Prep 7 Lease Structure, Content and Procedure for Granting

Doctrine of Waste for Alterations

A tenant cannot carry out alterations which reduce the value of the premises

Types of Covenant

• Absolute

• Qualified

• Fully Qualified

s19(2) LTA 1927

A qualified covenant becomes fully qualified as long as the proposed alterations are improvements from the point of view of the tenant

Contents of a Licence for Alterations

• Time limit

• Compliance with landlord’s requirements

• Pay the landlord’s costs

• Reinstate the premises at the end of the term

s3 LTA 1927

Tenant has a right to carry out improvements if the serve a noitce on the landlord/ apply to court

Requirements for applying to court under s3 LTA 1927

Improvements must:

• Add to the letting value of the property

• Are reasonable and suitable to the character of the property; and

• Will not diminish the value of any other property belonging to the landlord

s19(3) LTA 1927

If a landlord gives consent for change of use, they cannot charge or increase the rent for it unless it requires a structural alteration

NPV

The net present value used to calculate SDLT/ LTT

Registration of Leases

• Up to 3 years - do not need to be registered and cannot be noted against landlord’s title

• 3-7 years - do not need to be registered but can be noted on the landlord’s title

• 7+ years - must be registered and given its own title number and will be noted agains the landlord’s title

Anchor Tenant

The tenant which attracts other tenants and customers to nearby units

Safeguards to granting a lease

• A rent deposit

• A guarantor