A commercial lease is dated 8 March 2016. The lease term is defined as ’10 years from and including 1 January 2016’. The lease is protected by the security of tenure provisions of the Landlord and Tenant Act 1954 and contains no break clauses.
What will be the earliest date the tenant can unilaterally bring the lease to an end?
- 31 December 2025.
- 8 March 2026.
- 7 March 2026.
- 1 January 2026.
- Any time provided that a minimum of six months and maximum of twelve months is given.
Correct answer: 1)
The contractual expiry of the lease is 31 December 2025, and the tenant is bound by the lease until then.
A lease of restaurant premises was granted for a term of 10 years at an initial yearly rent of £50,000 with an upward only rent review at 5 years. The rent review provisions contain normal assumptions and disregards.
The five year rent review is due. The rental market has changed so that if the same premises were being let now, a rent of £55,000 would be expected.
However, the following events have occurred during the first five years of the lease:
- The tenant has suffered bad publicity about poor hygiene practice which would decrease the yearly rent by £10,000.
- The tenant has fitted out the premises which would increase the yearly rent by £15,000.
- The lease has been varied so that it now provides a right to additional parking space which would increase the yearly rent by £5,000.
What would you expect the yearly rent to be following rent review?
- £60,000.
- £55,000.
- £70,000.
- £45,000.
- £50,000.
Correct answer: 1)
This takes account of the additional parking space and disregards how the tenant’s occupation has affected the value (both negatively and positively).
A property agent regulated by the Royal Institution of Chartered Surveyors (RICS) acting for a pension fund prepares heads of terms for a ten year lease at a market rent of an industrial unit for a tenant who is represented by a property agent not regulated by RICS.
The landlord’s property agent sends the heads of terms to the tenant’s property agent. The heads of terms refer to the premises and rent, but do not contain details of the proposed repairing obligation and restrictions on alienation.
Has the landlord’s property agent complied with the Code for Leasing Business Premises (1st edition February 2020)?
- No, but it does not matter because the Code does not apply where one party’s property agent is not RICS regulated.
- No, because the heads of terms should contain the proposed repairing obligation and restrictions on alienation.
- Yes, because the heads of terms contain the essential terms and the landlord has sent the heads of terms to the tenant’s property agent.
- Yes, but only the mandatory provisions. The landlord’s property agent has not complied with the good practice provisions.
- No, because the landlord’s property agent should have advised the tenant to seek a property agent who was RICS regulated.
Correct answer: 2)
The property agent is regulated by the RICS and therefore bound by the Code. Including details of the proposed repairing obligation and restriction on alienation are mandatory requirements of the Code and have been breached.
The landlord of an industrial estate requires that for ease of administration, all occupational leases are granted for a term starting on 1 January.
A tenant completes a 10 year lease five days before 1 April. There is no rent-free period and no VAT payable. It is not a leap year.
The lease contains the following provisions:
‘Rent Payment Dates’ means 1 January, 1 April, 1 July and 1 October and ‘Rent Payment Date’ means any one of them
…
The Tenant must pay the yearly rent of £36,500 by four equal payments in advance on or before the Rent Payment Dates, the first instalment being a proportion, calculated on a daily basis, in respect of the period from completion of this lease to the day before the next Rent Payment Dates.’
What rent should the tenant expect to have paid by 31 December in the year of taking the lease?
- £27,375.
- £36,000.
- £26,875.
- £27,875.
- £36,500.
Correct answer: 4)
One quarter is £9,125. Three quarters have been paid by the end of the year (April, July and October), so 3 x £9,125 = £27,375. The tenant moved in 10 days before the April quarter, so 5 days’ rent should have been paid.
The daily rate is £36,500 divided by 365 = £100. Five days @ £100 = £500. £27,375 + £500 = £27,875.
A buyer’s solicitor is acting on the purchase of a long leasehold house.
The parties have agreed to adopt the Law Society Conveyancing Protocol.
What replies to enquiries should the buyer’s solicitor expect?
- Commercial Property Standard Enquiries 1 (CPSE1) and Commercial Property Standard Enquiries 3 (CPSE3).
- Property information form (TA6), Fittings and contents form (TA10) and Leasehold information form (TA7).
- Leasehold information form (TA7) only.
- Property information form (TA6), Fittings and contents form (TA10), Leasehold information form (TA7) and the buyer’s solicitor’s own precedent standard leasehold enquiries.
- Property information form (TA6) and Leasehold information form (TA7) only.
Correct answer: 2)
CPSE1 and CPSE3 are for commercial transactions. This is residential. Accordingly, you would need TA6, TA10 and TA7.
