Q&As

In a lease extension of an underlease pursuant to the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993), a freeholder is the competent landlord. There is an intermediary landlord under a headlease. The lease extension will extend beyond the headlease. The headlease provides for the freeholder to insure and reinstate the building. The underlease provides that the intermediary landlord will enforce these covenants. The freeholder does not want to give a direct future covenant itself. When the headlease falls away, will an obligation be implied on the landlord to insure and repair the building vis a vis undertenants or what steps can be taken to ensure that the extended underlease has right to require the freeholder to insure and repair? Does LRHUDA 1993, s 57 help?

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Published on LexisPSL on 19/03/2018

The following Property Q&A provides comprehensive and up to date legal information covering:

  • In a lease extension of an underlease pursuant to the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993), a freeholder is the competent landlord. There is an intermediary landlord under a headlease. The lease extension will extend beyond the headlease. The headlease provides for the freeholder to insure and reinstate the building. The underlease provides that the intermediary landlord will enforce these covenants. The freeholder does not want to give a direct future covenant itself. When the headlease falls away, will an obligation be implied on the landlord to insure and repair the building vis a vis undertenants or what steps can be taken to ensure that the extended underlease has right to require the freeholder to insure and repair? Does LRHUDA 1993, s 57 help?

In this scenario, a difficulty arises as the headlease is shorter than the extended underlease, but the covenants requiring the freeholder to insure and reinstate the building are contained in the headlease and are, therefore, contractual obligations between the freeholder and the headlessee. The underlessee has the right to require the headlessee to enforce the covenants owed to it by the freeholder but when the headlease expires, those rights will fall away. The freeholder is not willing to enter into a direct covenant to insure and repair with the underlessee.

Following a lease extension, section 56 of the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993) provides that a new lease at a peppercorn rent for a term expiring 90 years after the term date of the existing lease will be granted. The default position is that the terms of the new lease will be the same as the old tenancy. Clearly, in this scenari, this gives rise to a problem as following the expiration of the headlease, there will be no obligation as b

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