Landlord & Tenant - Level 1 Flashcards
Tell me about your understanding of the LTA 1927
The LTA 1927 has largely been superseded by the LTA 1954, however, there are still provisions that are relevant:
Section 146 - sets out notice requirements that LLs must follow when seeking to forfeit a lease
Section 147 - restricts the ability of LLs to impose certain restrictions on tenants, such as prohibiting alterations or assignments/sublettings
Section 148 - sets out circumstances in which Ts are entitled to compensation from LLs for improvements made to the property
Tell me about your understanding of the LTA 1954
UK law that governs the rights and obligations of Ts and LLs of commercial properties.
The Act provides security of tenure for business tenants, which means that they have a legal right to renew their lease when it expires.
The Act also sets out procedures for lease renewals and terminations
Tell me about your understanding of the Landlord & Tenant (Covenant) Act 1995
UK law that reformed the way in which covenants in leases are dealt with - dividing covenants into two types: qualified and unqualified
Qualified covenants are those that can be passed on to an assignee of the lease, whereas unqualified covenants cannot. The Act makes provision for the release of the tenant from unqualified covenants, however, the tenant can remain liable for the performance of the covenants if they have entered into an AGA..
The Act also introduced the concept of AGAs.
Tell me about your understanding of the LTA 1988
UK law setting out various rights and obligations for LLs and Ts of residential properties.
One of the most significant provisions of the Act is the assured shorthold tenancy (AST) which is the most common form of tenancy in the UK. Under an AST, LLs have the right to evict Ts after a fixed term, provided they follow the correct legal procedures.
Tell me about a key lease clause you are aware of
Rent review clause - sets out how the rent will be reviewed throughout the course of the term. Typically included in commercial leases to adjust the rent in line with the rental market / value of the property over time
The clause specifies the frequency of RRs (e.g. every 3/5 years), the method of valuation to be used (open market / index linked) and any specific assumptions to be taken into account
The RR clause is important for both LL and T as it ensures the rent remains fair and reflects the market value of the property.
What is alienation?
The transfer of ownership or the right to occupy a property from one party to another. This can include subletting or assigning a lease.
Tell me about your understanding of the Code for Leasing Business Premises
Mandatory professional statement replaced the 2007 Code and is effective from 1st September 2020
The objectives of te new Code are stated to improve the quality and fairness of negotiations on lease terms and promote the use of a new set of comprehensive heads of terms to make legal drafting of leases more efficient.
Tell me about how you would summarise a lease and what terms you would be looking out for
When summarising a lease it is important to highlight any unusual or particularly onerous terms that may affect the tenant’s ability to use and enjoy the property, as well as any potential liabilities that may arise during or after the lease term.
Key terms:
- Parties
- Premises
- Term
- Rent
- Repair and maintenance
- Alterations
- Alienation
- Insurance
- Service charge
- Break clause
What is the Regulatory Reform (Business Tenancies) (England & Wales) Order 2003
Legislation that amends the LTA 1954 fir the purpose of simplifying and streamlining the process of renewing commercial leases.
The main changes are:
- LLs can no longer contract out of the security of tenure provisions (subject to certain conditions)
- Min notice period for LLs to terminate a tenancy increased from 3 to 6 months
- Grounds on which LLs can oppose a new lease narrowed
- New procedure introduced for courts to determine the rent payable under a renewed lease, based on current market rents
What is the role of an expert witness?
To assist the court in understanding complex technical or factual issues that are relevant to the case.
They may be instructed by one or both parties, or by the court, to provide evidence and opinions on specific matters within their area of expertise.
How does an advocate differ from an expert witness?
Advocates represent their client at a hearing or in court and need only to disclose all matters which they wish to do so.
The duty is to act in the best interest of their client.
What is an arbitrator?
Can be appointed by RICS President using the Dispute Resolution Service and be a member of the Chartered Institute of Arbitrators.
Can only use evidence submitted by parties and will provide a reasoned award unless agreed otherwise with parties
How would you establish the relevant third party procedure for a rent review?
Read the lease to establish the method of determination within the rent review clause.
Options open for third party determination are agreed before the lease is signed and set out in the lease.
How much does it cost to submit an RICS DRS application?
£425
What is the difference between the hypothetical lease at a rent review and lease renewal?
The hypothetical lease refers to the terms that would be agreed upon between the hypothetical willing LL and hypothetical willing T in the open market, assuming certain conditions and circumstances.
