Leases

Question 1

What is a break clause?

Answer 1

Allows landlord and tenant to terminate on a date without any notice.

Question 2

What is a periodic tenancy?

Answer 2

Continues indefinitely from one period to another. Notice will usually be as long as the length of one period.

Question 3

What is a tenancy at will?

Answer 3

Tenant occupies the property on the terms that it may be terminated by either party at any time.

Question 4

Absolute covenant

Answer 4

Tenant cannot carry out the action. Landlord may allow one off consent but has total discretion on the matter.

Question 5

Qualified covenant

Answer 5

Action may be taken but only with landlord consent.

Question 6

Fully qualified covenant

Answer 6

Action may be taken but only with landlord consent but consent may not be unreasonably withheld.

Question 7

What is the meaning of a covenant to repair

Answer 7

There must be disrepair first - deterioration from previous physical condition.

Property need not be kept in perfect repair - fit for the occupation of a reasonably minded tenant of the class likely to take it

Works of renewal or improvement go beyond repair

Does not require tenant to give back a property wholly different

Beware - to keep also means to put in repair

Question 8

Is rent still payable if the property is rendered unusable?

Answer 8

Yes, unless there is an express term in the lease to the contrary

Question 9

What happens if there is no insurance for particular damage?

Answer 9

The tenant will be liable to repair the property under the repairing covenant.

Question 10

If a lease contains an absolute prohibition on all alterations, what can a tenant do?

Answer 10

A tenant of business may still be able to make “improvements” by serving a notice on the landlord detailing its proposals. The landlord has 3 months to reject and if it does the tenant can apply to the court for authorisation.

Question 11

What if the lease contains covenants against alterations?

Answer 11

A term is implied that a landlord’s consent to “improvements” cannot reasonably withheld z

Question 12

What constitutes an improvement?

Answer 12

The works increase the value or usefulness of the property.

Question 13

When can a tenant claim compensation for improvements?

Answer 13

A tenant which has served a notice to the landlord in accordance with the statutory procedure can claim for compensation of the improvements at the end of the lease term that “add to the letting value of the holding”

Question 14

Are there any implications for a landlord that unreasonably withholds consent to change in use of the property?

Answer 14

No, although if the landlord gives consent then they cannot charge a fine or increased rent as a condition or giving consent, providing no structural changes are made.

Question 15

Assignment - qualified covenants

Answer 15

Implied that consent is not to be unreasonably withheld.

Question 16

Landlord and tenant can agree conditions in which withheld consent would not be deemed unreasonable

Answer 16

S19(1)(A)

Question 17

If there is a qualified covenant on assignment and the tenant makes a written application for consent, what must a landlord do?

Answer 17

Within reasonable time:

• give consent, except in a case where it is reasonable not to;
• serve a written notice of its decision specifying any conditions or if it is being withheld, the reason for that decision.

Question 18

What are the guidelines that the court will consider when considering reasonableness and an application to assign?

Answer 18

A landlord is not entitled to refuse consent on grounds which are nothing to do with the landlord and tenant in regard to the subject matter of the lease

Landlord does not need to prove that conclusions were justified, if they were conclusions which might be reached by a reasonable person in the circumstances.

Detriment to to tenant must not be extreme and disproportionate to the benefit gained by landlord

Question 19

What are the statutory provisions that apply to underletting

Answer 19

If there is a qualified covenant:
- it is deemed subject to the proviso that consent is not to be unreasonably withheld
- tenant can make a written application for consent and landlord must respond in a reasonable time setting out any conditions or reason for declining to consent

Question 20

If lease is silent as to whether is payable in advance or arrears, when is it deemed payable?

Answer 20

In arrears.

Question 21

A grant of a commercial lease is exempt supply, subject to the landlord’s option to tax

Question 22

Types of rent review

Answer 22

Fixed increase
Index- linked - linked to RPI
Tenant receipts - linked to tenant turnover
Open market rent review

Question 23

Common assumptions that the property is available to let on the open market

Answer 23

Willing landlord and willing tenant
With vacant possession
On the terms of this lease other than as to amount of the annual rent but including the provisions for review of the annual rent
For a term of X years - equal to the unexpired residue or the actual term with a minimum term to cover a lease which is close to expiration
The tenant has fully complied with their obligations in this lease
If the property has been destroyed or damaged, it has been fully restored

What is disregarded?

Tenant’s occupation
Any goodwill attached to the property as a result of any business carried out by the tenant
Any voluntary improvements carried out by tenant

Question 24

When can a tenant call for the deduction of freehold title?

Answer 24

Where the lease is for a term of more than 7 years.