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APC Revision > Landlord & Tenant Training Module > Flashcards

Landlord & Tenant Training Module Flashcards

1
Q

What is the difference between a lease and a licence?

A

A lease gives a tenant exclusive right for possession and all third parties including the landlord can be excluded.

A license gives somone permission to do something that would otherwise be trespass.

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2
Q

What is the leading case in the matter of “lease or licence?”

A

Street v Mountford

  • A licence to occupy a furnished room in a house and has exclusive possession*
  • House of Lords rules the agreement consituted a Tenancy*
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3
Q

In what circumstances have you granted (or would consider granting) a licence?

A
  • For grazing of animals on land
  • Hot food vans on retail parks
  • Units in shopping centres
  • Car parking licences
  • Telecoms on buildings/roof tops
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4
Q

You are managing a property that is going to be redevloped at some unknown date in the future. What letting options do you have to generate some rental income without giving the tenant security of tenure under the 1954 Act?

A
  1. Grant two tenancies of less than 6 months (not exceeding 12 months)
  2. Grant a tenancy and have the security of tenure provisions excluded under section 38 of the Act
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5
Q

What is the difference between lease renewal and a rent review?

A

A lease renewal is a stututory procedure in accordance with Part 2 of L&T Act 1954.

  • If an agreement cannot be reached on the rent or terms then the matter is settled by the Court.*
  • If both parties agree they can be agreed by PACT (Professional Arbitration on Court Terms)*

A Rent Review is a contractual procedure contained within the lease and non agreements shall be settled in accordance with the review clause which usually states the rent shall be determined by an Independent Expert or Arbitrator

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6
Q

To what tenancies does the 1954 Act apply?

A

Business tenants in occupation.

If the tenant ceases to occupy the premises the Act ceased to apply.

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7
Q

When was the Landlord and Tenant Act 1954 last amended?

A

1st June 2004

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8
Q

Name the tenancies which the 1954 Act does not apply?

A
  1. Agricultural holdings
  2. Mining Leases
  3. Residential tenancies
  4. Tenancies granted as a condition fo employment
  5. Tenancies not exceeding 6 months unless
  • ​there is a provision for extension or,
  • Tenant has been in occupation for more than 12 months
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9
Q

What is a section 25 notice?

A

A section 25 notice is served by the Landlord on the tenant to terminate the existing tenancy to either:

  1. Granting a new tenancy
  2. Obtaining possession
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10
Q

When can a landlord serve a Section 25 Notice?

A

A section 25 notice can be served between 6-12 months before the contractual expiry of the lease or anytime thereafter.

Landlord to give a minimum of 6 months notice or maximum of 12 months notice.

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11
Q

What must a landlord’s Section 25 Notice contain?

A
  1. Name and Address of Landlord
  2. Name and address of Tenants
  3. Address of the property it relates to.
  4. Date of the notice
  5. Date of expiry of the notice
  • ​Terms for a new tenancy (Friendly Notice)
  • Ground(s) under Section 30(1) upon to oppose a new tenancy (Hostile Notice)

The notice may not be served at the tenants property but at the registered address.

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12
Q

What advice would you give a landlord client in respect of a lease renewal where a property is significantly over-rented?

A

To tell Landlord to do nothing as the Tenant will continue to pay the over rent.

As tenant is holding over (Section 24 of the Act) the tenant can give three months notice under Section 27.

If valuing the investment we would put a very high All Risks Yield.

However, if LL serves Sec 25 Notice and negotiated a new lease at say a 10 year term with a review after 5 years which would increase the Capital Value.

So what is more significant to the LL?

  • Rental Income

or

  • Capital Value
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13
Q

When is the best time to serve the Section 25 notice; 12 months or 6 months before lease expiry?

and

What are the advantages or disadvantages?

A

Advantage of serving at 12 months is gives both parties the maximum amount of time to negotiate.

