A reminder that the Leasehold Property (Repairs) Act 1938 applies to leases granted for seven years or more, with at least three years on the term left to run. Note that certain agricultural tenancies are excluded.

As the number of empty town-centre retail units increases, there is increasing pressure on Ls to allow charities, and other social organisations, into those premises free of charge. In return, of course, L will save on rates and outgoings, as well as having the benefit of someone occupying a unit (rather than it being vacant).

Should Ls be concerned about the possible use of virtual assignments by Ts?

The starting point, of course, is the decision (noted in our March 2010 issue, p19) in which the CA said that a virtual assignment will usually be valid. Previously, it had thought that it would amount to a breach of at least one of the usual covenants (ie not to make a declaration of trust; not to create an under-lease; not to grant an assignment; not to share or part with possession). But, in the CA’s view, a virtual assignment will not breach the standard alienation provisions found in the vast bulk of commercial leases; in particular, the CA found that ‘a covenant which forbids a parting with possession is not broken by a T who in law retains the possession, even though he allows another to use and occupy the premises’.

If a break clause is expressed to be personal to a particular T, then that break clause will only be exerciseable when the lease is vested in that T (ie it will not be exerciseable after T has assigned and is therefore the former T). Indeed, for a former T to exercise a break clause would require ‘an unambiguously clear’ wording (and it seems that there is no reported case in which that was so).

What happens if L is in administration, and T has a business tenancy that is nearing its end. Will T still have a right to renew under LTA 1954?

The answer is that L’s administration will not affect the right to seek a new tenancy, but the problem is that T cannot commence a claim for a new tenancy against L in administration without the permission of either the court or the administrator. So, there is a danger that permission will not be granted.

It is standard for a lease to allow L to recover any legal costs from T, if L has to take forfeiture proceedings under s146 LPA 1925.

But, it is important to appreciate that the costs clause will be interpreted strictly (against L). This is well illustrated by a recent case which involved a costs clause that will be found in many current leases. The lease allowed L to recover the costs incurred ‘in connection with any steps taken or in contemplation of, or in relation to, any proceedings under s146 LPA 1925’.

Suppose an existing business lease contains a break clause. If T is entitled to a new, renewal, lease under LTA 1954, can T insist upon that new lease also containing a break clause?

We all know that great care must be taken when exercising a break clause. Any pre-condition must be strictly complied with. In practice, that is often not the case (and there are many reported cases of solicitors referring to the wrong parties, or the wrong dates). So, a reminder of the main pitfalls: