RICS APC Property Law & UK Land Law 2 — Questions and Answers
Question 1: What is the primary purpose of the Landlord and Tenant Act 1954 (Part II) for commercial surveyors?
- It gives business tenants the right to renew their lease at the end of the term and protects them from arbitrary eviction (Correct answer)
- It sets out the obligations of landlords in residential properties only
- It prevents landlords from increasing rents in commercial leases more than once per year
- It requires all commercial leases to be registered at the Land Registry
Correct answer: It gives business tenants the right to renew their lease at the end of the term and protects them from arbitrary eviction
Part II of the Landlord and Tenant Act 1954 gives qualifying business tenants statutory security of tenure — the right to remain in occupation at the end of their lease and to apply to the court for a new tenancy on reasonable terms. Landlords can only oppose renewal on specified statutory grounds. This is fundamental knowledge for commercial property surveyors.
Question 2: What does 'contracting out' of the Landlord and Tenant Act 1954 mean in a commercial lease?
- The landlord and tenant agree, following a prescribed statutory procedure, to exclude the tenant's right to security of tenure under the Act (Correct answer)
- The landlord contracts an external managing agent to administer the lease
- The tenant agrees to pay rent without a break clause
- The lease is not registered at the Land Registry and operates informally
Correct answer: The landlord and tenant agree, following a prescribed statutory procedure, to exclude the tenant's right to security of tenure under the Act
Contracting out (or 'exclusion') of the 1954 Act means the parties agree that the tenant will have no right to renew the lease at the end of the term. The landlord must serve a warning notice and the tenant must make a statutory declaration before the lease is granted. This is common for short-term leases or where the landlord needs certainty of possession.
Question 3: What is a 'break clause' in a commercial lease and what conditions typically govern its exercise?
- A clause allowing one or both parties to terminate the lease before the end of the term, often conditional on full compliance with lease obligations (Correct answer)
- A clause allowing the landlord to increase rent above the reviewed level in exceptional circumstances
- A provision allowing structural alterations to the demised premises
- A rent-free period built into the lease at commencement
Correct answer: A clause allowing one or both parties to terminate the lease before the end of the term, often conditional on full compliance with lease obligations
A break clause gives one or both parties the right to end the lease at a specified date by giving notice. Exercise of break clauses is typically conditional on the tenant being up to date with rent, having given the correct notice period, and in some cases having complied with all lease obligations. Courts have strictly interpreted these conditions — even minor breaches have invalidated break notices.
Question 4: Under the Leasehold Reform Act 1967 (as amended), what right does a long leaseholder of a house have?
- The right to purchase the freehold of their house (enfranchisement) or to extend their lease by 50 years on prescribed terms (Correct answer)
- The right to assign their lease without landlord's consent
- The right to carry out any alterations without planning permission
- The right to withhold service charge payments if the landlord is in breach
Correct answer: The right to purchase the freehold of their house (enfranchisement) or to extend their lease by 50 years on prescribed terms
The Leasehold Reform Act 1967 gives qualifying long leaseholders of houses the right to acquire the freehold (enfranchisement) or extend their lease by 50 years at a ground rent of nil. This is a significant right that surveyors advising either landlord or tenant must understand, as it fundamentally affects the value of both the freehold and the leasehold interests.
Question 5: What are 'overriding interests' in registered land and why are they important for surveyors?
- Rights that bind a purchaser of registered land even though they are not shown on the register, such as the rights of persons in actual occupation — surveyors must investigate beyond the register (Correct answer)
- Interests that take priority over a mortgage lender's registered charge
- Planning conditions that override private rights of property owners
- Rights of local authorities to acquire land by compulsory purchase
Correct answer: Rights that bind a purchaser of registered land even though they are not shown on the register, such as the rights of persons in actual occupation — surveyors must investigate beyond the register
Overriding interests (now called 'unregistered interests which override' under the LRA 2002) bind a registered proprietor even though they are not visible on the register. Key examples include legal easements, the rights of persons in actual occupation, and certain local land charges. Surveyors and their clients' solicitors must investigate beyond the register to identify these hidden burdens.
Question 6: What is the key difference between a 'licence' and a 'lease' in property law, and why does it matter for surveyors?
- A lease grants exclusive possession of land for a term, creating a legal estate; a licence merely grants personal permission to occupy without exclusive possession — the distinction affects tenants' statutory rights (Correct answer)
- A licence is simply a lease of shorter than 6 months duration
- A lease requires a solicitor to prepare it; a licence can be prepared by a surveyor without legal involvement
- Licences apply to commercial premises only; leases apply to residential
Correct answer: A lease grants exclusive possession of land for a term, creating a legal estate; a licence merely grants personal permission to occupy without exclusive possession — the distinction affects tenants' statutory rights
The distinction between lease and licence is fundamental in property law (established in Street v Mountford [1985]). A lease grants exclusive possession (the hallmark of a tenancy) and confers statutory protections such as security of tenure and rent review rights. A licence grants permission only and does not create those protections. The label used by the parties is not determinative — courts look at substance.
RICS APC Property Law & UK Land Law 2
What is the primary purpose of the Landlord and Tenant Act 1954 (Part II) for commercial surveyors?