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Regulated by the RICS


 

1. Objective

To achieve the best rental and lease terms for our client (be they landlord or tenant) without undue delay and as far as reasonably possible to ensure continuity of rental income and to avoid the expense of a Court or third party determinations.

2. Basis of Renewal

  1. A lease is a contract between the landlord and the tenant allowing the latter to occupy a property on payment of an agreed rent and other agreed outgoings.
  2. At the lease end the tenant may wish to remain in possession of the property and therefore to agree terms for a new lease.  The tenant is entitled to a new lease on similar terms to the existing lease, under the provisions of the Landlord and Tenant Act 1954 (The Act).  This gives rights for continued occupation but these provisions can be excluded by specific wording in the existing lease (known as being “contracted out”). 

3. Rights to New Lease

  1. Where the lease is not “contracted out” there are set procedures under the Act by which the tenant may serve notice on the landlord requiring a new lease and if this is not agreed within a prescribed period the matter must be referred to the Courts for determination to preserve the tenant’s rights, although the Courts will usually agree to defer taking action if the parties are still in negotiations.
  2. There are also set procedures under the Act by which the landlord may serve notice on the tenant requiring them to vacate the property or to take a new lease and again if this is not agreed within a prescribed period the matter may be referred to the Courts.
  3. There are a limited number of grounds on which the landlord can prevent the tenant being granted a new lease - principally if the tenant has not complied with the obligations of the lease or where the landlord wishes to occupy the property for their own business or to redevelop and/or demolish the property.
  4. The Act provides that the new lease shall be on basically the same terms as the existing lease (unless there is good reason why they should be changed) but at a revised rent set at market value on the basis of the evidence at the date the rent is set.
  5. If the lease expires - and neither the landlord or the tenant take any action concerning the grant of a new lease - the tenant can “hold over” under the Act on the basis of the terms and the rent under the existing lease until an appropriate notice is served by either party starting the lease renewal procedures. 

4. Position “Outside” The Act

  1. If the provisions under the Act giving rights for continued occupation are excluded so that the lease is “contracted out” then there are no provisions by which the tenant can force the landlord to grant a new lease - other than on terms to which the landlord will agree.  Otherwise the tenant must leave the property at the end of the lease.
  2. If the lease is “contracted out” but no action is taken by the landlord to obtain possession or agree terms for a new lease and the tenant continues in occupation on the basis of the terms of the old lease - paying the same rent which is accepted by the landlord - after 6 months the tenant will obtain rights of occupation under the Act on the basis of a periodic tenancy.  The landlord cannot then obtain possession of the property except by following the procedures and subject to the restrictions imposed by the Act.

5. Dispute Procedure

If the terms of the new lease cannot be agreed they can be determined by the Courts.  Alternatively there is a procedure known as PACT where the Courts can appoint, at the parties request, a third party - normally a surveyor or solicitor - to set the new terms and rent.  These proceedings may be conducted as an arbitration or as a determination by an independent surveyor - depending on the parties request and the Court’s direction.

6. Lease Repairing Liability

  1. If the tenant leaves the property, they may be liable to pay to the landlord the cost of putting it into a reasonable state of repair on the basis of the condition in which the lease provides it should be returned to the landlord, to enable it to be re-let/ reoccupied.  This is called Dilapidations.
  2. However, if the landlord’s intention is to refurbish and improve the property or to redevelop or demolish it, this payment, either in part or in whole, may be avoided by the tenant.
  3. Please see notes in the Information Sheet on Lease Repairing Liability - Dilapidations

Please contact us on 01603 488023 (quoting 3. Rating. List 2010.  110503) if you are in need of advice or assistance on this topic