Term of Lease
Where a standardised commencement date is required for multiple leases for good estate management, the Commencement Date should ensure that the first lease is granted with at least a 990 year term from the date of the lease and that no lease is granted with an unexpired term of less than 989 years. Where sales are expected to span longer periods and a standardised Commencement Date is required, the first lease should be granted for a term in excess of 990 years to facilitate the intended sales period.
These are now at the beginning of the lease which will no doubt please a few people!
The tenant’s repairing obligation at Clause 3.4 is stated to be subject to Schedule 9 which sets out the repair contribution arrangements.
The repair contribution obligation lasts for 10 years or until final staircasing whichever is the earlier.
The definition has been amended so that a portioned percentage can be less than 5% if the purchase of an Additional Percentage pursuant to Schedule 10 has resulted in an Unacquired Percentage of less than 5%.
Assignment and underletting
A Leaseholder is not permitted to underlet without the Landlord’s consent and the Lease includes a declaration that it shall be reasonable to withhold consent where the underletting does not comply with the guidance or grant funding conditions provided by HE from time to time.
The Lease includes a covenant that states that the Leaseholder must not assign the Property without the Landlord’s consent and is supported by a declaration that it is reasonable for consent to be withheld if Clause 3.19 has not been complied with.
Now referred to as “First Option to Buy” – nomination period reduced to 4 weeks.
Notice of Forfeiture
Clause 6.2.3 – this is now more UK Finance compliant – Notice has to be given to mortgagee, the mortgagee gets 28 days to respond if it wants to remedy the breach and then a further 28 days (or longer if reasonable bearing in mind the nature and extent of the breach) to remedy it.
Mortgage Protection Clause
This has been renamed Lender Protection.
Schedule 6 Staircasing
This schedule includes a statement that the (traditional) staircasing rights are separate to those contained in Schedule 10 (1% Staircasing).
Importantly the Schedule now provides for Clause 6.8 (surrender of lease on frustration) to fall away on final staircasing. It also confirms that the clause is not a fundamental clause. This means that on mixed tenure sites outright sale leases no longer need the frustration clause in.
Schedule 7 Assignment to Nominee
This has simply been renamed.
Schedule 8 Surrender
A reference to the definition of Payment Sum has been tidied up.
Schedule 9 The Initial Repair Period
Note – it provides for leaseholder to repair space and heating and hot water which may not be the case with communal systems so the clause may need some slight amendment where you have CHP.
During the Initial Repair Period (first 10 years or final staircasing whichever is the earlier) the Landlord covenants to provide or procure the provision of external and structural repairs at no cost to the Leaseholder. One would hope that most would be covered by a new home warranty. The Leaseholder cannot be required to contribute towards any excess or admin fees payable under the relevant warranty/guarantee. Reserve fund contributions cannot be applied towards the external/structural repairs.
The leaseholder is obliged to assist the Landlord in making a claim, notify the Landlord of any potential issues and not do anything that might render a warranty/guarantee void.
The important bit – the Landlord is not responsible for general repairs – however, during the initial repair period the leaseholder can apply for a contribution towards the costs incurred by the Leaseholder for any qualifying repairs and maintenance works. This will not include any work that would be covered by a warranty/guarantee, normal cyclical health and safety requirements (eg annual gas servicing), decoration work that the Leaseholder is obliged to carry out under the terms of the Lease, improvements and any works required as a result of the Leaseholder being in breach of the lease eg work required as a result of neglect or deliberate damage.
If a claim is made the Leaseholder has to provide all relevant documentation to the Landlord.
The Landlord must consider any claims in a timely manner and pay approved claims within a reasonable period and notify the leaseholder of its decision within a reasonable period. Each year the leaseholder must be updated on the balance of the repairs allowance outstanding. There is no limit to the number of claims per annum but the maximum is £500 and up to £500 can be rolled over to the next year but no more than that. So the allowance will never exceed £1000.
Leaseholders have to use an approved service provider which is defined in the Lease.
Schedule 10 – 1% Staircasing
At any time during the 1% Staircasing Period (which is 15 years from the date of the lease but the 15 years starts again on each assignment) a leaseholder can request a valuation (but not within 3 months of an earlier valuation being received).
The value is determined by reference to the initial value (which can be the initial market value or if a valuer has valued the property more recently then that value can be used as can an open market valuation eg a valuation obtained on a remortgage) and the HPI index.
The Leaseholder can pay for the additional 1% at any time within 3 months of the valuation. Any arrears etc must be paid at the same time. The acquired percentage is then increased by 1% and the specified rent reduced to the unacquired percentage of the gross rent as per traditional staircasing. The Leaseholder is not obliged to complete the purchase of an additional 1% just because a valuation has been requested.
The Landlord must notify the Leaseholder of the current value each year.
If there is any dispute as to value a Valuer can be appointed to determine at the cost of the appointing party.
A memorandum of staircasing must be prepared by the Landlord and provided to the Leaseholder on completion of the purchase of a 1% share. If the purchase of a share results in a final staircasing then the relevant provisions of Schedule 6 will apply.
The parties are to bear their own costs.
Generally as above. Additional requirement that the transfer on final staircasing must contain the following clause
The parties hereby agree that to the extent that clause [ ] creates an estate rentcharge under section 2(4)(b) of the Rentcharges Act 1977 the remedies contained in section 121 of the Law of Property Act 1925 are not available to the Transferor.