Lease

Question 1

What is a leasehold title?

Answer 1

A leasehold title is granted by the freeholder in exchange for a premium and allows ownership of the building for a set number of years, after which it reverts to the freeholder.

The premium is typically a large sum of money, and ground rent is usually no more than £250 per year.

Question 2

What happens at the end of a leasehold term?

Answer 2

The property reverts to the freeholder after the lease term ends.

Question 3

How does conveyancing work for leaseholds?

Answer 3

Most leases are assignable, meaning they can be sold, gifted, or mortgaged by the leaseholder.

Question 4

What is the typical duration of a leasehold title?

Answer 4

Leasehold titles typically last for 99 years, with some lasting up to 999 years.

Question 5

What is the difference between a lease and a licence to occupy?

Answer 5

A lease creates an interest in land, while a licence confers personal interest without interest in the land.

Question 6

What are the key characteristics of a lease?

Answer 6

• Creates interest in the land
• Lessee has exclusive possession
• Tenant pays rent
• Offers security and certainty for the tenant
• Likely to bind a buyer if registered
• SDLT may be payable

Question 7

What are the key characteristics of a licence to occupy?

Answer 7

• Personal interest (no interest in the land)
• Exclusivity is not required
• Licensee pays a licence fee
• No statutory security of tenure
• Does not bind a buyer
• Not subject to SDLT

Question 8

True or False: Labeling an agreement as a licence makes it a licence.

Answer 8

False

Question 9

What are common lessee’s covenants?

Answer 9

• To pay rent
• To repair
• To insure
• To permit landlord entry
• Not to alter the structure
• To use premises for a specific purpose
• Not to deny landlord’s title
• Not to assign or sublet

Question 10

What are common lessor’s covenants?

Answer 10

• Not to derogate from the grant
• To repair
• To allow quiet enjoyment

Question 11

What is security of tenure under the LTA 1954?

Answer 11

A tenant has a statutory right to renew its tenancy at the end of the term, with limited grounds for landlords to oppose.

Question 12

What are exceptions to security of tenure?

Answer 12

• Contracted out leases
• Leases granted as part of employment
• Home business tenancy
• Tenancies for 6 months or less
• Licences and tenancies at will
• Other specific types (e.g., agricultural holding)

Question 13

What limited grounds can landlords use to oppose lease renewal?

Answer 13

• Premises in disrepair
• Arrears of rent
• Substantial breaches
• Willingness to provide alternative accommodation
• Ending a sub-lease to let the property as a whole
• Demolition or reconstruction work
• Landlord intends to occupy the premises

Question 14

What is the procedure to contract out of security of tenure?

Answer 14

• Step 1: Serve warning notice
• Step 2: Tenant must reply with acceptance
• Step 3: Endorsement in the lease referencing the notice and declaration

Question 15

What is a Section 25 Notice?

Answer 15

A notice served by the landlord to terminate and oppose the grant of a new lease.

Question 16

What is a Section 27 Notice?

Answer 16

A notice served by the tenant to end a business tenancy.

Question 17

What remedies can landlords pursue if a tenant is in breach of lease?

Answer 17

• Forfeiture
• Self-help for breach of repair covenants
• Specific performance
• Damages
• Injunctions

Question 18

What remedies can landlords pursue for non-payment of rent?

Answer 18

• Action in Debt
• Commercial Rent Arrears Recovery
• Draw down on rent deposit
• Pursue guarantor or former tenant
• Forfeiture

Question 19

What is the liability of the original tenant after an assignment of a lease for ‘Old’ leases?

Answer 19

The original tenant is liable for the whole term even after an assignment.

Question 20

What is the liability of the original tenant after an assignment of a lease for ‘New’ leases?

Answer 20

The original tenant is no longer liable after an assignment.

Question 21

What is an Authorised Guarantee Agreement (AGA)?

Answer 21

An agreement where the outgoing tenant guarantees the performance of the lease covenants by the incoming tenant.

Question 22

How must an AGA be formatted to be enforceable?

Answer 22

It must be in writing and signed by the guarantor.

Question 23

What restrictions may exist regarding assignment of a lease?

Answer 23

Some leases prohibit assignment, while most restrict it without the landlord’s consent.

Question 24

What is an AGA?

Answer 24

An AGA is an Authorised Guarantee Agreement that outlines the obligations of the incoming tenant under the lease.

An AGA may be a separate document or included in a licence to assign

Question 25

What must be true for an AGA to be enforceable?

Answer 25

It must be in writing and signed by the guarantor. ## Footnote This ensures that the agreement is legally binding

Question 26

What limitations exist for an AGA?

Answer 26

An AGA cannot impose requirements on the outgoing tenant to guarantee the liability of anyone other than the immediate assignee or for periods after the assignee has been released.

Question 27

What does s.19 LTA 1927 imply about a landlord's consent?

Answer 27

A covenant by the tenant not to assign or underlet without licence or consent cannot be unreasonably withheld. ## Footnote This is despite any express provision to the contrary

Question 28

What are the landlord's statutory duties under the LTA 1988?

Answer 28

The landlord must: * Give consent unless it is reasonable to refuse * Serve written notice of their decision * Pass on the application to anyone else whose consent is needed

Question 29

What happens if a landlord fails to comply with their statutory duties?

Answer 29

The landlord can be heavily penalised for failure to comply.

Question 30

What should a tenant do when applying for consent?

Answer 30

The tenant should serve the request for consent in writing. ## Footnote Failure to do so means the landlord's statutory duties do not arise

Question 31

What is the landlord's duty regarding reasonable time?

Answer 31

A landlord has a duty to respond within a reasonable time, and the burden of proof is on the landlord to show compliance.

Question 32

What constitutes unreasonable withholding of consent?

Answer 32

Failure to give consent within a reasonable time would constitute unreasonable withholding.

Question 33

On what grounds can a landlord reject consent?

Answer 33

The landlord can only reject consent based on reasonable grounds. ## Footnote It is not reasonable if the reasons are unrelated to the landlord-tenant relationship

Question 34

What must a landlord demonstrate if they impose conditions on consent?

Answer 34

The burden is on the landlord to show that the conditions imposed were reasonable.

Question 35

What does s.19(1A) allow for non-residential leases?

Answer 35

It allows the lease to specify circumstances in which the landlord may withhold consent and conditions under which consent may be granted.

Question 36

Under what condition can a tenant be required to enter into an AGA?

Answer 36

A tenant can only be required to enter into an AGA if it is reasonable to do so or if the lease expressly requires it.

Question 37

Can a landlord require payment for granting consent?

Answer 37

The landlord cannot require payment unless the lease provides for it, but can require payment of reasonable expenses. ## Footnote This is under s.144 LTA 1925

Question 38

What must a landlord provide in a written response regarding consent?

Answer 38

The landlord must provide written notice of the decision, specifying conditions if consent is granted or reasons if refused.

Question 39

What options does a tenant have if the landlord unreasonably withholds consent?

Answer 39

The tenant may: * Act without consent * Apply to court for a declaration * Claim damages for breach of statutory duty

Question 40

What is the risk if a tenant acts without consent?

Answer 40

If the refusal was reasonable, the tenant would be in breach and liable for damages, and the lease could be forfeited.

Question 41

What is a court declaration in the context of lease consent?

Answer 41

A tenant may apply to the court for a declaration that consent has been withheld unreasonably, allowing them to proceed without consent.

Question 42

Can an assignee claim damages for breach of the landlord's statutory duty?

Answer 42

No, the statutory duty is owed to the tenant, not the assignee.