Property (10)

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What is the period after which rent is reviewed know as?: A pattern, e.g. a five-year pattern.
What is a stepped rent review?: Where the landlord and tenant agree to increase the rent in fixed amounts each year.
What is a turnover rent review known as?: Review rent based on the tenant's turnover at the property.
What is the most common type of rent review?: Open market rent review
What is an open market rent review?: A periodic reevaluation of the rent based on what the rent would be if the property were re-let afresh at the date of review.
What is the new figure post rent review based on for the purpose of an open market review?: Local market leases on comparable properties at the date of review.
Will rents ever reduce?: Unlikely as most open market rent review clauses are drafted as upward only rent reviews.
Who is involved in determining the rent review?: (1) Landlord and Tenant should aim to agree in first instance; failing this a
(2) Valuer (surveyor).
Who will the value be nominated by?: Either by the landlord or tenant or if they cannot agree, by the president of the RICS or his nominee.
In what capacities can a valuer act?: Arbitrator or expert
Can an expert be sued in negligence?: Yes, unlike an arbitrator.
Where a valuer takes into account certain assumptions, what is the value said to be valuing?: A "hypothetical letting" of the premises.
What is the role of a tenant's solicitor in the context of agreeing assumptions and disregards?: The assumptions and disregards should achieve a fair result.
What rate of rent will a tenant pay pending a valuer's decision?: The old rent.
If a tenant has paid rent at an old rate while the valuer considered his/her decision, what would happen if there was an increase or decline?: Increase - pay difference
Decrease - nil increase agreed
Once agreed, how is a rent review formalised?: In a rent review memorandum (signed by both parties)
Should a tenant resist a clause calling for a 'best rent review'.: Yes. This would allow a valuer to take into account bids by potential tenants with a special interest (e.g. tenants of neighbouring premises who may be willing to pay a premium(.
Why is it important for tenants to leave rent review clauses to apply to 'every [X] anniversary of the term of the [commencement date]': If you include specific dates (which in time will pass), the valuer will assume that no rent reviews will take place in years that have not been documented on the original lease. Having no/few rent review would be something that tenants would pay a premium for.
Are leases granted on 1 December 2003 onwards subject to SDLT?: Yes.
When might the payment of SDLT be required for the purpose of a rent review?: Where there is an abnormal increase in rent.
What is an abnormal increase in rent?: 1. Finance Act 2006
2. Increases of more than 20%
The Code recommends upwards as well as downwards types of rent review.: Recommendation 4
What are assignments?: 'Sales' of the remainder of an existing term of a lease to another party who will become the immediate tenant of the landlord.
Where a lease is assigned, what can a landlord sue under?: Directly for breach of covenant under privity of estate.
What is privity of contract?: This exists between the landlord and the original tenant.
What is privity of estate?: Parties who are related by virtue of being involved in the interest in land, i.e. the landlord and assignee once the original tenant has assigned a lease.
What can a landlord sue for under privity of estate?: Only for non-observance of covenants which touch and concern the land.
If a landlord were to consent to a tenant assigning its lease, how would the agreement be formalised?: In a Licence to Assign
In a new lease, is a assignee automatically bound by all covenants in the lease? Auth?: Yes. S. 3 LTCA 1995.
Who are the parties to a licence to assign?: the landlord, tenant and assignee
Is a new lease created for the purpose of an assignment?: No
What might the purchase deed between the tenant and assignee be called?: A deed of assignment, although a TR1 must be used (as in freehold land) if the lease is already registered.
Post assignment of a lease, what should you discuss?: (1) Notify landlord - alienation provisions usually require written notice; and
(2) Registration - previously unregistered leases of more than 7 years must be registered. Registered leases also require registration.
When will SDLT be charged in the context of a lease being assigned?: If any premium is paid by the assignee to the tenant for the lease. Commercial leases rarely attract a premium owing to high rents.
For the purpose of sub-lettings, what is the situation regarding the leases?: A new lease is created and the head lease remains intact.
When a sub-lease is created, is there a natural relationship of either privity of contract or estate between the landlord and sub-tenant?: Nope, neither.
Can the terms of a sub-lease be more or less onerous than the terms of the head-lease?: Can be more onerous, not less.
Do privity of contract and estate exist between a tenant and sub-tenant?: Yes.
In the context of a sub-lease, is there privity of estate or contract between the landlord and sub-tenant?: Neither, no privity at all.
If a landlord consents to the tenant sub-letting the premises, how is the agreement formalised?: In a Licence to Underlet
Who are the parties to a Licence to Underlet?: The landlord, tenant and sub-tenant. This creates privity of contract between the landlord and sub-tenant.
Milmo v Carreras: The term of a sub-lease should always be less than that of the head lease otherwise it will take effect as an assignment
