Q&As

Five long residential leases of flats in a block of 14 have a management company as a party. They also contain a covenant by the landlord to grant any other leases of flats in the building in similar terms. The management company has been struck off and the landlord does not intend to form a new one. Can the landlord grant a new lease of another flat on the same terms, except with no management company as a party or will this be a breach of the covenant to grant leases in similar terms?

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Produced in partnership with Shabnam Ali-Khan of Russell-Cooke
Published on LexisPSL on 01/05/2019

The following Property Q&A produced in partnership with Shabnam Ali-Khan of Russell-Cooke provides comprehensive and up to date legal information covering:

  • Five long residential leases of flats in a block of 14 have a management company as a party. They also contain a covenant by the landlord to grant any other leases of flats in the building in similar terms. The management company has been struck off and the landlord does not intend to form a new one. Can the landlord grant a new lease of another flat on the same terms, except with no management company as a party or will this be a breach of the covenant to grant leases in similar terms?
  • What happens where the management company is struck off? Is the landlord bound to set up a new one?

This response concerns the landlord’s obligation to grant a new lease of a flat on similar terms to the other leases in the same building. Many leases will contain an obligation on the landlord to ensure that other leases in the building are granted on similar terms. The management company is a party to the current leases. As there are three parties to the lease, they are commonly referred to as tripartite leases.

Firstly, the wording of this obligation must be examined. Many leases will indicate new leases must be on ‘similar terms’ and covenants must be of a ‘similar nature’. The lease may state covenants to be performed ‘mutatis mutandis of a similar nature...’ this lends itself to the need to take a wider approach. New leases will not have to mirror current leases fully. Indeed, the phrase ‘mutatis mutandis’ means with the necessary changes. The word similar of course does not mean exactly the same. This allows a little flexibility for landlords when granting new leases in the building. Therefore, if a landlord simply cannot include a clause because circumstances have changed, then this may be permissible and will not be classed as a breach of the lease.

Furthermore, the wider lease terms need to be reviewed. For instance, in relation to this specific question, the management company is a party to five of

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