When do you need an agreement for lease?

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

  • When do you need an agreement for lease?
  • Common reasons for using an agreement for lease
  • 'Getting the lease executed will take too long'
  • Building works
  • Third party consents
  • Interaction with other deals
  • Where the landlord is agreeing to grant a lease of premises it does not yet own

When do you need an agreement for lease?

An agreement for lease is required where the landlord and tenant cannot enter immediately into the lease itself, but need to know that the other party is bound to do so on the agreed terms at the relevant point in the future. The form of lease should be annexed to the agreement for lease to ensure compliance with the statutory formalities for an agreement for the sale of land, or of an interest in land (Law of Property (Miscellaneous Provisions) Act 1989, s 2). LP(MP)A 1989, s 2 provides that the agreement must:

  1. be in writing

  2. contain or incorporate all of the terms expressly agreed by the parties, and

  3. be signed by or on behalf of the parties

See Practice Note: Contracts for the sale of land—formation, signature and variation.

An agreement for lease may also be needed where, although the lease can be completed immediately, there are other contractual obligations to be recorded, which the parties do not wish to include in the lease itself, eg because those obligations:

  1. could have adverse effects at rent review, or

  2. are intended to be personal to the parties and not to be disclosed to successors in title

Rarely (and ill-advisedly), parties may enter into an agreement for lease without having agreed the full terms of the lease itself. Instead of attaching the

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