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SQE 1 > Property Law 7 > Flashcards

Property Law 7 Flashcards

1
Q

What is the basis for the SDLT/LTT calculation featuring a long lease (say 999 years)?

A

The premium

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2
Q

What is the basis for the SDLT/LTT calculation featuring a short lease with market rent payable

A

Net Present Value

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3
Q

SDLT is assessed on the NPV, and different percentage rates apply to the slices of the total purchase price. What are those slices?

A
  • Up to £150,000, there is no SDLT payable.
  • Over £150,000 up to £5 million, SDLT of 1% is payable
  • Over £5 million, SDLT of 2% is payable

SDLT is rounded to the nearest pound.

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4
Q

LTT is assessed on the NPV, and different percentage rates apply to the slices of the total purchase price. What are those slices?

A
  • Up to £225,000, there is no LTT payable.
  • Over £225,000 up to £2 million, LTT of 1% is payable
  • Over £2 million, LTT of 2% is payable

Unlike SDLT, LTT is not rounded to the nearest pound.

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5
Q

Do leases of up to 3 years need to be registered?

A

No

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6
Q

Do leases of more than 3 years up to 7 years need to be registered?

A

Does not need to be registered. Can be noted against the landlord’s title

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7
Q

Do leases of over 7 years need to be registered?

A

Yes, must be registered at the Land Registry

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8
Q

What is the procedure for registering a lease?

A
  • OS1 (lease of whole) or OS2 (lease of part) search should have been carried out before completion to give priority.
  • The tenant applies to register the lease using form AP1 (if the landlord’s title is registered) or FR1 (if the landlord’s title is unregistered)
  • A certified copy of the lease may be scanned and submitted electronically.
  • If the landlord’s freehold title is charged, then a letter of consent from the lender will also be needed.
  • On completion of the application, the tenant’s solicitor will receive two official copies (the new leasehold title and the updated landlord’s title)

Note that if the tenant is a company, then usually the lease will not be charged, and so there is no need to register the transaction at Companies House.

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9
Q

Commercial Leases, Alterations - what is the position if Alterations are not mentioned in the lease?

A

The tenant is free to carry out alterations.

The only restriction imposed by law is the doctrine of “waste” which means that the tenant cannot carry out alterations which reduce the value of the premises.

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10
Q

Commercial Leases, Alterations - What if there is an absolute covenant against alterations?

A

If the tenant wants to make an alteration covered by an absolute covenant, they can ask the landlord, but the landlord has no obligation even to consider such a request.

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11
Q

Commercial Leases, Alterations - What if there is an qualified covenant against alterations?

A

A qualified covenant against alterations means that they are only permitted with landlord’s consent. The landlord does not have to give consent.

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12
Q

Commercial Leases, Alterations - What if there is a fully qualified covenant against alterations?

A

Alterations are only permitted with the landlord’s consent BUT the landlord must act reasonably in deciding to withhold consent.

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13
Q

Commercial Leases, Improvements - What if there is an qualified covenant against alterations but the alterations the tenant wants to make are improvements?

A

s19(2) LTA1927 converts it to a fully qualified covenant

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14
Q

Commercial Leases, Improvements - What if there is an absolute covenant against alterations but the alterations the tenant wants to make are improvements?

A

Doesn’t matter, the law can’t help with absolute covenants

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15
Q

Commercial Leases, Improvements - There is an qualified covenant against alterations but the alterations the tenant wants to make are improvements. Are those improvements from the point of view of the tenant or the landlord?

A

The Tenant

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16
Q

Commercial Leases, Alterations - If the Landlord consents to the alterations under a qualified covenant that consent will be documented in a licence for alterations. What’s included?

A
  • The works consented to
  • Time limit for carrying out those works
  • Carry out the works in compliance with the landlord’s requirements, typically with good quality materials and a high standard of workmanship
  • obtain all necessary consents, which could include planning permissions and building regulations approval
  • reinstate the premises at the end of the lease term.
  • pay the landlord’s costs in dealing with the tenant’s application for a licence for alterations (these will usually be the surveyor’s and solicitor’s costs)
17
Q

Commercial Leases, Improvements - How would the tenant carry out improvement even if there’s an absolute covenant against alterations?

A
  • Under s3, LTA1927, the tenant serves notice on the landlord of its intention to carry out improvements.
  • If the landlord does not object within three months, the tenant may go ahead and carry out the improvements.
  • If the landlord objects, the tenant can apply for the court’s permission to carry out the improvements.
  • The landlord may offer to carry out the works itself and increase the rent, but the tenant does not have to agree to this. However, the tenant can then not ask the court for permission.
18
Q

Commercial Leases, Improvements - What would the court consider if there’s an absolute covenant against alterations and the tenant has applied to the court to make improvements?

A

The court will give permission if the improvements:

  • add to the letting value of the property;
  • are reasonable and suitable to the character of the property; and
  • will not diminish the value of any other property belonging to the landlord.
19
Q

Commercial Leases, User - User refers to what the lease allows the tenant to use the premises for. What is the position if User is not mentioned in the lease?

A

The tenant is free to use the premises for anything they like.

20
Q

Commercial Leases, User, change of User - what conditions may a lease put on change in User?

A
  • the lease may prohibit changes of user (an absolute covenant),
  • allow changes of user with consent (qualified covenant) or
  • allow changes of user with consent not to be unreasonably withheld (fully qualified covenant)
21
Q

Does statute convert a qualified user clause to a fully qualified user clause?

A

No

22
Q

Can the Landlord charge more rent if there’s a change in User?

A

No - unless the change of use also requires structural alterations

23
Q

Will an FRI lease normally require a tenant to comply with relevant laws such as planning?

A

Yes

24
Q

Which change gets converted from qualified to fully qualified: User or Improvements?

A

Only improvements

25
Q

If a landlord consents to improvements, what document will be created?

A

Licence for alterations

SQE 1 (150 decks)

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