
When would you recommend assignment and when a sublet?
Depemds on Clients interests
→ Sublet if they wish to keep interest and reoccupy or occupy part
→ Assignment if in financial difficulty and struggle with payment → Note AGA may be requested
What types of breach are there?
Continuing breach: failure to repair, illegal use
Once and for all: Non-payment of rent / SC, failure to carry out works in a specific period
How can you remedy a breach?
Peaceable re-entry
→ Don’t demand rent etc
→ consider relief from forfeiture
Court proceedings
→ longer, expensive, but safer
→ don’t demand rent
