PP 8 - Grant of lease Flashcards
What is an Assured Shorthold Tenancy (AST)?
A short-term residential lease (usually 6–12 months), common in residential lettings.
What is a residential long lease?
A 99- or 999-year lease with low ground rent, e.g., £150 per year.
What is a commercial lease?
Typically up to 15 years, subject to market rent and business terms.
What are the three essentials of a lease?
- Exclusive possession
- Fixed or periodic term
- Proper formalities
When must a lease be created by deed?
If it lasts over 3 years.
What are the key objectives of a landlord in lease negotiations?
Clear rent with no deductions, Tenant repairs and insures, Control over use and assignments.
What are the key objectives of a tenant in lease negotiations?
Use premises as intended, Flexibility (break clauses, assignment), Avoid unfair terms and repair costs.
What are typical commercial lease terms?
3, 5, 10, or 15 years.
What is a reversionary lease?
A lease where the start date is after the date it becomes legally binding.
What is a break clause?
A provision allowing early termination by landlord, tenant, or both.
What is a Full Repairing and Insuring (FRI) lease?
A lease where tenant covers rent, repairs, and insurance.
What are four rent review mechanisms?
Stepped rent, Index-linked rent (e.g., RPI), Turnover rent, Open market rent.
What are common rent review assumptions?
Premises are vacant, Tenant complied with covenants, Lease terms apply (except rent), Rebuilt if destroyed.
What are common disregards in rent review?
- Tenant’s occupation
- Tenant’s goodwill
- Tenant’s voluntary improvements
Who must follow the RICS Code for Leasing?
- RICS members and regulated firms.
- Does not apply to landlords/solicitors unless RICS members.
Name 3 mandatory requirements under the RICS Code.
- Constructive lease negotiations
- Unrepresented parties advised to seek legal advice
- Heads of terms must be compliant
What areas must be covered in heads of terms?
- Premises
- Term & break rights
- Rent & rent review
- Repairing obligations Assignment/underletting
- Use
- Alterations & reinstatement.
What is an ‘engrossment’ in lease transactions?
The final, signed copy of the lease prepared for execution.
When is an agreement for lease needed?
When conditions must be satisfied before lease grant (e.g., planning permission).
What are the key lease searches?
- OS1: Lease of whole
- OS2: Lease of part
- OS3: Non-registrable lease
What happens at lease completion?
- Tenant sends completion money
- Solicitors date and exchange leases
- Documents sent to each other
When is SDLT or LTT payable on leases?
- SDLT (England) or LTT (Wales) is based on rent or premium.
- Must be paid promptly after lease completion.
How is SDLT on commercial leases calculated?
Based on Net Present Value (NPV) of rent over first 5 years:
* NPV < £150,000: 0%
* £150k–£5 million: 1%
* > £5 million: 2%.
When is a lease registrable at the Land Registry?
- > 7 years → Must be registered
- ≤7 years → Not registrable
What forms are used for lease registration?
- AP1: If landlord’s title is registered
- FR1: If landlord’s title is unregistered
- Certified lease copy submitted
What must a tenant’s solicitor do post-completion?
- Submit SDLT/LTT return
- Register the lease (if >7 years)
- Receive official copies of leasehold title
