Office Agents Society Repair and potential pitfalls Difficulties for landlords arising when a tenant underlets Nick Dalgleish and Simon Pestell September 2016

OAS Training OAS TRAINING Who we are: Nick Dalgleish, Associate Real Estate Thames Valley Email: Nick.Dalgleish@shoosmiths.co.uk Tel: 03700 868217 Simon Pestell, Senior Associate Property Litigation Thames Valley Email: Simon.Pestell@shoosmiths.co.uk Tel: 03700 868899

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OAS Training OAS TRAINING Today we will cover: Tenant covenants to repair How to pass liability to undertenants Overview of remedies for breach of covenant: During the term After the term ends

Tenant covenants to repair OAS Training OAS TRAINING Tenant covenants to repair Meaning of standard obligations: Full repairing lease “In repair” Method of repair Check no overlap Detailed definition of premises

Underlease repair covenants OAS Training OAS TRAINING Underlease repair covenants Different standard of repair may apply Direct covenant with landlord? Schedules of condition Inherent defects Insured risks Approval of works

Remedies During the Lease Term OAS Training OAS TRAINING Remedies During the Lease Term Forfeiture Damages Self Help/Notices to Repair Specific Performance

Remedies During the Lease Term Forfeiture: OAS Training OAS TRAINING Remedies During the Lease Term Forfeiture: S.146 Notice Beware leases over 7 years with 3 years left to run Effect on undertenants – relief? Damages: Diminution in value cap Effect on undertenants

Remedies During the Lease Term Self Help: OAS Training OAS TRAINING Remedies During the Lease Term Self Help: Notice to Repair/”Jervis v Harris” Notice - Debt claim - No diminution cap - Gets results, but tenant must be good for the money Effect on undertenants Specific Performance:

Damages After Lease End: OAS Training Damages After Lease End: Schedule and Dilapidations Protocol Basic Amount = Reasonable cost of works + loss of rent Limited by Section 18 Landlord and Tenant Act 1927 - 18(1) ‘first limb’ - diminution in value cap - 18(2) ‘second limb’ – demolition/substantial structural alterations Impact of protected undertenant in occupation

Damages After Lease End: OAS Training OAS TRAINING Damages After Lease End: Valuation Date Supercession/Landlord’s intention

Other Issues Relevant to Underleases: OAS Training OAS TRAINING Other Issues Relevant to Underleases: Underletting for whole of headlease term Surrender of headlease Variations and surrenders of underlease Consents Landlord and Tenant Act 1954 Disclaimer of headlease

OAS Training OAS TRAINING Questions?