Lease structure and content

Question 1

What are a tenant’s repairing obligations in a lease of whole?

Answer 1

The tenant is responsible for repairing the whole building.

Question 2

What are a tenant’s repairing obligations in a lease of part?

Answer 2

The tenant is responsible for repairing the demise, which will be defined in detail.

Question 3

What will a covenant containing a full repairing obligation state?

Answer 3

“To keep the Premises in good repair”.

If they are not in good repair, the tenant must put them in good repair. A tenant should obtain a survey so they are aware of any major items of repair.

Question 4

What will a covenant containing a qualified repairing obligation state?

Answer 4

“To keep the Premises in good repair but not to put the Premises in any better state of repair than it was in at the date of this lease as evidenced by the Schedule of Condition”.

Question 5

What is the insurance arrangement in a lease of whole?

Answer 5

In a lease of whole, the landlord will insure the whole, and the sole tenant will refund the landlord the whole of the insurance premium.

Question 6

What is the insurance arrangement in a lease of part?

Answer 6

In a lease of part, the landlord will insure the whole, and each tenant will refund the landlord a proportionate part of the insurance premium.

Question 7

What are alterations and can a tenant carry them out?

Answer 7

Alterations are changes to the premises, such as reconfiguring the internal walls, opening up new windows or adding a mezzanine floor etc.

If the lease is silent on alterations, then the tenant is free to carry out alterations.

Question 8

What is the doctrine of waste?

Answer 8

This means that the tenant cannot carry out alterations which reduce the value of the premises.

Question 9

What is an absolute covenant?

Answer 9

An absolute covenant against alterations means they are not permitted.

If the tenant wants to make an alteration covered by an absolute covenant, they can ask the landlord but they have no obligation to even consider the request.

Question 10

What is a qualified covenant?

Answer 10

A qualified covenant against alterations means they are only permitted with landlord’s consent.

Question 11

What is a fully qualified covenant?

Answer 11

A fully qualified covenant means the landlord must act reasonably in deciding whether to withhold consent.

Question 12

What does S19(2) LTA 1927 provide for in respect of tenant’s proposed alterations?

Answer 12

If the lease contains a qualified covenant against alterations, s19(2) LTA 1927 converts it to a fully qualified covenant insofar as the tenant’s proposed alterations are improvements from the point of view of the tenant.

Question 13

What tenant’s covenants will usually be included in a licence for alterations?

Answer 13

-Carry out the works in compliance with the landlord’s requirements

-Obtain all necessary consents e.g. planning permission

-Pay the landlord’s costs e.g. surveyor or solicitor costs

-Reinstate the premises at the end of the lease term

Question 14

If a lease contains an absolute covenant against alterations, how can a tenant circumvent this if their proposed alterations are improvements?

Answer 14

Under s3 LTA 1927, the tenant serves notice on the landlord of its intention to carry out improvements.

If the landlord objects, the tenant can apply for the Court’s permission to carry out the improvements.

Question 15

When will the Court grant permission under S3 LTA 1927 for the tenant to carry out improvements?

Answer 15

The Court will give permission if the improvements:

-add to the letting value of the property

-are reasonable and suitable to the character of the property; and

-will not diminish the value of any other property belonging to the landlord

Question 16

What time period does a landlord have to object to tenant’s improvements under S3 LTA 1927?

Answer 16

If the landlord does not object within 3 months, the tenant may go ahead and carry out the improvements.

Question 17

If the lease is silent on user, are they free to use the premises for anything they like?

Answer 17

Yes, provided the lease is silent on user.

Generally, the tenant will want more a general use to allow flexibility and the landlord way mish to keep the user very narrow.

Question 18

If a landlord decides to give consent to a change of use, can they charge a lump sum/increase the rent for giving consent?

Answer 18

No, unless the change of use requires structural alterations-S19(3) LTA 1927.

Question 19

What covenants does the Code for Leasing Business Premises require a landlord to give to a tenant in respect of alterations?

Answer 19

The Code requires a landlord to at least give the tenant a fully qualified covenant for internal non-structural alterations in a lease of part, and the tenant the ability to carry out internal non-structural alterations without consent in a lease of whole.