The term of a sub-lease should always be less than that of the head lease otherwise it will take effect as an assignment: Milmo v Carreras
Does a sub-lease need to be registered?: Yes (as with any lease) if the term is over seven years.
Is a break clause a form of alienation?: No, it simply permits either party to being the lease to an end.
What does alienation include?: (1) Assignment; and
(2) Sub-letting.
If there are no restrictions in a lease, can a tenant alienate a lease freely?: Ye
What are 'old' leases for the purpose of the LT(C)A 1995?: Leases granted prior to 1 January 1996
What are 'new' leases for the purpose of the LT(C)A 1995?: Leases granted from and including 1 January 1996
What is the position for the original tenant under an old lease?: The tenant remains liable for leasehold covenants through the entire term of the lease, whether or not the lease has been assigned.
What is the position for original tenants under a new lease?: On lawful assignment of the lease, original tenants are automatically released from all covenants under the lease (the new assignee is automatically bound).
When will a tenant not be released from its covenants on assignment?: If the assignment is unlawful (e.g. without the landlord's consent).
What is the effect of s. 19(1)(a) of the LTA 1927?: (1) no effect on absolute covenants;
(2) turns qualified into fully qualified;
Can a landlord charge a fee for giving his consent under s. 19(1)(a) of the LTA 1927?: Nothing to say he cannot. However, s. 144 of the LPA 1925 provides that a landlord cannot do so unless the lease specifically allows the landlord to.
Landlord cannot refuse consent on grounds wholly unrelated to the L and T relationship, e.g. liability of the new tenant or support of a different football club.: International Drilling Fluids Limited v Louisville Investments (Uxbridge) Limited
Moss Bros Group plc v CSC Properties Ltd: Landlord reasonable to refuse consent where the assignee's business did not fit with the landlord's tenant-mix policy.
Landlord reasonable to refuse consent where the assignee's business did not fit with the landlord's tenant-mix policy.: Moss Bros Group plc v CSC Properties Ltd
Ashworth Frazer Ltd v Gloucester City Council: Landlord's refusal will be reasonable if the landlord believes that the assignee intended to use the premises for a purpose which would give rise to a breach of covenant.
For the purpose of all forms of alienation, must a landlord give written consent within a reasonable time?: Yes s. 1 LTA 1988. The burden is on the landlord to prove reasonable refusal (s. 6).
What are the consequences if a landlord fails to give written consent to alienation within a reasonable time under s. 1 of the LTA 1988?: May be liable for a tortious damages for breach of statutory duty.
Dong Bang Minerva v Davina: 28 days from receipt of an alienation application was held to be a reasonable period within which to inform the tenant.
Agreement in principle to alienation could be construed as the landlord's full written consent even before a formal written licence.: Aubergine Enterprises Ltd v Lakewood International Ltd
What does s. 19(1A) apply to?: This section applies to covenants against assignment in new commercial leases ONLY (not all leases or all forms of alienation).
What does s. 19(1A) of the LTA 1927 permit?: Allows the lease to specify, by way of list, 'circumstances in which a landlord will be automatically reasonable in withholding consent to assign.
Are sub-letting provisions which contain a list of circumstances in which a landlord will be automatically reasonable in withholding consent to sub-let permissible?: Yes, they are commercially acceptable, however, s. 19(1A) will have no effect. They will not be deemed to be automatically reasonable.
Are some protections in place for tenants under old and new leases?: Yes. Ss. 17 and 19 of the LT(C)A 1995
What must a landlord attempting to recover payment from a former tenant do under s. 17 of the LT(C)A 1995?: Serve a default notice within six months of the payment becoming due.
What can a tenant who has paid a default notice under s. 17 of the LT(C)A 1995 do?: (1) Require the landlord to grant it an overriding lease under s. 19 LT(C)A 1995; (2) The tenant becomes the new landlord of the assignee;
(3) Helps tenant to regain possession to prevent future default;
(4) Must request within 12 months of making s. 17 payment.
What will the parties enter into to vary the terms of a lease?: Deed of variation
What might occur where a lease's variation affects the length of the lease's term or extent of the property?: The effect of this implied variation will generally be an implied surrender of the old lease and the grant of a new one.
What are the consequences where a new leases is created through varying an old lease?: (1) A further payment of SDLT may be due; and
(2) Close the existing leasehold register at the Land Registry and open a new one.
What is a landlord's interest referred to as?: The reversion (freehold reversion or leasehold reversion).
What is the long-stop date for the purpose of creating a reversionary lease?: 21 years after the lease was made (s. 149 (3) LPA 1925.
Can a landlord and tenant agree to end a lease before the end of its term?: Yes. This is known as a surrender.
When a sub-tenant wish to assign or sub-lease its lease, whose consent is required?: (1) Immediate landlord; and
(2) Any head landlord;

S. 2 LTA 1988 requires an immediate landlord to pass the application to any relevant third party within a reasonable time.

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