Term of Lease and Rent Flashcards
What is a key requirement of a fixed-term lease?
A. The term must be certain or periodic
B. Rent must be index-linked
C. The landlord must live in the property
D. The lease must include a break clause
A – The term must be certain or periodic
Explanation: A lease must have a determinate duration — either a fixed term or a periodic tenancy. Uncertain durations are not valid leases.
What is the effect if a lease is silent on when rent is payable?
A. Rent is due annually
B. Rent is presumed payable in arrears
C. Rent is automatically index-linked
D. Rent is unenforceable
B – Rent is presumed payable in arrears
Explanation: If a lease does not specify timing, rent is presumed payable at the end of the payment period, not in advance.
What is the primary purpose of a break clause in a lease?
A. To increase rent at regular intervals
B. To allow either party to transfer the lease
C. To allow early termination by one or both parties
D. To avoid stamp duty
C – To allow early termination by one or both parties
Explanation: Break clauses allow a party (often the tenant) to end the lease early, usually on a set date and subject to conditions.
What does the “term commencement date” refer to?
A. When the rent review takes effect
B. When the lease is registered
C. When the parties begin negotiations
D. The date the lease term officially begins
D – The date the lease term officially begins
Explanation: The term commencement date may be before, on, or after the lease is signed. It marks the start of the lease period.
A lease runs “from and including 1 October 2023” for 10 years. When does it expire?
A. 30 September 2033
B. 1 October 2033
C. 2 October 2033
D. 31 October 2033
A – 30 September 2033
Explanation: “From and including” means the term ends the day before the same date 10 years later.
A tenant pays £60,000 annual rent, quarterly in advance. How much is due each quarter?
A. £12,000
B. £15,000
C. £20,000
D. £30,000
B – £15,000
Explanation: £60,000 divided by four quarters = £15,000 per quarter.
A tenant wants to leave early but the lease has no break clause. What is the legal effect?
A. The tenant may terminate unilaterally
B. The landlord is required to renegotiate
C. The lease automatically converts to periodic
D. The tenant must pay rent until lease expiry or negotiate release
D – The tenant must pay rent until lease expiry or negotiate release
Explanation: Without a break clause, neither party can end the lease early unless both agree or a breach occurs.
A lease includes rent that increases to £25,000 in year 1, £30,000 in year 2, and £35,000 in year 3. What type of rent is this?
A. Turnover rent
B. Market rent
C. Stepped rent
D. Open market rent
C – Stepped rent
Explanation: Stepped rent increases by agreed amounts at fixed intervals, rather than being linked to market conditions.
A valuer must ignore a tenant’s voluntary improvements when reviewing rent. Why?
A. To avoid penalising the tenant for enhancing the premises
B. Because the landlord paid for the improvements
C. To apply an index-linked rent formula
D. To keep the lease outside the Landlord and Tenant Act 1954
A – To avoid penalising the tenant for enhancing the premises
Explanation: Improvements made voluntarily should not increase the tenant’s rent — this keeps rent reviews fair.
A commercial lease contains a clause tying rent to inflation. What type of rent review is this?
A. Stepped rent
B. Index-linked rent
C. Market rent
D. Turnover rent
B – Index-linked rent
Explanation: Index-linked rent adjusts with inflation, based on a chosen index such as the Retail Prices Index.
During rent review, the valuer assumes the premises are vacant. Why?
A. To calculate turnover rent
B. To ignore the goodwill of the existing tenant
C. To reflect a willing tenant and landlord entering a new lease
D. To allow early termination
C – To reflect a willing tenant and landlord entering a new lease
Explanation: This hypothetical lease model ensures a fair market value unaffected by current tenant’s specific use or needs.
A lease includes a clause requiring rent review to the higher of market rent or current rent. What is this?
A. Downward rent review
B. Stepped rent
C. Turnover rent
D. Upwards-only rent review
D – Upwards-only rent review
Explanation: This means rent can increase but never fall — it protects the landlord’s income from market dips.
