What are the disadvantages of owning a leasehold property?
- Depreciating asset
- Property belongs to landlord
- Landlord can specify what the tenant can and cannot do
- Repairing obligations which involve expenditure for the tenant.
Advantages of owning a leasehold
- Good for commercial tenants
- Flexible
- Tenants can negotiate a break clause to terminate the lease earlier.
Prescribed clauses
Leases that are dated on or after 19 June 2006 which are granted out of registered land, must contain a standard set of clauses - summary of the important details of the lease.
Rent suspension
Rent will continue to be payable even if the property is unusable.
Tenant should ensure that the lease provides for the payment of rent to be suspended during any period that the property cannot be occupied.
Rent review clause
Annual rent payable under a lease is periodically reassessed
Types of rent review
(A) fixed increase - rent will increase to a set amount throughout the term.
(B) index-linked - rent will be altered in line with inflation.
(C) tenants receipts - tenants ability to pay the rent.
(D) open market rent review (most common) - rent is adjusted at regular intervals, usually every 3-5 years.
Licence to underlet
Head-landlord gives consent to head-tenant to underlet the property to the under tenant.
Landlords consent must be given by or on completion of the underletting
An assignment of a lease contains what?
• landlords consent.
•new lease (1/1/1996) - assignor will give an AGA to the landlord.
•old lease - a direct covenant by the assignees to the landlord to observe and perform the covenants.
•assignor agrees to pay the landlords legal and professional costs.
When will an indemnity from the assignee to the assignor be beneficial?
If the assignor is giving an AGA to the landlord.
What pre-completion searches should be done for an assignment of a registered lease?
OS1 to check for any new entries and to gain a priority period within which to register the transfer
What pre-completion searches should be done for an assignment of an unregistered lease?
Land charges search against the name of the assignor to check that no adverse entries have been made and to ensure that the priority period of 15 working days cover completion of the assignment
How should notice of assignment be given?
Notice should be given in duplicate with the appropriate fee set out in the lease.
Landlord should be asked to sign one copy of the notice as acknowledgment of the receipt and return the receipted copy to the sender to be kept with the title deeds
Can a party rescind if consent by the landlord to assign the lease has not been obtained 3 working days before completion date?
SCs ✅
SCPCs - cannot rescind until 6 months after completion date.
