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How a Lease Can End

How a Lease Can End

There are various ways in which a lease can end. The appropriate method of termination depends on several factors including whether the lease has the protection of the Landlord and Tenant Act 1954, which party wants to bring it to an end, whether the lease is coming to its contractual end or one party wants to get out of it early, and whether the tenant is in breach of any of the lease terms. This note provides an overview of the most common ways in which a lease may end and highlights some of the key considerations.

Business Tenancies – Landlord and Tenant Act 1954 (the “Act”)

The Act offers protection to business tenants when the contractual term of a lease is ending, though the landlord and tenant may contract out of the Act if they wish. This protection gives the tenant a right to remain in occupation of the property and to take a new lease at a market rent. Unless the parties have contracted out before the lease is granted, a protected lease will automatically continue after the contractual termination date. If either party wishes to bring the lease to an end they need to follow a specific procedure.


Landlords’ dilapidations recovery may be limited to the cost of work they actually carry out

Landlords’ dilapidations recovery may be limited to the cost of work they actually carry out

Car Giant Ltd and another v Mayor and Burgesses of the London Borough of Hammersmith [2017] EWHC 197 (TCC)

Background

Hammersmith Borough Council’s lease included a covenant to yield up the property in good and substantial repair.

Car Giant together with others was the Council’s landlord. The landlords brought a claim for dilapidations at the end of the lease which exceeded the cost of the works that they, the landlords, had undertaken. They had carried out some repair work, however, much of the work referred to in the schedule of dilapidations had not been done.


Is a dilapidations settlement capital or income

Is a dilapidations settlement capital or income

In James Allan Thornton v HMRC [2016], the First-tier Tribunal (FTT) considered the distinction between income and capital payments in relation to a dilapidations settlement and held that a payment to a landlord as compensation for dilapidations was a capital receipt.

Background

James Allan Thornton owned 18 flats, known as Jordan House, Nairn (the property). The property had been the subject of a single lease.


Dilapidations in England and Wales, Guidance Note 7th Edition

Dilapidations in England and Wales, Guidance Note 7th Edition

The dilapidations guidance Note 7th Edition has now been published by RICs and is available for downloading on our website

This guidance note seeks to advise members on the factors they should take into consideration when producing Schedules of Dilapidations, Quantified Demands, Responses, Scott Schedules and Diminution Valuations for reference to or use by the client, the other party to the lease, third parties and tribunals.


Vacant possession and Demountable partitions

Vacant possession and Demountable partitions

In Riverside Park Ltd v. NHS Property Services Ltd [2016] a tenant's break notice was held to be ineffective because the tenant had failed to remove demountable partitioning from the premises and consequently had not complied with the obligation to give vacant possession.


Tyco Fire & Integrated Solutions (UK) Limited v. Regent Quay Development Company Limited - June 2016

Tyco Fire & Integrated Solutions (UK) Limited v. Regent Quay Development Company Limited - June 2016

Validity of notice exercising break option in lease

The Landlord, Regent Quay, owned commercial premises known as the Glover Pavilion in Aberdeen Science and Technology Park. It granted a lease of Units 3 and 4 to Tyco for a 10 year period expiring on 5 February 2014. The parties subsequently agreed to vary the terms of the lease to include Unit 1, extending the term of the lease until August 2021 and including a break option exercisable by the tenant after 5 years.


Laindon Holdings Limited v South Essex Partnership University NHS Foundation Trust [2016]

Laindon Holdings Limited v South Essex Partnership University NHS Foundation Trust [2016]

A provision permitting internal non-structural alterations worked to the benefit of the tenant

Following the determination of a lease, Laindon Holdings Limited (the“Landlord”), brought a dilapidations claim against South Essex Partnership University NHS Trust (the “Tenant”).


Dilapidations advice crucial

Dilapidations advice crucial

I read the letter by Anthony Lorenz (Feedback, 18.03.16) with interest.

While rent is the largest ongoing cost for a tenant, which start-ups may struggle to pay, once they have made that leap and need to move on to the next level - offices with greater floor space - they are then hit on the way out with dilapidations claims.


Consortium Commercial Developments Limited v ABB Limited

Consortium Commercial Developments Limited v ABB Limited

This case concerns a claim for dilapidations in relation to premises known as Capella House, Snowdon Drive, Milton Keynes, which was let for a term of 15 years expiring on 16 June 2011

Even though the lease expired some 4 years prior to the case, the disrepair and failure to re-instate that existed at lease expiry has not been remedied and the case concerned the amount that should be awarded to the landlord in relation to such breaches of covenant. Such damages being limited by S.18 (1) of the landlord and Tenant Act 1927 to the diminution in value caused by the disrepair.


Court of Appeal overrules High Court decision to allow M&S to claw back £1.1m in rent and other charges from Landlord.

Court of Appeal has overrules High Court decision to allow M&S to claw back £1.1m in rent and other charges from Landlord

This serves as a blow to tenants trying to claim back rents following a break clause when there is no specific provision listed.

If M&S had been successful, Landlords could have been forced to refund to tenants portions of rent and services changes paid to exercise a break clause, even if the lease failed to provide for this eventuality.