PP 9 - Lease structure and content Flashcards
What does ‘demise’ refer to in a lease?
The part of the building covered by the lease and leased to the tenant.
Who is responsible for repair in a lease of whole?
The tenant, including interior, exterior, and structure.
Who is responsible for repair in a lease of part?
Tenant repairs the interior; landlord maintains common areas (e.g., halls, lifts).
What is a full repairing obligation?
Requires tenant to put and keep premises in good repair — tenant should get a survey.
What is a qualified repairing obligation?
Tenant must repair but not improve beyond original condition, evidenced by a Schedule of Condition.
Are tenants responsible for renewal or rebuilds under repair covenants?
No — tenants repair or replace, but are not responsible for full renewal or rebuilding.
Should tenants be liable for inherent/structural defects in new buildings?
No — these should be excluded from tenant obligations and service charges.
Who insures the property in a commercial lease?
The landlord insures and recovers costs from tenants as insurance rent.
How is insurance rent typically split?
Lease of whole → Tenant pays 100%
Lease of part → Proportional share via service charge
Is the tenant liable for insured risks?
No — unless the damage is caused by the tenant’s negligence.
Give examples of typical insured risks.
- Fire
- Flood
- Storm
- Explosion
- Subsidence
- Riot
- Earthquake
- Vehicle impact
If a lease is silent on alterations, what can the tenant do?
Alter freely, subject to the doctrine of waste — cannot reduce the value of the premises.
What are the types of alteration covenants?
- Absolute – No alterations allowed
- Qualified – Consent required (no duty to be reasonable)
- Fully qualified – Consent required, must be reasonable
Can a tenant convert a covenant into a fully qualified one?
Yes, under LTA 1927, for improvements, if statutory conditions are met.
What is a Licence for Alterations?
Document recording the landlord’s consent to alterations under a qualified covenant.
What must a Licence for Alterations include?
- Description of works
- Standards & deadlines
- Tenant’s planning obligations
- Landlord’s legal/surveyor fees
- Reinstatement terms
What is the purpose of a user clause?
To restrict how the tenant can use the premises.
What are examples of user clause types?
- Highly specific: “For use as a tailor’s shop.”
- Moderate: “Retail use.”
- Class-based: “Use within Class E(a).”
What are the levels of control in change of use clauses?
- Absolute – No change
- Qualified – Consent required
- Fully qualified – Consent not to be unreasonably withheld
Does statute upgrade user clauses like it does with alterations?
No — s19(3) LTA 1927 does not convert user clauses.
What is required when a tenant changes use under planning law?
- Planning permission
- Regulatory approval (e.g., betting licence for Sui Generis)
Best practices for user/alteration clauses under RICS Code?
- Limit restrictions to protect property value
- Use fully qualified covenants for non-structural/internal alterations
- Reinstatement clause should be clear in heads of terms
