Landlord & Tenant - Summary of Experience Flashcards
Why is a good Landlord and Tenant relationship important?
It is essential for effective property management
Tell me about your understanding of the Landlord and Tenant Act 1927
Sections 1-3 give a tenant who has made improvements during the tenancy the right to compensation
Section 18 limits/defines the amount of damages the Landlord is able to recover for breach of the tenant repairing covenant
Tell me about your understanding of the Landlord and Tenant Act 1927
Sections 1-3 give a tenant who has made improvements during the tenancy the right to compensation
Section 18 limits/defines the amount of damages the Landlord is able to recover for breach of the tenant repairing covenant
What does section 18 mean in relation to the Landlord and Tenant Act 1927?
Section 18 limits/defines the amount of damages the Landlord is able to recover for breach of the tenant repairing covenant
What does the landlord and Tenant Act 1988 say?
Imposes new statutory duties on landlords in connection with covenants to assign and underlet
-> serve notice of decision within a reasonable period
Can you use a drop in capital value as a reason to refuse an assignment?
No -> Landlord and Tenant Act 1988 -> respond within reasonable period
Might a Tenant receive compensation for improvements is the lease renewal is opposed?
Yes -> section 1-3 of the Landlord & Tenant Act 1927
- Compensation if value is added as a result of improvement
- Usually off-set against dilaps
What is a modern form lease?
Lease entered into after Landlord & Tenant (Covenants) Act 1995
- Introduces AGA and removed privity of contract
- Also includes modern clauses such as MEES and CRAR
What is a modern form lease?
Lease entered into after Landlord & Tenant (Covenants) Act 1995
- Introduces AGA and removed privity of contract
- Also includes modern clauses such as MEES and CRAR
Tell me about your understandnig of the Landlord and Tenant (Covenants) Act 1995
Introduces AGA -> removes privity of contract
- Cannot hold previous tenant liable for incoming tenant in assignment unless AGA
Explain the legislation that needs to be considered in an assignment of a lease
- Landlord and Tenant (Covenants) Act 1995
- Landlord and Tenant Act 1954
- Landlord and Tenant Act 1988
What does the Jervis v Harris clause mean to you?
Clause in a lease that allows the landlord to serve notice on a tenant to carry out repairs -> may enter and carry out the works themselves and recover the costs if not complete
How are damages assessed when a tenant is in breach of repair covenant?
Section 18 Landlord & tenant Act 1927
- Damaged limited to the loss in value only, as a direct result of the breach in repair
How are damages assessd when a landlord is in breach of repair covenant?
Restore the tenant to the position they would have been if there was no breach
- Difference in value to renant at the current date compared to if repairs has been undertaken
You are managing a property for your landlord Client and have recieved a request from a tenant to carry out improvements. The tenant has requested that improvement work is registered under the 1927 Act. What advice would you give to your Client?
For improvements to qualify for compensation under the act:
- Tenant must serve notice before works start with details and plans
- Landlord can object and has 3 months to do so (only if reasonable)
- Landlord can offer to do works himself -> 3 months to do so
- Otherwise, Tenant can proceed and complete works in specified period -> entitled to compensation at tenant end
- - Would recommend off-setting against dilaps
What lease terms are implied under section 19 of the Landlord and Tenant Act 1927?
Turns qualified covenants into fully qualified covenants for alienation
-> Consent not to be unreasonable withheld
What is the basic difference between a lease renewal and a rent review?
Lease renewal is a statutory procedure and rent review is a contractual procedure
Name the tenancies to which the 1954 Act does not apply
- Agricultural holdings
- Mining leases
- Residential tenancies
- Tenancies granted as a condition of employment
- Tenancies not exceeding 6 months
What action should the Landlord take if he/she requires possession of a property at the end of a lease?
Serve section 25 hostile and ground for opposing new lease under section 30
What action should the Landlord take if he/she requires possession of a property at the end of a lease?
Serve section 25 hostile and ground for opposing new lease under section 30
In what circumstances is a tenant entitled ti compensation when a landlord successfully opposed a new lease under the 1954 Act?
Under grounds E, F and G (no fault grounds) of Section 30
How is tenants compensation assessed under the 1954 Act?
