Residential flat schemes—the terms of a concurrent lease
Residential flat schemes—the terms of a concurrent lease

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Residential flat schemes—the terms of a concurrent lease
  • Rent
  • Term
  • Covenants
  • Right of re-entry (concurrent lease)
  • Right of re-entry (flat lease)

Rent

As a result of the grant of the concurrent lease, the rents reserved under the flat leases are receivable by the management company, as concurrent tenant, in its capacity as the landlord under those leases.

However, the developer will be able to secure an income for itself by reserving a rent under the concurrent lease. Although, in theory, there is no limit to the amount that can be reserved, the rent payable under the concurrent lease should be based on, or ‘geared to’, the aggregate of the occupational rents payable under the flat leases. There is no point in reserving an open market rent under the concurrent lease, because if the amount of that rent exceeds the amount that the management company will receive from the flat tenants, it has no other source of income from which to fund the shortfall.

In practice, the rent under the concurrent lease will be in the region of 90 per cent of the total amount payable under the flat leases (as reviewed from time to time in accordance with the provisions in those leases); the ‘margin’ exists to cover the management company’s administrative costs of collecting the rents under the flat leases.

Term

In theory, the term of the concurrent lease can be of any length, ie it could be shorter than,