The main difference is that in a RR the hypothetical lease is used to determine the current market rent by comparing the terms of the existing lease with the current market conditions, and adjusting the rent accordingly. In a lease renewal, the hypothetical lease is used to determine the new lease terms that would be agreed upon in the open market.
What is PACT?
Professional Arbitration on Court Terms - is a type of arbitration used for disputes relating to rent reviews of commercial leases in the UK
How do in and out of court PACT differ?
In-court proceeding’s refer to disputes that are referred to court by either the LL or T. The court then refers the matter to a PACT arbitrator who makes a legally binding decision based on evidence presented to them.
Out of court refers to disputes resolved without the need for court involvement - the parties agree to use a PACT arbitrator to make a binding decision, without the need for court proceedings. This can often be more time and cost efficient.
What is a Calderbank offer?
The use of a Calderbank offer can achieve early resolution of a dispute and prevent costs escalating
The letter served must be on headed ‘without prejudice save as to costs’ and not marked ‘subject to contract’
It is a tool for influencing costs and negotiations in rent reviews as the losing party will have to pay the other side’s recoverable costs
The letter must set out all the terms to settle the dispute and a time limit in which the other party must accept the offer. This is often 21 days, but this is sometimes reduced provided that the period gives the party sufficient time to consider the offer and respond.
It must be a genuine offer to settle, not simply a mechanism to influence costs and/or pressure the other party
The arbitrator is obliged to make an award for costs
What is a break clause?
Provision in the lease that allows either the LL or T (or both) to terminate the lease before the end of a fixed term.
The terms vary from lease to lease, but often require notice to be given by one of the parties within a certain timeframe, and may include other conditions that need to be met before the break can be exercised
Tell me about your understanding of notices under the LTA 1954
Each notice is mutually exclusive
Section 25 - LLs notice to end the lease or seek a new lease
Section 26 - Ts notice to seek a new lease
Section 27 - Ts notice to end the lease with 3 months notice
Section 28 - renewal of tenancy by agreement
Section 29 - order by Court for a new tenancy
Tell me about your understanding of interim rent
An interim rent is the rent payable by a business tenant under the 1954 Act for the period of occupation between the termination of a former tenancy and the commencement of the new lease
The interim rent can be subject to adjustment if market conditions change significantly over the period the interim rent is paid but it is normally the new Market Rent
Tell me about your understanding of the Court procedure at lease renewal
Process that a T can follow to renew a commercial lease if the LL and T are unable to agree on the terms of renewal.
The court will consider evidence presented by both parties and may make an order for a new lease on specified terms.
What are the Civil Procedure Rules?
Set of rules that govern the conduct of litigation in the Courts of England and Wales
What are Jackson Reforms?
Series of changes to the civil justice system in England and Wales introduced in April 2013. The reforms were proposed by Lord Justice Jackson.
The key objectives were to reduce the costs of litigation, increase access to justice and improve the efficiency of the court system.
What is a Part 36 offer?
Formal offer made under Part 36 of the Civil Procedure Rules.
Tactical tool used to settle a dispute and can be made by either party at any time. The purpose is to encourage parties to reach a settlement early in the litigation process, without the need for trial.
Can you serve a Calderbank offer at lease renewal?
Yes, it is a form of a Part 36 offer under the Civil Procedure Rules, 1998 and must be made in writing and remain open for acceptance for a minimum of 21 days
What does Section 34 relate to in a lease renewal?
Basis of valuation for the new rent
What is compensation for disturbance?
Paid by the LL to the T when the T is required to vacate the property due to the LLs actions, such as lease termination, without the T being at fault.
Under Section 37 of the LTA 1954, if the tenant does not agree to a new lease and the LL successfully applies to the court for possession, the tenant may be entitled to compensation for disturbance. However, this compensation is not payable if the LL is following a Section 25 notice and the T has refused a new lease or failed to respond to the notice.
What does Section 18 mean in relation to the LTA 1927?
Relates to the power of a tenant to remove fixtures and fittings from the leased property at the end of the lease term.
It provides that a T may remove any fixtures or fittings that they have affixed to the property, providing that they do not cause damage to the property and that the LL has not required them to be left in place.
Why would you contract out a lease?
- A requirement of the head lease to grant any subletting outside the Act
- The LL will want to re-occupy the property following lease expiry
- The LL wishes o redevelop the property
- The rent may be lower (favourable for T)
- The LL wants future flexibility
How would you contract out a lease?
Section 38A of the LTA 1954 sets out the procedure which must be followed for the LL to contract outside the Act.
What are the Section 30 grounds under the LTA 1954?
LLs grounds for opposition of a new lease