  • (If tenant was considering leaving then the tenant will now need to make a decision giving Landlord maximum time to re-let the property)*
  • Also you will be re-negotiating a new rent many months before the expiry date which may or maynot be an advantage.*

Serving at 6 months gives advantage of re-negotiating nearer to the expiry date but this does not give much time for LL to re-let

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14
Q

Why would a landlord give 12 months’ notice when he could give 6 months’?

A

If say there were 3 months to lease expiry a landlord can terminate the tenancy by giving 6 months notice but he could give 12 months notice.

If the property is over-rented and the Tenant hasn’t given a Section 26 Notice request the landlord can serve 12 months notice and gain 6 months at the over rent.

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15
Q

What action should a landlord take if he/she requires possession of a property at the end of a lease?

A

Landlord has to serve notice under Section 25 and state the ground/grounds upon where possession is required in accordance with Section 30.

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16
Q

What can a landlord do if he cannot get a response from the tenant to his friendly Section 25 Notice?

A
  • Upto 2004 a Tenant had to serve a counter notice within 2 months of receiving a section 25 noltice and make a court application within 2 to 4 months of receiving the notice.*
  • Since 2004 there is no need for a tenant to serve a counter notice.*

Write to tenant stating unless I hear by X date then the Landlord will make apoplication to the court to determine the terms of the new tenancy and looking at Tenent to pay Landlords Costs.

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17
Q

What advice would you give a tenant when a landlord’s Section 25 Notice is due to expire in two weeks’ time and an agreement for a new lease has not yet been agreed?

A

A tenants has to make an application to Court before the expiry of the notice.

If the tenant fails to do this they will lose all security of Tenure.

The landlord can then either make the tenant leave or dictate the terms upon which the Tenant can stay.

However, under Section 29b the Landlord and Tenant can agree to extend the period.

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18
Q

Name the grounds under Section 30(1) of the Landlord and Tenant Act 1954 under which a landlord can obtain possession?

A
  1. Tenant failing to do Repairs.
  2. Tenant persistantly Late in paying rent.
  3. Breach of covenant.
  4. Landlkord offer Suitable alternative accommodation.
  5. A sub tenancy and the landlord can get a higher rent as a whole
  6. Demoilition or Development
  7. Lanldord wishes to occupy for their own purposes.
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19
Q

A lease of a shop property is due to expire in 12 months time. You are instructed for the first time by the landlord to negotiate a new lease with the tenant. Explain how you would deal with this instruction?

A
  1. Require a copy of lease.
  2. Agree Terms of Engagement.
  3. Inspect the property and measure.
  4. Check for any bbreaches of covenants.
  5. Factors that may affect the rent of the property.
  6. Assuming no grounds for not offering the tenatn a new lease instrufct solicitors to serve a Section 25 notice for a new lease.
  7. Then hopefully reach an agreement for a new lease.
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20
Q

In what circumstances is a tenant entitled to compensation when a landlord successfully oppose a new lease under the 1954 Act?

A
  1. Where the tenancy was created by a sub lease.
  2. Where the landlord wants to redevelop.
  3. Landlord wants to occupy for own purposes.

Commonly known as the NO FAULT GROUNDS

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21
Q

How is a tenants’ compensation assessed under the 1954 Act?

A

If Landlord gains possession by one of the No Fault Grounds the tenant is entitled compensation by the Rateable Value Multiplier: Section 37.

14+ years = Twice x RV

Less than 14 years = 1 x RV

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22
Q

Explain the power that the Court has in ordering a new lease?

A

Under Section 29(1) the court has the power to grant the following:

  1. The property Comprised: Section 32
  2. The length of the lease not exceeding 15 years: Section 33
  3. The Rent: Section 34
  4. The other terms: Section 35
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23
Q

What do you understand a Section 34 rent to be?

A
  1. The rent that the property might reasonably expect to be let for in the open market diregarding:
  • Tennants previous occupation
  • Any goodwill
  • Tenants Improvements (except if required within the lease)
  • Any licence to sell alcohol
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24
Q

What do you understand an Interim Rent to be?

