The Rent Review Specialist
Tenancy
Periodic Tenancy
A periodic tenancy - also known as a tenancy from year to year, month to month, or week to week - is a tenancy that exists for some period of time determined by the term of the payment of rent. Periodic tenancies may qualify for renewal rights under Landlord and Tenant Act 1954, particularly where the landlord has demanded and accepted rent for at least 12 months after the expiry of a contractual tenancy.
Lease
The terms and conditions of a tenancy are embodied in a document, known as a 'lease'. Although the terms and conditions of the completed agreement are commonly referred to as the lease, in fact the lease is simply the document itself. The document is a written record of the terms and conditions that comprise the agreement between landlord and tenant for the premises.
A type of occupancy known as a licence can cause problems and is generally to be avoided. A licence is a personal privilege that makes lawful that which would be unlawful otherwise. Although strictly a lease is a document, in popular parlance a lease and tenancy are interchangeable. With a licence, calling a document a licence does not make it one, so whilst the intention may be licence, in practice, the arrangement may constitute a tenancy. Amongst the tests to determine whether the occupancy is a licence or tenancy is whether the occupier has exclusive possession of the premises but, per business law, exclusive possession does not necessarily negate a licence.
The relationship between landlord and tenant hinges upon the terms and conditions of the tenancy. A tenancy (or ‘lease’) is a contract for a certain term and has a date of document, a tenancy contractual term start date and contractual term expiry (end date). When a tenancy is for a business purpose, the lease is a commercial contract which means the parties are in law deemed to know what they are doing.
Generally, the onus is on the landlord’s side to draft the documentation, and for the tenant’s side to approve. Although early leases were not unsophisticated, the trend over the years has been the widespread use of precedents and a general tightening of the “small print” so as to minimise management expenses with more control for the landlord of the relationship between landlord and tenant.
Basically a lease contains terms and conditions for the operation, management and enforcement of the tenancy. The landlord and tenant, known as the parties, can agree whatever terms and conditions they like for the tenancy, but some requirements are governed by overriding legislation.
Because different landlords and different tenants have different requirements and shops, in common with all commercial properties, are different, there is no standard form of lease in use generally. Whilst many landlords and tenants have their own standard wording for the documentation, also the Law Society, for example, has a standard document for use by landlords and tenants, one cannot buy a ready-made document and simply fill in the blanks and reasonably expect the tenant to sign without question, or at least not without changing some wording. Normally, what happens is that after outline terms have been agreed between the parties and 'heads of terms' agreed, the lawyers for the respective parties, sometimes with the help of respective surveyors, draft and approve the documentation from scratch.
Because tenancies often last for years, and the wording of terms and conditions can be fashionable, the content of leases varies considerably. Also, although the terms and wording of a lease cannot be changed after completion, except by rectification or mutual agreement, leases are assets that can be bought, sold, transferred and mortgaged. During the life of a lease it is common for related agreements to be entered into by the parties and their successors. Such agreements include deeds of variation, rent deposit deeds, licences to alter, change the use, assign, underlet, rent review memoranda, and side-letters.
Confusion can arise when, in the drafting of a lease, the draftsman uses the word ‘lease’ when referring to commencement dates for purpose of term, rent, and rent reviews. In modern leases, each expression or phrase will usually be defined in the lease so as to leave no scope for different interpretation, but where the draftsman does not, or phrasing or expression definitions are incomplete, and instead refers casually to the date of the lease, an ambiguity can arise where the lease states that rent reviews are at stated intervals during the term but the review dates themselves are calculated from commencement of the lease.
For some reason, best known to the world of lawyer-draftsmen, the wording and phrasing in leases, especially in the realm of rent review, is often unbelievably convoluted. Commonly, rent review dates are not specified, such as 25 December 2006, 25 December 2011, but referred to as intervals such as 5th and 10th anniversaries, which is all very well provided it clear from the wording of the lease from which each particular anniversary is computed.
Generally, any and all other documents related to the lease may be loosely included in the definition of lease. Usually, other documents, such as licences to alter, vary the user, deed of variation, deed of rent deposit, memoranda, and side-letters, are likely to mention the lease itself, so the wording and content of associated and related documents could affect the rental and/or capital value.
A type of occupancy known as a licence can cause problems and is generally to be avoided. A licence is a personal privilege that makes lawful that which would be unlawful otherwise. Although strictly a lease is a document, in popular parlance a lease and tenancy are interchangeable. With a licence, calling a document a licence does not make it one, so whilst the intention may be licence, in practice, the arrangement may constitute a tenancy. Amongst the tests to determine whether the occupancy is a licence or tenancy is whether the occupier has exclusive possession of the premises but, per business law, exclusive possession does not necessarily negate a licence.
