Structure of a Lease Flashcards
What is the difference between a lease and a Licence?
The distinction between a lease and a licence was established in Street vs Mountford (1985).
A lease is for a term, at a rent and grants exclusive possession whereas a licence is merely permission to use land or property.
What is the difference between leasing and letting?
A lease grants possession for a specified term, whereas a let grants occupancy???
What are the 6 different parts to a lease?
- The Particulars (details of the parties)
- The Habendum (term certain)
- The Reddendum (rent)
- The Covenants
- Provisions and Conditions
- The schedules
What lease terms affect value?
- Rent review patterns
- Alienation
- Break options
- Repairing covenants
- Security of tenure
- Any other onerous conditions
What is the importance of carrying out covenant checks?
To assess whether the tenant has the ability to meet the financial obligations in the lease
What covenant checks are you aware of?
- Company accounts (3x profit test)
- Experian credit check
- Credit safe credit check
- Landlords / bank reference
What is MEES?
New energy efficiency regulations making it unlawful to let commercial property with an EPC rating of lower than an E. From 2023, the regulations will apply to continuing leases.
What are the fines for not complying with MEES?
Breach of 3 months - 10% of Rateable Value subject to a Minimum of £5,000
Breach in excess of 3 months - 20% of Rateable Value subject to a minimum of £10,000
Who enforces MEES
Office of fair trading
What are the exemptions to MEES?
- Some listed buildings
- Temporary buildings
- Industrial buildings that do not use a lot of energy
- Buildings that are due to be demolished
- Places of worship
How long does an EPC exemption last?
5 Years