A

An interim Rent is the period between the DATE OF EXPIRY of either the Landlords Section 25 Notice or The Tenants Section 26 Notice and the commencement of a NEW LEASE.

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25
Q

How is Interim Rent assessed?

A

Assessed on the basis that the terms of the old tenancy continue.

Generally the rent under the new lease unless either party can show either:

  • different valuation dates
  • different terms of old and new tenancy
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26
Q

In what circumstances would you recommend a tenant to serve a Section 26 Notice?

A
  • When the property is over-rented then recommend tenannt to serve a section 26 Notice to force the issue where if the terms cannot be agreed thay can be determined by the Court.
  • Sometime the Tenant may also require the security of a fixed term lease.
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27
Q

Explain when tenant’s improvements are disregarded at lease renewal?

A
  • They were carried out any time during the old tenancy.
  • Disregarded if carried out within the last 21 years.
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28
Q

Explain what action a tenant should take if there are 6 months of the lease remaining and he/she wants to vacate at expiry. The landlord has not served a Section 25 notice?

A
  • Tenant serve Section 27 notice of termination giving three months notice.

or

  • Hand back the keys on expiry
29
Q

What are the key elements of a rent review clause?

A
  1. The machinery (Who does what and when)
  2. The basis of Valuation
  3. The means of settling disputes where the parties cannot agree on the revised rent.
30
Q

What is a trigger notice?

A

A where a Landlord proposes a rent by a certain date.

31
Q

What do you understand by the expression time of the essence?

A

Both parties have got to stick very firmly by the time scales laid down by the rent review clause.

32
Q

What are the two landmark cases in respect of time of the essence?

A

The Burnley and Cheapside cases

33
Q

In what circumstances is it likely that time is of the essence?

A
  • If the lease says so
  • the lease makes if clear that time limits are strict (e.g. linked to Tenants option to break).
  • there are deeming provisions*
  • Tenant serves notice making time of the essence
34
Q

What are deeming provisions?

A

*Deeming Provisions

  1. L gives Notice proposing a new rent.
  2. T to serve counter-notice with a counter-proposal within a stated period of time
  3. If T fails to serrve counter-notise in time, T is deemed to have agreed L’s rent
  4. L could be deemed to accept Ts counter-proposal if lease states so
35
Q

What lease terms affect the rent at review?

A
  • Rent Review Clause
  • Definition of rent the assumptions and disregards
  • Rent review frequency
  • Insurnace liability
  • Repairing liability
  • User Restrictions
  • Alienation for Assignment or Subletting
36
Q

What assumptions are usually made in determining the rent at review?

A
  • the property is fit for occupation and use.
  • market rent payable after any rent free period for Tenants fitting out works.No work by Tenants has reduced the rental value (say removal of a mezzanine floor)
  • Tenant has compliet with the covenants of the lease
37
Q

What is the hypothetical term?

A

A rent review is on the basis it is to be let for all the other term of the lease except the rent.

38
Q

Is the hypothetical term more advantageous to the landlord or to the tenant?

A

Depends upon the length of the hypotheticla term and the length of the term.

  • The shorter the term is advantageous to the landlord.
  • The longer term is advantagoeous to the tenant.
39
Q

What are the usual disregards?

A
  1. Previous occupation
  2. Any goodwill
  3. Certain improvements
  4. License to sell alcohol
40
Q

Where do the usual disregards originate from?

A

Section 34 of the Landlord and Tenant Act 1954.

41
Q

How may a rent review be resolved if a landlord and tenant cannot reach agreement?

A

Rent review is resolved by what the lease states.

  • Independent Expert

Or

  • Abitrator
42
Q

What are the differences between an independent expert and an arbitrator?