In the form of a rateable value multiplier
- 2x RV for occupatio of 14+ years
- 1x RV for occupation of less than 14 years
Tell me about your understanding of the Landlord and Tenant Act 1954
Provides business tenancies with security of tenure
Tell me about the Landlord and Tenant Act 1954 in relation to contracting out
Section 38 - introduced in 2003
Landlord serves health warning, statutory if within 14 days of new lease start date, or simple if more than 14 days
When would you recommend that a Landlord serves notice in a L&T Act 1954 renewal
If property is under-rented or if we want to pre-empt a tenants section 26 notice
When would you recommend that a tenant serves notice in a L&T Act 1954
If they wish to vacate after the lease expiry or if the property is over-rented and they wish to remain
What does section 40 of the 1954 Act say
Landlord or tenant request for information
Information on the others interests in the property
e.g to understand who the comtant landlord is
What does section 40 of the 1954 Act say
Landlord or tenant request for information
Information on the others interests in the property
e.g to understand who the comtant landlord is
When can the value of improvements be captured?
Rent review:
- if improvements are obligation of lease
- usually disregarded
Lease renewal:
- Can never capture improvements at first renewal (L&T ACt 1954)
- 21 year rule applies on subsequent renewals (if undertaken more than 21 years ago)
What tenancies are covered by the 1954 act?
Business tenancies
What is a competant landlord?
Landlord who serves notice or has notice served upon
S.44 Freeholder or superior tenant with 14+ months unexpired term
Tell me about terms of a new lease in relation to a contracted in lease renewal (e.g lease length)
Sections 32-35 of Landlord and Tenant Act 1954
S.32 - Demise (same as before)
S.33 Term (Max 15 years)
S.34 - Disregards
S.35 - Other terms
O’May v City of London (1983) tests to be satisfied before amending terms of old lease
What is the valuation date for a lease renewal?
- Set by when you apply to court
- Otherwise, the day after lease end
Can a tenant lose their 1954 Act rights?
Yes, if negotiations are not complete by the deadline and the tenant fails to agree extension with the Landlord or apply to court
What is the process for contracting out of S.24 -S.28?
S.38
Landlord serves health warning
- Statutory is within 14 days of new lease start
- Simple if more than 14 days
tenant respons accepting they have understood what it means to be contracted out
What is section 23 of L&T Act 1954?
Meaning of business tenancy
What is section 24 of L&T Act 1954?
Continuation tenancy and Interim rent
What is section 25 notice?
Landlord friendly or hostile notice (served 6-12 months prior to lease expiry or suggested lease end date)
What is section 25 notice?
Landlord friendly or hostile notice (served 6-12 months prior to lease expiry or suggested lease end date)
What is a section 26 notice?
tenant request for new lease -> 6-12 months prior
What is section 27 notice?
Tenant notice to vacate -> 3 months notice
What is section 28 of the L&T Act 1954?
Freedom to agree new lease
What are the grounds for opposition under section 30?
a) Breah of repair covenant
b) Persistent delay in rent payment
c) Other substantial breach
d) uneconomic subdivision
f) Redevelopment
g) owner occupation
What is a lease
Binding contract that passes interest in land for an agreed period in exchange for rent
What is a licence?
Licence passes no interest inland but makes lawful what would otherwise be unlawful
What is the key case law in the discussion of lease or licence?
Street v Mountford (1985)
licence to occupy a furnished room -> exclusive possession at a rent -> House of lords rules this agreement = tenancy
What is the key case law in the discussion of lease or licence?
Street v Mountford (1985)
licence to occupy a furnished room -> exclusive possession at a rent -> House of lords rules this agreement = tenancy
What are the different rent review mechanisms
- Open market
- RPI / CPI / Index linked
- Stepped / fixed increase
- Turnover rent
Tell me about the role of third parties in a rent review
Stated in lease -> agreed to prior to signing lease
Either Arbitrator or Independent expert
What if parties cannot agree on a third party in a rent review?
President of RICS will appoint
What is an Arbitrator?
Independent person or body goverened by the Arbitration Act 1996, appointed to settle disputes
What is an independent expert?
Surveyor who is a specialist in subject field and appointed to settle dispute using their expertise
What is the difference between an Arbitrator and independent expert?
- Arbitrators must rely on evidence and not own expertise
- Arbitrator cannot delegate duties
- Arbitrator is goverened by Arbitration Act 1996
- Arbitrator is not liable for negligence
When does notice need to be served at rent review?
Stated in the lease
-> usually requires landlord trigger notice
-> is time of the essence? this will affect
What is a rent review assumption?