The relationship between landlord and tenant hinges upon the terms and conditions of the tenancy. A tenancy (or ‘lease’) is a contract for a certain term and has a date of document, a tenancy contractual term start date and contractual term expiry (end date). When a tenancy is for a business purpose, the lease is a commercial contract which means the parties are in law deemed to know what they are doing.
Generally, the onus is on the landlord’s side to draft the documentation, and for the tenant’s side to approve. Although early leases were not unsophisticated, the trend over the years has been the widespread use of precedents and a general tightening of the “small print” so as to minimise management expenses with more control for the landlord of the relationship between landlord and tenant.
Basically a lease contains terms and conditions for the operation, management and enforcement of the tenancy. The landlord and tenant, known as the parties, can agree whatever terms and conditions they like for the tenancy, but some requirements are governed by overriding legislation.
Because different landlords and different tenants have different requirements and shops, in common with all commercial properties, are different, there is no standard form of lease in use generally. Whilst many landlords and tenants have their own standard wording for the documentation, also the Law Society, for example, has a standard document for use by landlords and tenants, one cannot buy a ready-made document and simply fill in the blanks and reasonably expect the tenant to sign without question, or at least not without changing some wording. Normally, what happens is that after outline terms have been agreed between the parties and 'heads of terms' agreed, the lawyers for the respective parties, sometimes with the help of respective surveyors, draft and approve the documentation from scratch.
Because tenancies often last for years, and the wording of terms and conditions can be fashionable, the content of leases varies considerably. Also, although the terms and wording of a lease cannot be changed after completion, except by rectification or mutual agreement, leases are assets that can be bought, sold, transferred and mortgaged. During the life of a lease it is common for related agreements to be entered into by the parties and their successors. Such agreements include deeds of variation, rent deposit deeds, licences to alter, change the use, assign, underlet, rent review memoranda, and side-letters.
Confusion can arise when, in the drafting of a lease, the draftsman uses the word ‘lease’ when referring to commencement dates for purpose of term, rent, and rent reviews. In modern leases, each expression or phrase will usually be defined in the lease so as to leave no scope for different interpretation, but where the draftsman does not, or phrasing or expression definitions are incomplete, and instead refers casually to the date of the lease, an ambiguity can arise where the lease states that rent reviews are at stated intervals during the term but the review dates themselves are calculated from commencement of the lease.
For some reason, best known to the world of lawyer-draftsmen, the wording and phrasing in leases, especially in the realm of rent review, is often unbelievably convoluted. Commonly, rent review dates are not specified, such as 25 December 2006, 25 December 2011, but referred to as intervals such as 5th and 10th anniversaries, which is all very well provided it clear from the wording of the lease from which each particular anniversary is computed.
Generally, any and all other documents related to the lease may be loosely included in the definition of lease. Usually, other documents, such as licences to alter, vary the user, deed of variation, deed of rent deposit, memoranda, and side-letters, are likely to mention the lease itself, so the wording and content of associated and related documents could affect the rental and/or capital value.
Holding Over
Where a tenancy would on expiry of the contractual term qualify for rights under the Landlord and Tenant Act 1954 but no statutory procedures are implemented before the contractual expiry, the contractual term would end and thereafter the tenant would be able to ‘hold over’ on the same terms of the expired tenancy.
Holding over is also known as the statutory term. The distinction between contractual term and statutory term/holding over is important because different rules apply when the parties want to end the existing tenancy or grant a new tenancy.
When the tenancy is outside the Landlord and Tenant Act 1954, the tenant would have no legal right to remain in occupation of the premises after the contractual term expiry date. That does not mean that the tenant would necessarily have to vacate, simply there is no legal right to remain in occupation.
Holding over is also known as the statutory term. The distinction between contractual term and statutory term/holding over is important because different rules apply when the parties want to end the existing tenancy or grant a new tenancy.
When the tenancy is outside the Landlord and Tenant Act 1954, the tenant would have no legal right to remain in occupation of the premises after the contractual term expiry date. That does not mean that the tenant would necessarily have to vacate, simply there is no legal right to remain in occupation.
Licence
The other type of occupancy known as a licence can cause problems and is generally to be avoided.
Licence is a personal privilege that makes lawful that which would otherwise be unlawful.
