Property 5 - Leasehold Flashcards
Advs and Disadvs
Easier to enforce covenants in multi-occupation.
Prescribed clauses
After 19 June 2006. Must contain standard set of clauses.
Periodic leases
Notice should be length of one period of the lease. Yearly can be on six months.
Leasehold covenants
Absolute - absolutely cannot carry out
Qualified - obtain landlords consent
Fully qualified - landlord cannot withhold consent unreasonably.
Repairing and insuring
To repair
Must be disrepair first.
Can oblige to repair inherent defect if only way to effect the repair.
Insurance
Defined risks.
Insured to ‘full reinstatement value’ protects shortfall.
Covenant to pay for insurance policy - sum reserved as insurance rent.
Covenant by landlord to reinstate (protect tenants shortfalls).
Rent suspension clause if property destroyed (otherwise would have to keep on paying).
Termination - frustration only applies in certain scenarios. Should ensure clause for this.
Alterations
Absolute, qualified, fully qualified.
S3 LTA 1927 - serve notice. Three months to object, tenant has right to apply to court.
Will allow if add to letting value, reasonable and suitable to character and do not diminish value of any other property.
Landlord can carry out himself for reasonable increase in rent (tenant cannot apply to court).
Qualified and fully qualified;
Conditions in a license to alter.
Qualified s19(2) - landlord cannot unreasonably withhold. - increase in value allowed.
Compensation ;
Entitled to compensation under s3. (that add letting value).
Change of use
No statutory implication that consent can be unreasonably withheld. But cannot charge or fine as a condition of giving consent provided no structural alterations.
Alienation
assignment
underletting
charging
sharing occupation
parting with possession
S19(1)(a) LTA 27 - any qualified covenant cannot be unreasonably withheld.
S19(1A) - agree in advance conditions which it would be unreasonable for landlord to refuse consent.
S1 LTA 88 - qualified covenant - written application. landlord must within reasonable time;
give consent unless not reasonable
serve on tenant written notice of decision.
specifying conditions or reason for withholding.
-Conclusiosn made by reasonable person
-Can refuse on purpose even if not forbidden
-should consider detriment to tenant
Underletting
Underlease must be shorter than headlease.
Can end up direct if headless forfeited and undertenant applies for relief.
Headlease still liable.
S19(1)(a) implies into any qualified -consent not to be unreasonably withheld and tenant made written must within reasonable time;
give consent (unless not reasonable)
serve on tenant written notice of decision;
conditions
reason for withholding.
May ask to mirror, provide direct covenant etc. disapply ss24 - 28 LTA 54.
2019 Royal Institute of Chartered Surveyors
Failure to follow negligence claim for surveyor.
-Negotiations must be approached in constructive and collaborative manner
-Must be advised of exitstence of code
-Transaction terms in writing
Includes;
amount of rent
frequency of rent
basis of rent review
liability for insurance
ability to assign
repairing
permitted use
Remainder can be departed from in exceptional circumstances;
lease plan
length of term and break provisions
rent review process
standard provisions for assignment of whole
repairing obligations
controls on alterations no more restrictive than necessary.
Procedure
May consider
references, guarantee, deposit.
Drafting the lease.
Landlord s will draft and submit to tenants s.
Contract (agreement for lease)
useful if delay.
Particulars of sale must state leasehold and give details of term.
Incumbrances disclosed.
SCPC 8.2 and SC - form annexed to draft contract, landlord to engross lease and supply to tenant with engrossment at least five working days before.
If mortgage contact lender as usually prohibited (under lease). Will investigate clients title.
Registered may get absolute title. Still want to check.
Not entitled to call for freehold title unless lease more than seven years,.
SC 8.2.4 and SCPC 11.2.4 - landlord to deduce title to enable tenant to obtain registration.
Headless with absolute, no need to see title.
Where unregistered;
entitles UT to call for headless and all subsequent assignment for last 15 years.
only allowed where 7 or more years.
Landlord should provide t with;
draft agreement
draft lease
evidence of freehold/headlease title
copies of planning consents
evidence of lender’s consent.
Same as conveyancing but may want to see insurance policy.
License to underlet before or on completion.
Direct covenant creates contractual relation.
License to underlet - consent, grant, direct covenant, obligation to pay costs.
Prepared with lease and counterpart. Lease by landlord counterpart by tenant.
Will exchange for signature at least five working days before.
Completion -
landlord will receive
counterpart lease/ underlease
premium for grant
apportioned sum for ret payable in advance
Landlord gives tenant ;
lease/underlease
marked or certified copies of freehold title deeds (unregistered only)
certified copy of consent of lender.
Underlet consent from head landlord.
SDLT
Non-residential same as freehold.
Net present value of rent
0 to 150,000 (Zero)
150,001 to 5,000,000 (1%)
Above 5,000,000 (2%)
LTT -
Net present value of rent;
0 to 225,00 - Zero
225,001 to 2m (1%)
Above 2m - 2%
Overriding?
Seven years or less not capable of registration. Take effect as overriding even if not actual occupation.
Unregistered - binding on all subsequent owners.
Lease over 7 registrable in own right even if freehold not.
If registered within OSR1 period.
Absolute leasehold, possessory qualified, or good leasehold title.
Good - when unregistered and no freehold title on application.
Self-help - Jerris V Harris Clause
If tenant does not respond to repair in reasonable time, landlord may enter himself and recover as a debt.
Termination
Security of tenure - LTA 1954.
Termination of leases at common law;
Effluxion of time.
(periodic full period or for 1 year 6 months notice.
Surrender - both agree - by deed to be legal.
Merger - acquisition of reversion title.
1954 act - common law termination may not apply.
Applies where tenancy for business purposes.
Does not apply to tenancies at will or fixed-term tenancies not longer than six months.
Although if option to renew longer than six does apply.
Agricultural, farm and mining expressly excluded.
If contracted out must tell tenant and if less than 14 days before grant must get statutory declaration.
1954 act ways to terminate
-notice under s25
-tenants request under s26
-forefeiture
-surrender
-periodic (tenant giving notice to quit)
-fixed-term lease, tenant serving three months written notice under s27.
-fixed-term - tenant ceasing to be in occupation for business purposes.