An accountancy firm takes a lease of the whole of a building on a 20 year lease from a private investor. The building was built in the 1920s, and the current roof dates from 1970.
The lease contains the following covenant:
The Tenant shall maintain the Property in good and substantial repair and condition rebuilding, renewing or replacing in whole or in part if beyond economic repair.
Only a few weeks after moving in, the accountancy firm find that the roof is badly leaking and subsequently consult a roofing specialist who says that trying to repair the roof will be more difficult and expensive than replacing the roof.
How would you advise the accountancy firm about the roof?
- The accountancy firm will need to either repair or replace the roof, although the more practical solution is for them to replace it.
- The accountancy firm cannot be held responsible for repair of a latent defect.
- The accountancy firm will not be responsible for repairing or replacing the roof because the responsibility is to maintain the property in good repair, and it was not in good repair at the beginning of the term.
- The accountancy firm should request the landlord to replace the roof, and if they do not do so, then the accountancy firm can carry out the work at the cost of doing so if the lease contains a Jervis v Harris clause.
- They will be responsible for replacing the roof at their own expense under the full repairing obligation which includes replacement where an item is beyond economic repair.
Correct answer: 5)
Given that this is a full repairing obligation, this correctly refelcts TT’s obligation under the wording.
A solicitor is preparing a licence for alterations as part of the asset management work for an institutional investor. The proposed alteration is an additional fire escape required under new regulations, and the landlord foresees that any future tenants would need the same fire escape.
Which of the following obligations is the licence NOT likely to impose on the tenant?
- To obtain all necessary consents.
- To pay the landlord’s legal costs.
- To carry out works with good quality materials and a high standard of workmanship.
- To pay the landlord’s surveyor’s costs.
- To reinstate the premises at the end of the lease term.
Correct answer: 5)
Although this is commonly included, the facts here mean that the landlord is unlikely to want the fire escape removed.
A building developer granted a 999 year lease of a flat to a woman five years ago. The building developer is still the landlord. The woman wants to sell the flat to a man.
The lease is silent on alienation.
Can the woman sell the flat?
- Yes, but the building developer will need to grant a new lease.
- Yes, but with the building developer’s consent and there is no obligation to act reasonably.
- Yes, but with the building developer’s consent not to be unreasonably withheld or delayed.
- No.
- Yes, without consent.
Correct answer: 5)
If the lease is silent on alienation, then alienation is permitted without consent.
A solicitor acts for a retailer in applying for an assignment of a shop unit from the landlord, an institutional investor.
The lease says that the tenant must pay the landlord’s legal costs in an application for consent, but the provision is badly worded so it could be argued to read that this is conditional on the consent being given.
The solicitor gave the landlord’s solicitor an undertaking as follows:
“We undertake to pay your reasonable legal fees charged on your usual time basis capped at £1,000 plus VAT whether or not the matter proceeds to completion.”
The landlord’s solicitor prepares a draft licence. However, after sending the draft to the tenant’s solicitor for consideration, the landlord finds that the proposed assignee has gone insolvent and advises the tenant that the application will proceed no further. The landlord’s solicitor has incurred chargeable time of £525 plus VAT.
The tenant’s solicitor has incurred chargeable time of £425 plus VAT.
What must the tenant’s solicitor pay under the undertaking?
- £100 plus VAT.
- Nothing as the costs provision in the lease would be construed against the landlord.
- £525 plus VAT.
- £1,000 plus VAT.
- £575 plus VAT.
Correct answer: 3)
The undertaking was to pay the landlord’s solicitor’s reasonable legal fees on their usual time basis. The landlord’s solicitor’s chargeable time appears reasonable, and is for the time they spent, not the limit of the cap.
Note that whatever the lease may say, once an undertaking has been given, the solicitor is bound by it. In this case, the tenant’s solicitor should have pointed out the ambiguity in wording and obtained the tenant’s agreement before giving an undertaking.
A developer is building a new city centre shopping centre. Their agent is seeking occupational tenants.
A major department store wants to take a large space near the entrance. This department store is a recognised anchor tenant (it will draw other prospective retailers to the shopping centre). The shopping centre is due to be built in 18 months.
What kind of transaction are the developer and department store likely to adopt?
- A tenancy at will with an option for the department store to take a lease following practical completion of the building works.
- A lease conditional on practical completion of the building works.
- A licence to occupy with an option for the department store to take a lease following practical completion of the building works.
- An agreement for lease with completion tied to practical completion of the building works.