Although strictly a lease is a document, in popular parlance a lease and tenancy are interchangeable. However, calling a document a 'licence' does not make it one, so whilst the intention may be licence, in practice the arrangement may constitute a tenancy.
Amongst the tests to determine if an occupancy is a licence or tenancy is whether or not the occupier has exclusive possession of the premises.
Licence is a personal privilege that makes lawful that which would otherwise be unlawful.
Although strictly a lease is a document, in popular parlance a lease and tenancy are interchangeable. However, calling a document a 'licence' does not make it one, so whilst the intention may be licence, in practice the arrangement may constitute a tenancy.
Amongst the tests to determine if an occupancy is a licence or tenancy is whether or not the occupier has exclusive possession of the premises.
Effluxion of Time
The expiration of a limited-time agreement or contract: the tenancy ended by effluxion of time.
Tenancy
A tenancy exists when someone lets premises to another for a term in return for a rent. There are three types of tenancy:
There is another type of occupancy, known as licence.
Normally, the term is for a number of years, but it is possible to create a weekly, quarterly or yearly tenancy.
A tenancy can come into existence in one of three ways:-
A. On grant of a document, called a lease. A lease is usually a deed. This is the most common normal method of creating a business tenancy.
B. Tenancies for three years or less can be created by a document that is not a deed. A document of that type is often referred to as a "tenancy agreement" rather than a "lease".
C. A tenancy can also be created by verbal/oral arrangement between the parties or by conduct, for example where the landlord lets the tenant into possession and, with the intention of creating a tenancy, the tenant pays rent and the landlord accepts it. It is not generally prudent for a landlord to create a tenancy in that way, because of the question of proving the terms of the agreement and whether the landlord has any right to take back the premises should the tenant fail to pay the errant. Also, under this arrangement, the tenant may qualify for rights per Landlord and Tenant Act 1954.
A tenancy-at-will is a tenancy for occupation of premises for a period less than 12 months, where either landlord or tenant may terminate the tenancy at any time. Tenancies at will are commonly used for temporary occupancies but should be avoided unless the parties are trustworthy because, although a tenancy at will is excluded from protection of Landlord and Tenant Act 1954, any oversight in the operation of the agreement could result in a tenancy-at-will becoming a periodic tenancy and possibly qualify for rights under Landlord and Tenant Act 1954. A tenancy-at-will can arise after expiry of a contractual term of tenancy where the tenant has failed to protect its renewal rights under the Landlord and Tenant Act 1954 but remains in occupation of the premises and continues to pay rent.
A periodic tenancy - also known as a tenancy from year to year, month to month, or week to week - is a tenancy that exists for some period of time determined by the term of the payment of rent. Periodic tenancies may qualify for renewal rights under Landlord and Tenant Act 1954, particularly where the landlord has demanded and accepted rent for at least 12 months after the expiry of a contractual tenancy.
The expression "business tenancy" is used to refer to a tenancy of premises that are used for the purposes of a business. The premises may be a building, part of a building or open land. In older leases, premises are often described as demised premises. (A demise is a legal term meaning the conveyance or transfer of property or a title by demising.)
- 1. Simple tenancy, usually known as a tenancy.
- 2. Tenancy-at-will
- 3. Periodic tenancy
There is another type of occupancy, known as licence.
Normally, the term is for a number of years, but it is possible to create a weekly, quarterly or yearly tenancy.
A tenancy can come into existence in one of three ways:-
A. On grant of a document, called a lease. A lease is usually a deed. This is the most common normal method of creating a business tenancy.
B. Tenancies for three years or less can be created by a document that is not a deed. A document of that type is often referred to as a "tenancy agreement" rather than a "lease".
C. A tenancy can also be created by verbal/oral arrangement between the parties or by conduct, for example where the landlord lets the tenant into possession and, with the intention of creating a tenancy, the tenant pays rent and the landlord accepts it. It is not generally prudent for a landlord to create a tenancy in that way, because of the question of proving the terms of the agreement and whether the landlord has any right to take back the premises should the tenant fail to pay the errant. Also, under this arrangement, the tenant may qualify for rights per Landlord and Tenant Act 1954.
A tenancy-at-will is a tenancy for occupation of premises for a period less than 12 months, where either landlord or tenant may terminate the tenancy at any time. Tenancies at will are commonly used for temporary occupancies but should be avoided unless the parties are trustworthy because, although a tenancy at will is excluded from protection of Landlord and Tenant Act 1954, any oversight in the operation of the agreement could result in a tenancy-at-will becoming a periodic tenancy and possibly qualify for rights under Landlord and Tenant Act 1954. A tenancy-at-will can arise after expiry of a contractual term of tenancy where the tenant has failed to protect its renewal rights under the Landlord and Tenant Act 1954 but remains in occupation of the premises and continues to pay rent.