A
  • Arbitrator
  • An arbitrator acts on the evidence and arguments submitted.
  • Cannot decide without receiving evidence.
  • Procedure of the Arbitrator is regulated by the Arbitration Act 1996.
  • A party can compel disclolsure of documents (through the court)
  • May not delegate any duties.
  • Can determine fees and costs and can order a party to pay all or part.
  • Abitrators fees can be determined by the Court.
  • Some right of appeal on a point of law.
  • Not liable for negligence.
  • Independent Expert
  • An expert has a duty of investigation by may receive evidence from the parties.
  • Basis decisions on own knowledge and investigations. Maybe require under the lease to obtain evidence.
  • No legislative procedure.
  • No such powers.
  • May seek assistance.
  • No power to make any orders as to fees.
  • No procedure.
  • No right of appeal but Court might set it aside.
  • Liable for damages through negligence.
43
Q

What is the purpose of a Calderbank letter/offer?

A

The purpose is an unconditional offer to settle the rent review.

44
Q

What must a Calderbank letter/offer contain?

A
  1. Unconditional offer to settle
  2. Reaasonable proposal to settle costs (usual to propose each party payw own fees and 50% of the Abitrator’s fee).
  3. A time for each party to accept the offer (usually 21 days).
  4. A statment that is made without prejudice save as to costs.
45
Q

A tenant has entered into a full repairing and insuring lease of a property in disrepair. The landlord now requires the tenant to remedy this disrepair. What advice would you give to this tenant?

A

As the tenant has entered into an FRI lease then tenant is obliged to pout the property into repair.

However, an issue is the standard of repair.

46
Q

What advice would you give to a tenant wanting to take a full repairing and insuring lease of a property in disrepair but suiting his business?

A
  1. Ask landlord to bring property in good repair.
  2. Rent free period whilst carrying out the repairs.
  3. Schedule of Condition to attach to teh lease.
47
Q

What action can a landlord take when a tenant is in breach of repairing covenant?

A
  1. Forfeiture under Section 146 of Law of Property Act 1925
  2. Sue the tenant for damages.
  3. Action for specific performance.
  4. Re-enter premises and carry out the repairs and recoup the cost only if the lease states it.
48
Q

What action can a tenant take when a landlord is in breach of repairing covenant?

A
  1. Tenant can sue for damages
  2. Tenant can go to court for specific performance.
  3. Tenant can get authorisation to carry out repairs and deduct from the rent via the Courts.
  4. Set off against rent.
49
Q

What does the Jervis v Harris case mean to you?

A
  1. Lanldord had a Right of entry for repair.
  2. Recovering the cost of works by a claim for debt rather than damages if a Section 146 Notice was served.
  3. Acoids Leasehold Property Repairs Act 1938.
  4. Avoids Section 18(1) of Landlrod and Tenant Act 1927
50
Q

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

A

The maximum damages that a landlord can claim is the deminution in value of his reversion.

51
Q

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

A

Damages are assessed on the difference in value of the property in repair and out or repair.

52
Q

Explain the provisions of Section 18(1) of the Landlord and Tenant Act 1927?

A
  1. Maximum damages a Landlord can claim in a diminution in value to the reversion caused by the tenants breach.
53
Q

Explain difference between a Schedule of Condition and a Schedule of Dilapidations?

A
  1. A schedule of condition is a statemnt describing the physical state and condition fo the building.
  2. A schedule of Dilapidations are a record of alleged breaches of repairing covenants.
54
Q

Explain the differene between an Interim and a Terminal Schedule of Dilapidations?

A
  1. An interim Schedule of Delapidations is served where there are more than three years remaining on the lease.
  2. A terminal schedule of Dilapidations is served in the last three years of the term and can be served at termination/lease expiry.
55
Q

What is a Scott Schedule?

A
  • A scott Schedule is the form in which a Dilapidations case should be presented to the court as per RICS Guidance Note on Dilapidaitons.
56
Q

Your tenant client wishes to extend an industrial property. Explain the factors that need to be considered and the action that needs to be taken?

