Leasing and Letting

Question 1

Can you please tell me what the code for leasing premises outlines?

Answer 1

• Aims to improve the quality and fairness of negotiations on lease terms and promote use of a comprehensive HoTs template.
• Requirements include:
• Negs must be approached in constructive and collaborative manner
• Party not represented by RICS member must be informed of the existence of the code and recommended to seek pro advice
• HoTs must state STC and include …
• Negs should aim to achieve fair outcome considering both sides commercial interests
• Appendix A= HoTs template

Question 2

Please name some lease terms that affect value

Answer 2

• Lease length/ term certain
• Break clauses
• User clauses
• RR pattern/ basis of valuation
• SoT provision

Question 3

What are the 4 requirements of a lease?

Answer 3

1. Exclusive occupation
2. Payment of rent
3. Duration for a specified term
4. If for more than 3 years, must be in writing, signed and registered as a deed

Question 4

What are the grounds for refusal of a lease LTA54?

Answer 4

• As per S.30 LTA54:
• Breach of repairing covenant
• Persistent delay in paying rent
• Other substantial breach
• Provide suitable alternative accommodation
• Uneconomic subdivision
• Demolition or reconstruction
• Owner occupation

Question 5

What is a Tenancy at Will?

Answer 5

• Form of licence created in writing for an unspecified period of time in which LL can evict T at any time
• Eg of use: early access for T fit out works or temp agreement when negotiating new terms after LEX

Question 6

What is a Wayleave?

Answer 6

• Temporary right which receives annual payment
• Cannot be transferred
• Eg: right for electric company to install apparatus

Question 7

What is an Easement?

Answer 7

• Permanent right which receives one lump payment
• Allows a right enjoyed by one party over the land of another
• Can be registered with land reg

Question 8

Difference between lease and licence?

Answer 8

• Street v Mountford 1985
• 3 main differences:
  1. Lease provides an occupier with an estate in the relevant land, a licence is a permission to make it lawful for them to use the land
  2. A lease can be assigned, a licence cannot
  3. A lease cannot be terminated until it expires (unless break option), a licence can usually be revoked at any time.

Question 9

What legislation did you have regard to when preparing marketing particulars?

Answer 9

• Misrepresentation Act 1967
• Also had regard for RICS Commercial Estate Agency Pro Statement, which states: all advertising and marketing material must be honest and truthful

Question 10

What goes into marketing particulars?

Answer 10

• Address
• Tenure
• Price
• Photo
• Property description
• Use class
• EPC
• Rates
• Disclaimer
  Contact

Question 11

What goes into HoTs?

Answer 11

• RICS Pro Statement Code for Leasing Business Premises 2020:
• Always STC
• Address
• Length of term (and if inside LTA54)
• Any renewal or break options
• Rent
• Any RRs, inc frequency and basis
• Repairing obligations
• Any RF or incentive

Question 12

How can a lease be ‘contracted out’?

Answer 12

• Section 38A LTA54 sets out the procedure which must be followed to contract a lease outside of the Act.
• LL must serve ‘health warning’ on T warning that proposed lease will not be protected by the Act
• T must respond, confirming they have received the notice and agree
• Must occur before lease is signed
• Two kinds of declaration:
  1. Simple declaration- given when the parties have at least 14 days or more before commencement of the new lease
  2. Statutory declaration- given when the parties have less than 14 days before commencement of the new lease. Sat dec must be made in front of independent solicitor (not tenants or vendors).

Question 13

what are some of the reasons you would choose to sub -let over assigning a lease?

Answer 13

• May be requirement of the lease
• If for only part of the demise not the whole
• If market rent is higher than passing rent (profit rent)
• If t may want to reoccupy

Question 14

What are the rules surrounding marketing boards?

Answer 14

• Town and Country Planning Act 2007
• PP required for commercial boards over 2sq.m flat and 2.3sqm v board
• Only one board per building
• Must not project more than 1m out
• No higher than 4.6m from ground
• Must be removed within 14 days of completion
• Policed by LPA

Question 15

What are the rules surrounding marketing particulars?

Answer 15

What are the 4 options available to LL when T is not repairing their property:
1. Serve a repair notice
2. Serve an interim schedule of dilaps
3. Do the works and charge T
4. Forfeit the lease