A periodic tenancy - also known as a tenancy from year to year, month to month, or week to week - is a tenancy that exists for some period of time determined by the term of the payment of rent. Periodic tenancies may qualify for renewal rights under Landlord and Tenant Act 1954, particularly where the landlord has demanded and accepted rent for at least 12 months after the expiry of a contractual tenancy.
The expression "business tenancy" is used to refer to a tenancy of premises that are used for the purposes of a business. The premises may be a building, part of a building or open land. In older leases, premises are often described as demised premises. (A demise is a legal term meaning the conveyance or transfer of property or a title by demising.)
Term
The term of a tenancy is the duration or period of time for the contractual right to occupy the premises. For example, a tenancy granted for 10 years would give the tenant the right to remain in the premises for 10 years.
The term commencement date is not necessarily the same date as the lease. The lease date is the date of the document and a lease document is normally dated on the day that the lease is completed.
The commencement of the term is not necessarily the same as the lease/document date because the parties have agreed that the term would commence before the date when the lease was completed. Generally, the commencement date of the term would not be expected to start after the date of the lease; in such cases, an agreement for lease is likely to be entered into, where it is intended that the parties will enter into a binding agreement for term in the future.
The commencement date of the term (which as I say doesn’t have to be the same date as the date of the lease/document) is the date from which computations for contractual requirements in the tenancy. For example, rent of £x commencing on (date); rent reviews at 5 yearly intervals, where each interval would be calculated from the commencement of the term; a covenant to decorate the premises at stated intervals; and for operation of a break clause.
Because a lease/document is a contract, the duration of the term has both a contractual start date and a contractual expiry date. With a tenancy where the duration of the term is not predetermined, such as an oral tenancy or a periodic tenancy, the duration of the term and the parties’ right to end the tenancy would depend upon the terms of the tenancy.
Where the tenancy would on expiry of the contractual term qualify for rights under the Landlord and Tenant Act 1954 but no statutory procedures are implemented before the contractual expiry, the contractual term would end and thereafter the tenant would be able to ‘hold over’ on the same terms of the expired tenancy. Holding over is also known as the statutory term. The distinction between contractual term and statutory term/holding over is important because different rules apply when the parties want to end the existing tenancy or grant a new tenancy.
When the tenancy is outside the Landlord and Tenant Act 1954, the tenant would have no legal right to remain in occupation of the premises after the contractual term expiry date. That does not mean that the tenant would necessarily have to vacate, simply there is no legal right to remain in occupation.
The term commencement date is not necessarily the same date as the lease. The lease date is the date of the document and a lease document is normally dated on the day that the lease is completed.
The commencement of the term is not necessarily the same as the lease/document date because the parties have agreed that the term would commence before the date when the lease was completed. Generally, the commencement date of the term would not be expected to start after the date of the lease; in such cases, an agreement for lease is likely to be entered into, where it is intended that the parties will enter into a binding agreement for term in the future.
The commencement date of the term (which as I say doesn’t have to be the same date as the date of the lease/document) is the date from which computations for contractual requirements in the tenancy. For example, rent of £x commencing on (date); rent reviews at 5 yearly intervals, where each interval would be calculated from the commencement of the term; a covenant to decorate the premises at stated intervals; and for operation of a break clause.
Because a lease/document is a contract, the duration of the term has both a contractual start date and a contractual expiry date. With a tenancy where the duration of the term is not predetermined, such as an oral tenancy or a periodic tenancy, the duration of the term and the parties’ right to end the tenancy would depend upon the terms of the tenancy.
Where the tenancy would on expiry of the contractual term qualify for rights under the Landlord and Tenant Act 1954 but no statutory procedures are implemented before the contractual expiry, the contractual term would end and thereafter the tenant would be able to ‘hold over’ on the same terms of the expired tenancy. Holding over is also known as the statutory term. The distinction between contractual term and statutory term/holding over is important because different rules apply when the parties want to end the existing tenancy or grant a new tenancy.
When the tenancy is outside the Landlord and Tenant Act 1954, the tenant would have no legal right to remain in occupation of the premises after the contractual term expiry date. That does not mean that the tenant would necessarily have to vacate, simply there is no legal right to remain in occupation.