- A lease with the rent commencement date tied to practical completion of the building works.
Correct answer: 4)
This gives the landlord and other tenants the assurance that the anchor tenant will take up their lease once the shopping centre is built.
A landlord has negotiated a draft lease of a warehouse to a haulage company. The landlord holds the registered freehold of the warehouse, and the lease is for the whole of the landlord’s title. The lease term is 15 years.
What Land Registry search should the haulage company’s solicitor carry out before completion?
- OS2 search.
- OS3 search.
- None is necessary.
- Land Charges search against the landlord’s name.
- OS1 search.
Correct answer: 5)
This is the appropriate search as the lease will be registrable and is of the whole of the landlord’s registered title.
A man is buying a house on a 999 year lease with the benefit of a secured loan from his bank.
What form will the bank’s security take?
- A merger of the freehold and leasehold interests.
- An assignment of the freehold to the bank.
- A charge over the leasehold estate.
- An assignment of the leasehold to the bank.
- A charge over the freehold estate.
Correct answer: 3)
The man will give a charge of his leasehold estate, which is valuable.
Note that the man cannot give a charge over the freehold estate as he dpes not own it.
A 100 year lease of open land at a peppercorn rent was granted in 1980 by a private owner to a railway company.
The lease contains a fully qualified covenant against assignment of whole.
The railway company has applied to the private owner for consent to assign the lease to a printing company.
The private owner’s solicitor sends a draft licence to assign to the railway company.
Which of the following provisions will the draft licence to assign NOT be likely to contain?
- The railway company guarantees the obligations of the printing company following the assignment.
- A limit on the time for which the consent is effective.
- A limit on the transaction for which the consent is effective.
- The printing company covenants directly with the private owner to observe and perform the lease obligations.
- The railway company agrees to pay the private owner’s legal costs.
Correct answer: 1)
This is an old lease, so the original tenant remains bound by the tenant obligations for the term of the lease.
A council provides a building for an indoor market and enters into agreements with various people to hold different stalls. Other than signing the agreements, the council does not carry out any formalities.
Each person pays £60 a month for a stall, and the agreement can be ended at any time on one month’s notice by either party.
Under their agreements, any given stallholder can be moved to another stall from day to day, and this routinely happens.
Would the stallholders have security of tenure?
- No, because they occupy under licences.
- No, because they have service tenancies.
- Yes, because the stallholders occupy for the purpose of a business, and their leases have not been contracted out.
- Yes, because the stallholders occupy for the purposes of a business, and they have periodic tenancies.
- No, because they have periodic tenancies.
Correct answer: 1)
The lack of exclusive possession evident from the arrangements described points to licences, not leases.
A landlord validly contracted a two year tenancy out of the security of tenure provisions of the Landlord and Tenant Act 1954.
The tenant’s lease has now expired, and the landlord has told the tenant to leave. However, the tenant has refused. The tenant has attempted, but failed, to pay the landlord a sum equivalent to a quarter’s rent under the original lease.
What is the status of the tenant’s occupation?
- The contractual term has expired, and the tenant is a trespasser.
- The tenant is holding over, but cannot apply for a renewal lease.
- The two-year tenancy has been converted to a periodic tenancy.
- The contractual term has expired, but the landlord will need to serve notice to quit on the tenant.
- The tenant is holding over, and can apply for a renewal lease.
Correct answer: 1)
When a lease is contracted out, the tenant’s right to occupy ends at the expiry of the contractual term. If they continue in occupation after the landlord has asked them to leave, then they are trespassing.
A Ltd, a supermarket chain, takes a lease of a high street shop from a private investor. The lease is protected by the security of tenure provisions of the Landlord and Tenant Act 1954.
Two months before the contractual term of the lease is about to end, B Ltd, a rival supermarket chain, buys the freehold reversion from the private investor.
B Ltd then serves a section 25 notice on A Ltd opposing renewal on the basis that B Ltd intends to occupy the premises for its own use.
Will B Ltd be successful in opposing the renewal lease?
- Yes, and B need not provide evidence as it is a mandatory ground.
- No, because the section 25 notice should have been served six months before the expiry of the contractual term.
- No, because B Ltd has not owned the freehold reversion for five years before the date of termination.
- No, because B Ltd is acting in bad faith, and A Ltd can seek specific performance on B Ltd to grant a renewal lease.
- Yes, provided B Ltd offers evidence of a firm and settled intention to occupy the premises.
Correct answer: 3)
This is a requirement of ground (g) - the landlord must have a firm and settled intention to occupy the premises, but must also have owned the reversion for at least five years before the date of termination.
