Evaluate and articulate the function and effect of leasehold ownership, the legal relationship between landlord and tenant, third party rights, covenants and contracts for the sale of land.

Learning outcomes Code Description LO1 Demonstrate knowledge and critical understanding of the principles of property law and the underlying system of land ownership in England and Wales with consideration of Scottish Law differences. LO2 Articulate the features and impact of common law and statutory provisions. LO3 Evaluate and articulate the function and effect of leasehold ownership, the legal relationship between landlord and tenant, third party rights, covenants and contracts for the sale of land. LO4 Undertake critical analysis of information, draw logical conclusions based on legal principles and communicate arguments and analysis and effectively, using relevant legal terminology. Scenario You are a Chartered Surveyor, working in a multi-disciplinary company with other real estate and building surveyors. Castle Limited occupy a self-contained office building in a City Centre in the North East of England. The premises are held on a 15-year internal repairing and insuring lease from 29 September 2006 at a current rental of £35,000 per annum. The lease is subject to five-year upward only rent reviews, and contains a tenant’s option to break after five and ten years of the term on giving at least six months written notice. The rent review clause states that the revised rent shall be the ‘open market rental value as at the rent review date on the assumption that the premises are let with vacant possession and otherwise on the same terms and conditions as the lease hereby granted save for those provisions as to rent’. In order to initiate the rent review, the landlord is to serve notice on the tenant ‘no later than three months prior to the rent review date’ specifying the proposed rental which is thereafter to be agreed ‘in writing between the parties’ and, in the absence of agreement ‘to be determined by a third party (acting as an Expert) appointed by the Royal Institution of Chartered Surveyors’. During the former lease, Castle carried out substantial improvements to the premises with their landlord’s consent. These improvements have undoubtedly increased the rental value of the premises. The lease allows the tenant to use the premises for ‘offices or any other use to which the landlord may consent. Consent not to be unreasonably withheld’ but, recently, the landlord has been turning a blind eye to the fact that Castle has also been using the premises to sell its products to visiting members of the public. Sarah Guy, the managing director of Castle, has just received a letter from their landlord, Robin Hill, advising that Robin intends to take possession of the premises at the end of the lease as he is in negotiations with another potential occupant which constitutes a better covenant. She has also just received a second letter from Robin’s surveyors pointing out that the last rent review was never implemented and stating that it is now the landlord’s intention to review the rent from 29 September 2016. © University College of Estate Management 2021 Page 3 of 8 Sarah admits that Castle do not use the offices as often as they used to as many employees now work from home meaning that, on some days, they are completely empty. However, she is reluctant to give up possession as the property is centrally based and known to their clients. Robin has recently suggested that, if Castle are prepared to take a new ten-year full repairing and insuring lease at a commencing rental of £45,000 per annum, he may consider granting a new lease to them. Having taken advice from a leading firm of property consultants, however, Sarah has been advised that the open market rental value is currently likely to be in the order of £30,000 per annum. Task You are required to draft a report, for approval by your managing Partner, advising Castle on the following two issues: a. whether Robin is still entitled to review the rent and, with reference to legal authority and making any assumptions you feel are necessary, explain all other relevant factors which will impact on the rent review; b. whether Robin is likely to be successful in obtaining possession of the premises at the end of the lease and, if not, whether Castle are obliged to accept the terms of the new lease. Reference list and bibliography You should include a reference list of at least seven relevant and appropriate sources that you have written about and cited within your work. A bibliography of uncited sources is not required.