FAQs

We hope that some of the questions answered on this page will be of some assistance. Remember though that the information is given in general terms and does not relate to any specific situation. if you have a particular problem upon which you need advice then you should consult a suitably qualified legal adviser.
 
What happens at the end of the lease?
This depends on whether or not the lease carries security of tenure. If the lease does not carry security of tenure then when the agreed fixed term set out in the lease expires the tenants right to stay in the property comes to an end and the tenant should give the premises back in accordance with the terms of the lease – this may mean carrying out some work e.g. repairs, decoration, reinstatement of alterations – this will depend on the terms of the lease. If the tenant does remain in occupation with nothing being done then the tenant may acquire security of tenure.
If the lease does carry security of tenure then it does not end on the expiry date in the lease. Rather it continues until terminated by one of the procedures in the Landlord and Tenant Act 1954 – this is generally either a notice served by the landlord under Section 25 or one served by the tenant under Section 26.
What is security of tenure?
This is the means by which a business lease continues past the expiry date set out in the lease. The tenant is usually referred to as 'holding over'. The lease can only be terminated by one of the procedures that are laid down in the Landlord and Tenant Act 1954. The reasoning behind the legislation is to protect the goodwill that a business tenant builds up by running a business from certain premises.
Which leases carry security of tenure?
In order for a lease to acquire security of tenure certain conditions need to be satisfied:
• The lease must be for a fixed term or for a periodic term.
• The premises must be occupied for business purposes.
• The premises must be occupied by the tenant.
Don't forget that even if the lease complies with the above then there are still some leases that do not carry security of tenure such as:
• Where security of tenure has been specifically excluded (this will be by way of a Court Order if the lease was entered into before 1st June 2004 or by following a prescribed procedure if after 1st June 2004).
• Where a licence is granted rather than a lease – this is a grey area and there are not many instances where a true licence of business premises can be entered into. In a dispute a court would look at the actions of the parties rather than the label put on the document.
• Where the length of the fixed term lease beginning on the date the tenant took up occupation is less than 6 months. Note particularly this runs from the date the tenant took up occupation – not the date the lease is entered into.
Can the lease be ended early by the tenant?
Save in exceptional circumstances the tenant is not able to bring the lease to an end before the expiry date unless the lease contains a break clause.
Can the lease be ended early by the landlord?
If there is a break clause  exercisable by the landlord then yes – but bear in mind that the tenant may have security of tenure.
If the tenant breaches any of the terms of the lease then the landlord can forfeit the lease.
If the tenant becomes insolvent the the trustee in bankruptcy (or liquidator as the case may be) may well have the right to disclaim the lease.
What is a break clause?
The lease may contain a clause which says that either landlord or tenant or both can bring it to an end. Generally this would require a notice to be served specifying a certain period – often the dates that the lease can be broken are also set out in the lease. These dates are generally construed strictly.
What is forfeiture?
If the tenant breaches the terms of the lease then the landlord has the right to forfeit the lease – which means bring it to an end. If the breach is non payment of rent and the premises are used for business purposes then forfeiture can be effected by the landlord re-entering and simply changing the locks – generally speaking bailiffs would be employed for this purpose. Alternatively the landlord can obtain a court order first.
If forfeiture is effected by way of the landlord simply re-entering and changing the locks tehn the tenant is entitled to apply to the court within 6 months of the date of forfeiture for 'relief'. Relief means seeking an order of the court to the effect that the forfeiture be set aside and the lease be reinstated. The tenant would have to remedy the breach and convince the court that it would reasonable for the lease to be reinstated. If the landlord obtains a court order for forfeiture then the option of relief is not available to the tenant.
If the breach is anything other than non payment of rent then before the right of forfeiture can be exercised the landlord has to serve on the tenant a notice specifying what the breach is and giving the tenant a reasonable time to remedy the breach – if the breach is remedied then the right of forfeiture is removed.
Can the rent in a lease be increased?
Generally speaking a lease will contain provisions for the rent to be reviewed at regular intervals. Commonly the intervals are every 3 years or every 5 years. The lease will set out the basis of reviewing the rent – but usually the basic idea is that it should be reviewed to whatever the current open market level is at the time – often though on an upward only basis i.e. rent cannot go down even if market levels drop – this does though depend on what the lease says.
Who should the tenant serve a notice on?
If you are the tenant of business premises benefiting from security of tenure and wish to serve a Section 27 Notice (to bring the existing tenancy to an end) or a Section 26 Notice (to request a new tenancy) then it is important that the notice is served on the correct landlord. This may not necessarily be the person whom rent is paid to. The tenant can serve a notice on the person purporting to be the landlord under Section 40(3) of the Landlord and Tenant Act 1954 requesting that person disclose the information. That person is obliged by law to respond to the notice and give the information.
Who should the Landlord serve a notice on?
Similarly if you are the landlord of premises occupied by a business tenant and wish to serve a Section 25 Notice (to bring the existing tenancy to an end)  then it is important that you have correct information about the tenant. The occupant may not be the tenant that the landlord thought it was. A landlord can serve a notice on its tenant under Section 40(1) of the Landlord and Tenant Act 1954 requesting the information be disclosed. The tenant is obliged by law to respond and give the information.
Do I have to pay Stamp Duty Land Tax?
If there is any Stamp Duty Land Tax to pay then it is for the Tenant to do this. This depends on the amount of the rent and the length of the lease. Broadly, on a lease, tax is payable at the rate of 1% on the amount by which the Net Present Value exceeds £150,000  - this is calculated by multiplying the rent by the term and then applying a discount. Even if no tax payable the tenant often still has to complete a Land Transaction Return.
Does the lease have to include a plan?
It is important that the lease is capable of clearly identifying the property that is leased. A plan will always be helpful in achieving this. If the lease is one that requires registration at HM Land Registry then almost certainly the Land Registry will require a plan. This has to conform to certain standards which briefly are:
• it should be drawn to a scale of 1:1250 or 1:500
• the scale should be marked on the plan
• the plan should not be reduced in size
• the plan should not be marked  'for identification only' or similar wording
• the plan should show a North point
• if the lease of of part of a building then it should clearly show on what floor the premises are
• any measurements should be shown in metric.
 
If the plan does not conform then the tenant will not be able to register the lease at the Land Registry. If you would like to purchase a Land Registry complaint plan see Useful Links. Alternatively you could try a local surveyor.
What are Prescribed Clauses?
Subject to a few minor exceptions all leases that are granted on or after 19th June 2006 and that require registration at the Land Registry have to contain certain Prescribed Clauses. These are a set of definitions dealing with the basic terms of the lease that the Land Registry need to know for the purpose of registration. They have to be set out in a particular way or else the Land Registry will refuse registration. All the leases we supply contain these Prescribed Clauses.
Does the lease require registration of the Land Registry?
If the term of the lease granted exceeds 7 years then the lease needs to be registered at HM Land Registry. You do this using form AP1 which can be downloaded for free from the Land Registry web site. There is a fee charged by HM Land Registry which is based on the amount of the rent.
Is an Energy Performance Certificate required?
Yes. On the grant of a lease the Landlord, or on an assignment (transfer) of a lease the seller, is required to provide free of charge to the tenant or buyer an Energy Performance Certificate.
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