This Q&A assumes that on the exercise of the break option the tenant will surrender the lease to the landlord. A payment by a landlord to a tenant on a surrender of a lease would normally be treated, for VAT purposes, as the supply of an interest in land by the tenant to the landlord, and may be exempt from VAT unless the tenant has opted to tax the relevant land. If the tenant has opted, the supply will be standard

Our answer to this Q&A is limited to whether the rent-free period referred to can be recovered as damages, but not the calculation of such damages, and does not give an analysis of section 18 of the Landlord and Tenant Act 1927 (LTA 1927). Recovery of rent-free period If, following the expiry of the term of a lease, there are breaches of the tenant’s repairing obligations, the landlord is entitled to bring a claim against the tenant. The landlord’s only remedy, however, will be for damages

The Landlord and Tenant Act 1954, and excluding it Tenants who occupy premises themselves for the purposes of a business enjoy protection under the Landlord and Tenant Act 1954 (LTA 1954), subject to certain exceptions. This protection involves a degree of security of tenure, including special formality requirements that the landlord must comply with in order to bring the tenancy to an end. In particular, LTA 1954, s 25 provides for the way in which notice must be given. In this Q&A we have assumed that the effect of the LTA 1954 has been validly excluded. Where the tenancy is to be for a fixed term it is possible for the parties to contract out of the LTA 1954, so that the

Forfeiture of a commercial lease for non-payment of rent Statute makes provision for the regulation of many business tenancies: see for example the Landlord and Tenant Act 1954 (LTA 1954) which, in its LTA 1954, Pt II, makes extensive provision as to business tenancies. Notwithstanding such statutory regulation, the common law right to forfeit a lease remains in the case of a commercial lease. For many breaches of a lease, section 146 of the Law of Property Act 1925 (LPA 1925) requires the landlord to serve a formal written notice on the tenant before the landlord can proceed to forfeit the lease. However, in the case of non-payment of rent, LPA 1925, s 146(11) specifically excludes the requirement

If a dispute arises over these or any other issues, the starting point for resolving the dispute will be the lease, read in conjunction with the RICS Code of Practice. While leases will generally provide for the service charge account to be final and binding on the tenant, the RICS Code refers to the tenant's 'Right to challenge' (RICS Code, section 4.5). Hence, the landlord should allow the tenant a reasonable amount of time from issuing certified accounts (say four months) to raise queries or request further information. The landlord should deal with any reasonable queries and requests for information promptly and efficiently. For more information,

When a lease is forfeited, any underlease granted out of the lease will also end. See Practice Note: What happens to an underlease on termination of the lease? There is an exception where the underlease is a lawfully granted assured (including assured shorthold) tenancy, or a Rent Act tenancy, in which case, the tenancy will continue to exist, with the subtenant becoming the direct

This Q&A raises a number of issues concerning compliance with repair and reinstatement covenants at lease end. Broadly, a useful approach to considering whether the landlord will have a claim for breach of those covenants following expiry of the lease is as follows: • first, consider whether the covenants, on their terms, are engaged in the current circumstances. For example, has any notice requiring reinstatement been served in time? • second, consider whether the covenants have been breached • third, consider whether the

The time at which a lease break option can be exercised is always a matter of interpretation of the clause itself, in the context of the whole lease and the background facts known to the parties when it was entered into. For general guidance, see Practice Note:

It is assumed that the lease was granted before the coming into force of the Land Registration Act 2002. At that time there was no obligation to register the grant of a lease of less than 21 years. The lease, therefore, took effect as a legal lease without registration if granted by deed. However, if the execution was not carried out correctly such that the lease was

For the purposes of this Q&A, it has been assumed that the tenant is paying rent in advance and that the tenant has never been in occupation under a lease that has since expired. Oral lease It is worth considering initially how an oral lease can arise. As a general rule, the relationship of landlord and tenant arises when one person (the landlord) grants to another (the tenant) a right to the exclusive possession of land for a term less than that which the landlord has in the land. The grant or demise must be either for a period which is subject to a definite limit originally, as in the case of a lease for a term of years certain, or for a period which, although originally indefinite, may be made subject to a definite limit by either party

Members voluntary liquidation It has been assumed this Q&A refers to a members voluntary winding up which can only take place where the company is solvent and the creditors will be paid in full. A voluntary winding up must be commenced by a special resolution of the company under section 84 of the Insolvency Act 1986 (IA 1986). For more information in respect of members voluntary liquidation (MVL), see Practice Note: Quick guide to property insolvency and Members' voluntary liquidation (MVL)—overview and Practice Note: What is a members’ voluntary liquidation and when is it typically used? The landlord is able to prove for amounts due under the lease including for sums due in the future (discounted to reflect a debt payable in the future) and be paid in full. For further information on quantification of claims, see Practice Note: Proof of debt,

Can the administrator sell the tenant company to another company and let the new company into occupation of the property without obtaining the landlord's consent in accordance with the lease? We assume that the new company would wish to take an assignment of the lease. In that event, whether or not the administrator requires landlord’s consent depends on the alienation provisions under the lease. Leases generally contain restrictions against an assignment of the lease without the consent of the landlord. This would restrict the ability