LEASES
Lease (leasehold/tenancy/term of years)
Leases are another way for 2+ people to simultaneously benefit from the same land at the same
time
Involves the owner of an estate of land (usually a freehold estate) becoming a landlord (or
lessor) and granting a tenant (or lessee) the temporary right to exclusive possession of that
land
Effectively an ownership right granting the temporary property ownership of their land to a
tenant for rent as a lease is both an interest and an estate in land
Differs from co-ownership (where more than one individual shares the possessory right) as
freeholder of the lease gives up their right to possession
A lease cannot exist without a freehold estate, however from a lease, a further lease (sub-lease),
mortgage, easement etc. can also be granted, although this must be consistent with the terms of
the lease held (eg. cannot grant a sub-lease of 20 years when the original lease is only 10 years
and this must also be consistent with its contractual terms)
Leases are highly common as an alternative way of ‘owning’ or possessing land and are utilised in
both the domestic and the commercial context
In a residential context, almost 40% of land is occupied under a tenancy
Often vary significantly in length (particularly in the domestic context)
Freehold estates are becoming less and less affordable
Policy and regulation surrounding leases is often regarded as paternalistic for the landlords
(imbalance in power and protection of landlords over tenants)
Potential advantages of leasehold land
A freehold owner will earn (regular) income from land while retaining its ultimate ownership and
ensuring that the land is occupied and maintained even if you are unable or unwilling
Grants a tenant the flexibility of temporary land ownership with most of the rights in the land, but
at a cheaper price
For example, a temporary lease would be valuable to students in a student house and new
businesses in a commercial premise who do not intend to stay in that location long-term
As of September 2023, the average house price stands at £291,385
Also grants a tenant a proprietary right which can bind third parties, as well as the right to carve
out your own subsidiary rights (provided these are consistent with the lease)
Potential disadvantages of leasehold land
A freehold holder must part with key rights over land during the lease (such as exclusive
possession) and it can be difficult to remove a tenant before the end of a lease even if its agreed
terms are breached
Must serve a tenant a particular kind of notice with multiple stipulations and requirements
and even where this is served, a landlord will not be entitled to evict the tenant themselves-
, must go to court if they refuse to move out for possessory rights to be granted back in full to
the landlord and to court once again if they refuse to move out in order to involve a bailiff
Aims to protect a tenant from unequal bargaining power over security of their home
Flexibility is not often an advantage for tenants (especially in domestic cases) and can be a means
of control for landlords to allow them to increase rents/weaken other rights in return for renewal
There is usually a power imbalance (especially in domestic cases) and an inequality in
bargaining power as lease agreements often do not result from a true ‘negotiation’
Leases can be expensive to enter, with many landlords charging large upfront fees followed by
periodic rents
Landlords can still require deposits to be paid upfront and demand rent in advance
Tenants may also be charged other fees by the freehold owner that can be of dubious value
(although the Leasehold Reform (Ground Rent) Act 2022 now largely bans ground rents on
most new long-term residential leases, this is not retrospective- ground rents pay for the
maintenance of the common area of the estate, eg. garden around a block of flats, which
increases exponentially in value over the course of the long lease (20+ years))
Similarly, although tenants often pay large sums in rent, they do not acquire any permanent
ownership rights
Tenants purchasing long leasehold estates might not fully understand they are only buying a
leasehold estate and can face significant additional cost if they subsequently wish to purchase the
freehold title after all (many tenants are unaware of differences between ownership forms)
Concerns about the quality of many leasehold properties
The Homes (Fitness for Human Habitation) Act 2018 now implies a term into residential
tenancies of less than 7 years duration that the property is fit for human habitation
The Fire Safety Act 2021 and Building Safety Act 2022 have also recently been passed in an
attempt to improve building safety in the aftermath of the Grenfell Tower fire and other
similar tragedies
Essential elements of a lease
Classic definition in Street v Mountford [1985]- ‘to constitute a tenancy the occupier must be
granted exclusive possession for a fixed or periodic term certain in consideration of a premium or
periodic payments’
Case clarified earlier discussion about the essential characteristics of a lease
Definition preferred to s205(1)(xxvii) LPA 1925 (wordy)
In the case, M was offered the ability to occupy two rooms on S’ estate with the rent payable
at £37/w which was terminable on two weeks’ notice and subject to the conditions set forth
in the contract which effectively and expressly sought to exclude the key issue on the case
Key issue depended on whether a lease could be found (on the facts), as it would otherwise