A flat owner grants an assured shorthold tenancy to a student for a fixed term of six months from and including 20 January 2024 at a monthly rent of £600.
After the expiry of the six month term, the student wishes to stay on indefinitely, which the landlord agrees, and the student continues to pay £600 a month in advance on the 20th of each month.
It is now 1 April 2025, and the student wishes to move out and end the tenancy as soon as possible.
If the tenant gives notice to quit now, what is the earliest that the tenant can require the tenancy to end?
- 20 May 2025.
- 1 May 2025.
- 30 April 2025.
- 30 June 2025.
- 19 May 2025.
Correct answer: 5)
This is a monthly tenancy running from the 20th of each month to the 19th of the next. A minimum of one month’s notice must be given by the tenant. The notice may end on the first day or the last day of a period of the term, so either 19 or 20 May. However, the question was about the earliest date, so the tenant would opt to end on 19 May 2025.
A landlord has let commercial premises to a tenant on a secured tenancy. The landlord and the tenant have a series of arguments, and eventually the tenant decides that they want to leave the premises.
The landlord has another interested party, and the landlord agrees to enter into an agreement for surrender with the tenant conditional on the landlord completing a lease with the other interested party.
The parties intend to exchange the agreement in two days’ time.
What formalities must the parties follow so that the landlord can ensure that the tenant does not continue to enjoy security of tenure?
- The landlord must give notice of the agreement to surrender a protected tenancy and the tenant must provide a statutory declaration.
- No formalities necessary. The tenant will only lose security of tenure once they actually leave the premises following the surrender.
- The landlord need not do anything now, but following exchange, must give notice of the deed of surrender of a protected tenancy and the tenant must provide a statutory declaration before the actual surrender takes place.
- There are no formalities that the parties can adopt for a protected tenancy. The deed of surrender will be effective to bring the contractual term to an end, but the tenant will still be able to hold over.
- The agreement for surrender cannot be valid because it is attempting to circumvent the tenant’s alienation rights.
Correct answer: 1)
The procedure for contracting out an agreement to surrender is similar for the procedure for contracting out a new lease.
The contracting out procedure must be carried out before exchange of the agreement for surrender.
A man takes a lease of a shop with a flat. As expressly permitted by the lease, the man uses the flat as his living accommodation, and runs his business from the shop beneath. He has fallen behind with two months of his rent.
His landlord has written giving seven days’ notice of entering the premises to exercise Commercial Rent Arrears Recovery (CRAR) against him.
How would you advise the man?
- The landlord cannot exercise CRAR because the rent arrears are not enough.
- The landlord can exercise CRAR and the man should attempt to settle his arrears urgently.
- The landlord can exercise CRAR but can only take goods up to a value equivalent to seven days’ rent.
- The landlord cannot exercise CRAR because the man is not a company.
- The landlord cannot exercise CRAR because the letting is part-residential.
Correct answer: 5)
CRAR can only be exercised for purely commercial premises.
A company grants a full repairing and insuring (FRI) lease of an office for a contractual term of five years to a limited liability partnership (LLP).
The lease is protected by the security of tenure provision of the Landlord and Tenant Act 1954.
The LLP has let the property fall into serious disrepair. It is a landlord-friendly market and the company wants to get the LLP out of the property as soon as possible.
How would you advise the company?
- The company can serve a section 146 notice on the LLP, but as it is a protected tenancy, it will also need to serve a hostile section 25 notice based on the ground of breach of covenant.
- The company can serve a section 146 notice on the LLP but the tenant can serve a counter-notice which means that the landlord will need to apply for leave to the court before proceeding.
- The company cannot serve a section 146 notice on the LLP as it is a protected tenancy.
- The company can serve a section 146 notice on the LLP and will be entitled to forfeit if the tenant does not remedy the breach by the reasonable time specified in the notice.
- The company can serve a section 146 notice on the LLP, but as the breach is irremediable, can proceed straight to forfeiture.
Correct answer: 4)
Forfeiture is the correct remedy to adopt, and this correctly states the procedure.
The lease term is less than 7 years, so the Leasehold Property (Repairs) Act 1938 does not apply.
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1 - Intro to Freehold Transactions40
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2 - Title Investigation92
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3 - Pre-contract Searches and Enquiries92
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4 - Exchange of Contracts99
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5 - Completion96
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Formatives 120
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6 - Grant of a Lease80
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7 - Lease Structure and Content74
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8 - Alienation99
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9 - Business Tenancies115
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10 - Lease Termination99
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Formatives 220
