The Basics of a Lease
Leases are often lengthy documents and can come in all shapes and sizes however there are some basic elements that should be present in every case:
Houses and Flat Leases
Generally speaking, houses will be freehold and flats will be leasehold however some houses are leasehold. House leases are generally much shorter than flat leases as they require less provisions.
Date of Lease – This is date the lease was created, so generally this is the completion date of the first sale and is found at the beginning of the document.
Commencement date – This is the date that the term of the lease runs from and will often be found in the “Definitions” or following the Term. It may be the same as the “Date of Lease” but is often earlier. This is to ensure that all of the leases (in a block of flats) come to an end on the same day.
Term – This is the duration of the lease. A “long lease”, that is to say one that is for 21 years or more, will typically be granted for a term of 99, 125 or 999 years. It is a fixed term. A purchaser of leasehold property is really only purchasing the lease, so on expiry of the term his interest comes to an end and ownership reverts to the freeholder. The definition of the term will usually be found near the beginning of the lease.
Ground Rent – Every lease will include an obligation to pay ground rent (though sometimes it will be “a peppercorn if demanded”, which really means zero rent is payable. The amount of rent will often be found following the words “Yielding and Paying” towards the beginning of the document.
Forfeiture clause – This clause will allow the landlord to terminate the lease early if the tenant is in breach of the covenants in the lease, such as the covenant to pay rent. For residential properties which are occupied by the tenant the landlord will need to obtain a court order before terminating the lease.
Covenant for quiet enjoyment – Whether actually written in the lease or not, a covenant for quiet enjoyment will always be implied. It is a covenant by the landlord with the tenant not to interfere with the tenant’s lawful occupation. It is this that prevents the landlord not having himself a key made and just popping in when he feels like it. This does not take away his right to enter the property to carry out emergency repairs or to seek forfeiture if the tenant is in breach of the lease covenants.
Alienation provisions – “Alienation provisions” is the term given to the group of clauses which set out the outgoing and incoming tenants’ responsibilities on a change of ownership. Typically this will involve things like serving notice of the change of ownership (notice of assignment) on the landlord, making sure the buyer enters into a deed of covenant with the landlord, transferring the seller’s shares in the management company etc.
Flat Leases Only
Flats are obviously different from houses in that individual flats are dependent each other in a way that houses are not, for example for maintenance of the structure, support and shelter, use of the common parts etc. For this reason the lease of a flat is usually longer because it needs additional provisions. Some of the following clauses will also be found in house leases, but are generally only applicable to flats.
Insurance – A block of flats should ideally be insured under a single buildings insurance policy arranged by the landlord who then recovers the premium from the tenants. In this way both the landlord and the tenant can be sure that the whole of the building is insured. There are provisions for this in most (though not all) flat leases.
Maintenance and repair – Generally, the common parts of a block of flats (the main structure of the building, roof, foundations, communal gardens, halls and landings etc) are not demised under any of the leases but rather are retained by the landlord, who should be responsible for repairing and maintaining them.
Service charge – Where the landlord is responsible for repairs and maintenance and insurance the there will be provisions in the lease allowing him to recovery what he spends from the tenants as service charge or maintenance charge.
Access for repair – In order the tenant to comply with his covenant to maintain his own flat he may from time to time require access to other parts of the building, including other flats. The lease should therefore contain a right of access to other parts of the building on giving reasonable notice or in the case of an emergency, without notice.
Rights of services – The tenant should have the right to use any service conduits (pipes, cables, wires etc) that cross other parts of the building.
Rights of way – if there is any shared means of access to the flat (staircases, lifts, landings, drives etc) then the lease will need to contain a right of way over them.
Rights of support and shelter – Every flat in a block needs a right of support and/or shelter from the flats above and below. Take away the fat below and yours collapses, take away the flt above and you are open to the elements.