Used to find real open market value:
- Willing landlord & willing tenant
- Property available for immediate occupation
- Property is vacant
- Hypothetical term
- Covenants complied with
- Premises used for purpose set out in lease
What is a rent review disregard?
Find real open market value:
- Occupation
- Goodwill
- Incentives/ rent review period
Tell me about rent review case law you are aware of
NULIS v BRB
Norwich Life Insurance Society vs British Railway Board (1987)
- Wider than usual repairing liability resulted in arbitrators discounting rent by 27.5%
- -> more onerous than usual repairing liability
Tell me about rent review case law you are aware of
NULIS v BRB
Norwich Life Insurance Society vs British Railway Board (1987)
- Wider than usual repairing liability resulted in arbitrators discounting rent by 27.5%
- -> more onerous than usual repairing liability
How would you deal with post-dated rent review evidence?
- Weight it accordingly
- If unforseeable, don’t take into account
- If forseeable, then it’s releavnt
How do you treat tenants improvements at rent review?
In lease:
- usually disregard
- If unauthorised, may be able to rentalise
Tell me about an instance where you have reflected market conditions on rental value?
During rent review and lease renewal of Unit 24 Bourne and Compass House
Used comparables (market evidence) to ascertain estimated rental value and yield - confiemd with letting agents who agreed
What is the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003?
alters procedures for renewal and termination of business tenancies
Introduces new procedures for contracting out
*What is the difference between a hypothetical lease at rent review and hypothtical lease at lease renewal?
Assumptions and disregards may differ?*****
What is PACT?
Professional Arbitration on Court Terms
Tell me about your understanding of the court procedure at lease renewal?
- Application to court to direct terms of new tenancy or decide whether opposition grounds are reasonable
- Can also extend time frames for negotiation
What is a Calderbank offer?
Unconditional, genuine offer to settle, ‘without prejudice save as to costs’
Can you serve a Calderbank offer at lease renewal?
No, you would serve a Part 36 offer under Civil Procedure Rules 1998
What does section 34 relate to in a lease renewal?
Gives the court power to determine the level of rent when the parties have not been able to reach an agreement
What time limits apply in relation to lease renewal notices?
S.25 & S.26 notice -> 6-12 months (S.26 counter notice within 2 months)
S.27 notice -> 3 months notice
Tell me about one example of lease renewal case law you are aware of?
S.Frances v The Cavendish Hotel (2017)
- Landlord opposed tenancy under refurbishment grounds, even though he had no intention to refurbish and was solely to evict.
- Supreme court held that the Landlord must prove every intention to carry out works
O’May v City of London
- new lease should be the same as the old lease
What does disclosure mean in a lease renewal?
Statement providing confirmation to the tenant less than 14 days before the lease is entered into
Tell me about a contracted out lease renewal you have dealt with
The Paddocks Industrial Estate
Tenant contacted me advising they wish to extend lease, 1 year prior to expiry
- Checked lease and confirmed no security of tenure. Therefore free to arrnge renewal without constraints of Act.
- Contacted the Client to ascertain their objectives. Receieved instruction to proceeed.
- Measured and inspected unit, gathering comparables and confirming these with letting agent
- Agreed new lease on same terms as current lease but at new market rent (Unit was under-rented)
How would you advise a tenant differently between a contracted in and out lease renewal?
Contracted out -> Tenant has no rights and therefore not a strong negotiating position
Contracted in -> Tenant has rights and can apply to court or PACT
What strategy did you recommend to your Client around notices during the lease renewal at Unit 29 Bourne
Unit was under-rented so suggested S.25 friendly notice
In what circumstances have you or would you consider granting a licence?
Licence to Alter
Tenancy at Will - allows occupation of the property temporarily -> can evict at any time
How did you ensure the break notice at Glasshouse Yard was valid?
- Reviewed the lease and confirmed conditions (i.e Served in a particular way, no less than 6 months before break date)
- Also had solicitors review and confirm
- On break date i inspected to check final conditions
Explain your advice on dilapidations at 20-25 Glasshouse Yard
Always refer to Dilapidations in England and Wales, 2016
- Following the break notice, i advised my Client to instruct Building Surveyors to prepare a Schedule of Dilapidations
- I inspected with BS, providing them with all relevant documents
- Schedule was served by solicitors and settlement of £150,000 negotiated
What do you understand a conditional break clause to be?
Break clause effective only after certain conditions have been satisfied -> common
What RICS guidance is there on Dilapidations and what status does it hold?