A
  • Unexpired lease term (Having a sufficient length lease.
  • Wording of any rent review clause.
  • Tenants improvements are disregarded at review.
  • When the tenant is due to pay rent and lease renewal under section 35 of the 1954 Act.
57
Q

You are managing a property for your landlord client and have received a request from a tenant to carry out improvements. The tenant has requested that improvements are registered under 1927 Act. What advice would you give to your client?

A
  • Plans and specification from the tenant.
  • The works must consitute improvements and NOT alterations.
  • If it is an improvement which adds value teh Landlrod has 3 months to object or offer to do the owrks himself for a reasonable increase in rent.
  • If Lanldord does not object or want to do the work the Tenant can proceed and must complete the works within an agreed time period.
  • If the Landlord objects the matter can be determined by the Court.
58
Q

How is compensation for tenant’s improvements calculated?

A
  • The compensation only applies to where the improvements are reegistered for compensation.
  • Compensation is payable when the tenancy comes to an end.
  • Compensation shall not exceed the smaller of The Net Addition top the Value of the property

Or

  • The resonable Cost of carrying out the improvement at the end of the lease less the cost of putting the improvemnt into a reasonable state of repair.
59
Q

What lease terms are implied under Section 19 of the Landlord and Tenant Act 1927?

A
  • Section 19 implies that such reasonable consent is not to be unreasonably withheld.
  • Also relates to assignment or subletting where consent is not to be unreasonably witheld.
60
Q

Explain the legislation that needs to be considered in an assignment of a lease?

A
  • Section 19 Landlord & Tenant Act 1927
  • Landlord & Tenatns Act 1988 (Consent must be given in a reasonable time)
  • Landlord & Tenant Covenants Act 1985 (Landlord to ask the assigner or authorised guarantour agreement with the assignee)
61
Q

In what circumstances could no restrictions on assignment and subletting be appropriate?

A
  • An unusual or difficult property to let as a whole and the larger building may be required to be split up to sublet out.
62
Q

What are reasonabble grounds for refusing consent to assign?

A
  • The Financial Status of the Tenants and the effect this can have on the Landlords Reversion.
63
Q

What is the usual amount of an assignnee’s business profit that a landlord will look for before giving consent to assign?

A
  • Lanldord will look at Tenants profit being 3 times the rent and all the other charges payable under the lease being:
  • Service Charge
  • Insurance
  • Rent
  • Business Rates
64
Q

What do you understand by the expression authorised guarantee agreement or AGA?

A
  • Under Section 16 of Landlrod & Tenants Covenant Act 1995 a Landlord can require the assignor to enter into an agreement to guarantee the performance of the assignee.
65
Q

In what circumstances is it appropriate to have restrictive user clauses in leases?

A
  • To protect Value.
66
Q

What do you understand a conditional break clause to be?

A
  • A tenant can only break if certain conditions are satisfied.
67
Q

What conditions are usually attached to break clauses?

A
  • The tenant must comply with all the terms of the lease up to the expiry of the break clause.
  • If the tenant wishes to break they must pay a fine/premium.
68
Q

Can you give two examples of situations where it was held in Court that a break notice was invalid/ineffective?

A
  • Osborne Asssets Ltd v Britannia Life Ltd
  • Tenant covenanted to decorate using 3 coats of good quality paint.
  • Invoice stated only two coats had been applied.
  • Held that the break clause was ineffective.
  • NYK Logisticks (UK) Ltd v Ibend Estates BV (2011)
  • Tenant gave a break notice whaich all parties accepted to be valid.
  • Lease required the Tenant to give vacant possession at expiry of the notice.
  • Landlord had served a Terminal Schedule of Dilapidations.
  • Tenant had not completed the works at expiry of the notice and its workmen remained in the property for another week.
  • Held the Tenant had not exercised the break clause.

APC Revision (32 decks)

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