The Property Lease – Key Areas
You will often find that leases are long, detailed documents that can vary dramatically from case to case, but there are basic elements that will be present in most of them:
House and Flat Leases
In most cases a house will be freehold and a flat leasehold, but there will be some cases where houses are leasehold too. When a house has a lease this document is normally shorter than a lease of a flat as they require fewer conditions.
Date of Lease – This is located at the start of the document and will indicate when the lease was first created, which is often the date of completion on the first sale.
Commencement Date – You will often find this following the Term or within the ‘Definitions’ section and it will detail the date that the lease started. It can sometimes be the same as the ‘Date of Lease’ but will often be earlier so as to ensure that all of the leases (in a block of flats for example) will terminate on the same day.
Term – This is usually found near the beginning of the lease document and will detail the definition of the term, showing you how long the lease will run for. A lease that runs for 21 years and above will be referred to as a ‘long lease’ and will normally be granted for a period of 99, 125 of 999 years. This is a fixed term meaning that whoever is buying the leasehold property is only purchasing the lease and when this comes to an end the interest in the property also expiries and the ownership will go back to the freeholder.
Ground Rent – Towards the beginning of the document you will often find the words ‘Yielding and Paying’, which is where the amount of rent will be indicated. Every lease will come with ground rent that has to be paid, but you will sometimes find that it says ‘a peppercorn if demanded’, which basically means that there is no rent to pay.
Forfeiture Clause – If the tenant breaches any of the covenants detailed in the lease (i.e. to pay ground rent), the landlord can terminate the lease before the end date, through this forfeiture clause. If this arises in a residential property that a tenant occupies, a court order will need to be obtained by the landlord before this lease can be legally ended.
Covenant for Quiet Enjoyment – This covenant is always implied, even if it isn’t written into the lease and is a rule that prevents the landlord from interfering with the tenant’s lawful occupation. This covenant prevents the landlord from having his own key to the property and going into the home as and when he wants. This doesn’t remove his rights to enter the property when emergency repairs need carrying out or when seeking forfeiture if the lease covenants have been breached by the tenant.
Alienation Provisions – Should a change of ownership occur, the ‘alienation provisions’ detail responsibilities (both outgoing and incoming) of tenants’ through a group of clauses. These will normally include factors such as ensuring the new buyer enters into a deed of covenant with the landlord; serving a notice of the change of ownership; and transferring the seller’s shares in the management company.
Flat Leases Only
Because of the ways that flats often depend on each other (i.e. maintenance of the building, using common parts etc.) this makes flat leases different from those for houses. Due to these additional provisions, the lease of a flat is generally longer and below are some clauses that are applicable to flats:
Insurance – Most flat leases will have a provision that covers an insurance policy, which ideally covers the entire building and is arranged by the landlord. The landlord then recovers this premium payment from their tenants so both parties know that the building is correctly insured.
Maintenance and Repair – In most cases, the common parts of a block of flats (the foundations, halls, roof, gardens etc.) will not be included in leases as they are retained by the landlord, who should, therefore, assume responsibility for the upkeep of these.
Service Charge – Provisions will be found in the lease when the landlord is responsible for the insurance, maintenance and repair of a building, which will allow them to cover the costs spent through their tenants in the form of a maintenance or service charge.
Access for Repair – Sometimes access to other parts of a building, including other flats, may be required by the tenant so they can adhere to the covenant of them maintaining their own flat. These rights of access to other areas in the building should be indicated within the lease with reasonable notice provided unless an emergency arises where no notice is required.
Rights of Services – Any service conduits (wires, cables, pipes etc.) that go into other parts of the building should be available for use by the tenant.
Rights of Way – A right of way for any communal access areas, such as drives, landings, lifts and staircases should be indicated within the lease.
Rights of Support and Shelter – Shelter and/or support should be provided from the flats above and below in case anything should happen to one of these.