Dilapidations in England and Wales, 2016
Guidance Note
What is a trigger notice?
Written notice that essentially ‘triggers’ the event
What terms afect the rent review?
- Rent review clause
- Repairing liability
- Insurance liability
- Alienation
- User clause
- L&T Act 1954
What are the ley elements of a rent review clause?
- procedure / machinary for effecting the rent review
- Bases of valuation
- Means of settling dispute
Talk me through the lease renewal procedure at 29 Bourne Industrial
After receiving Client instructions, i inspected and measured the unit
I spoke with the tenant who was keen to remain in the unit
Ascertained market rent using comparable method and confirmed with letting agents.
Instructed solicitors to serve S.25 friendly, with new lease terms stated.
Tenant made contact and we negoiated new lease -> HOTs drafted and solicitors instructed to document
Did you have regard to any RICS guidance during the lease renewal at Bourne Industrial?
Yes, RICS Code for Leasing Business Premises 2020 (professional statement)
What are the contents of a S.25 notice?
- name and address of Landlord and Tenant
- Address of property
- Notice of date to end tenancy
- Confirmation on whether new lease is offered or opposed
- Confirmation on time scales for response
- Landlords proposal for new tenancy (including proposed rent)
- Landlords grounds for opposition
- Strong recommendation to seek professional advice
What was the Market Rent at unit 29 Bourne?
£13.50 psf -> £33,500
What would you have siggested if Unit 29 Bourne was over-rented?
- Don’t serve notice -> tenancy will continue under S.24
- Serve notice to provide guarantee of income stream -> serve asap to secure rent now in a falling market
What options are vailable if negoiations didn’t go as planned?
Arbitration or Independent Expert
-> Apply to court or PACT for extension
PACT / Court determine terms unde S.32-35
What did you look for in your inspection at Compass House?
- material matters that may impact value
- unlicenced works
- improvements
- breach of repairing / decorating obligations
What is time of the essence?
Statement that saus contract provision must be completted on time
- Time is material to the performance of contract provision
How did you know time was not of the essence?
Reviewed lease and did not mention or state time of the essence
-> also no connected lease event or deeming provision
What case law are you aware of in relation to time of the essence?
USH v BBC
United Scientific Holding v Burnley Borough Council (1977)
- Time is of the essence if expressly stated in the lease
Cheapside Land and Development v Messels Services (1977)
Bello v Ideal View (2008) -> Rent review not initiated for 13 years -> court said time not of the essence and rent review could prcoeed
What case law are you aware of in relation to time of the essence?
USH v BBC
United Scientific Holding v Burnley Borough Council (1977)
- Time is of the essence if expressly stated in the lease
Cheapside Land and Development v Messels Services (1977)
Bello v Ideal View (2008) -> Rent review not initiated for 13 years -> court said time not of the essence and rent review could prcoeed
Talk me through the rent review procedure at Compass House
Reviewed the lease and familiarised myself with RR clause
- clarified assumptions, disregards and mechanism
Time not of the essence and open market review, so i inspected and measured unit. Gathered comparable evidence, confirming with local letting agent
- Determined suitable market rent and contacted tenant to begin RR discussions
- Once rental level was agreed, solicitors drafted the RR memo
Talk me through the rent review procedure at Compass House
Reviewed the lease and familiarised myself with RR clause
- clarified assumptions, disregards and mechanism
Time not of the essence and open market review, so i inspected and measured unit. Gathered comparable evidence, confirming with local letting agent
- Determined suitable market rent and contacted tenant to begin RR discussions
- Once rental level was agreed, solicitors drafted the RR memo
What was the process for dispute resolution stated within the lease at Compass House?
indpendent Expert
What is an Open Market review?
Rent adjusted to the market rent asssuming the property is available to let in the open market on the reveiw date
What is the hierarchy of evidence?
- open market lettings
- lease renewals
- rent reviews
- independent expert examination
- arbitrators awards
What negotiation tactic do you employ?
Accomodating and collaborative style
- importance of maintaining good relation and strong cooperation
- Honest and transparent
Will differ depending who i am negotiating with
How did you initiate the rent review?
Contacted teh tenant, essentially service a trigger notice
Tell me about your understanding of the Code for Leasing Business Premises
Code for Lease Business Premises 2020 (professional statement)
- Objective is to improve quality and fiarness in negotiating lease terms
- Promote the issue of comprehensive HOTs making the legal drafting process more efficient