be subject to the Rent Act (prior to the Housing Act 1988 which stated that any new
tenancies following the act coming into effect after 1989 were not subject to the Rent Acts)-
provides protections preventing eviction (under normal circumstances) and enabling
Lease (leasehold/tenancy/term of years)
Leases are another way for 2+ people to simultaneously benefit from the same land at the same
time
Involves the owner of an estate of land (usually a freehold estate) becoming a landlord (or
lessor) and granting a tenant (or lessee) the temporary right to exclusive possession of that
land
Effectively an ownership right granting the temporary property ownership of their land to a
tenant for rent as a lease is both an interest and an estate in land
Differs from co-ownership (where more than one individual shares the possessory right) as
freeholder of the lease gives up their right to possession
A lease cannot exist without a freehold estate, however from a lease, a further lease (sub-lease),
mortgage, easement etc. can also be granted, although this must be consistent with the terms of
the lease held (eg. cannot grant a sub-lease of 20 years when the original lease is only 10 years
and this must also be consistent with its contractual terms)
Leases are highly common as an alternative way of ‘owning’ or possessing land and are utilised in
both the domestic and the commercial context
In a residential context, almost 40% of land is occupied under a tenancy
Often vary significantly in length (particularly in the domestic context)
Freehold estates are becoming less and less affordable
Policy and regulation surrounding leases is often regarded as paternalistic for the landlords
(imbalance in power and protection of landlords over tenants)
Potential advantages of leasehold land
A freehold owner will earn (regular) income from land while retaining its ultimate ownership and
ensuring that the land is occupied and maintained even if you are unable or unwilling
Grants a tenant the flexibility of temporary land ownership with most of the rights in the land, but
at a cheaper price
For example, a temporary lease would be valuable to students in a student house and new
businesses in a commercial premise who do not intend to stay in that location long-term
As of September 2023, the average house price stands at £291,385
Also grants a tenant a proprietary right which can bind third parties, as well as the right to carve
out your own subsidiary rights (provided these are consistent with the lease)
Potential disadvantages of leasehold land
A freehold holder must part with key rights over land during the lease (such as exclusive
possession) and it can be difficult to remove a tenant before the end of a lease even if its agreed
terms are breached
Must serve a tenant a particular kind of notice with multiple stipulations and requirements
and even where this is served, a landlord will not be entitled to evict the tenant themselves-
, must go to court if they refuse to move out for possessory rights to be granted back in full to
the landlord and to court once again if they refuse to move out in order to involve a bailiff
Aims to protect a tenant from unequal bargaining power over security of their home
Flexibility is not often an advantage for tenants (especially in domestic cases) and can be a means
of control for landlords to allow them to increase rents/weaken other rights in return for renewal
There is usually a power imbalance (especially in domestic cases) and an inequality in
bargaining power as lease agreements often do not result from a true ‘negotiation’
Leases can be expensive to enter, with many landlords charging large upfront fees followed by
periodic rents
Landlords can still require deposits to be paid upfront and demand rent in advance
Tenants may also be charged other fees by the freehold owner that can be of dubious value
(although the Leasehold Reform (Ground Rent) Act 2022 now largely bans ground rents on
most new long-term residential leases, this is not retrospective- ground rents pay for the
maintenance of the common area of the estate, eg. garden around a block of flats, which
increases exponentially in value over the course of the long lease (20+ years))
Similarly, although tenants often pay large sums in rent, they do not acquire any permanent
ownership rights
Tenants purchasing long leasehold estates might not fully understand they are only buying a
leasehold estate and can face significant additional cost if they subsequently wish to purchase the
freehold title after all (many tenants are unaware of differences between ownership forms)
Concerns about the quality of many leasehold properties
The Homes (Fitness for Human Habitation) Act 2018 now implies a term into residential
tenancies of less than 7 years duration that the property is fit for human habitation
The Fire Safety Act 2021 and Building Safety Act 2022 have also recently been passed in an
attempt to improve building safety in the aftermath of the Grenfell Tower fire and other
similar tragedies
Essential elements of a lease
Classic definition in Street v Mountford [1985]- ‘to constitute a tenancy the occupier must be
granted exclusive possession for a fixed or periodic term certain in consideration of a premium or
periodic payments’
Case clarified earlier discussion about the essential characteristics of a lease
Definition preferred to s205(1)(xxvii) LPA 1925 (wordy)
In the case, M was offered the ability to occupy two rooms on S’ estate with the rent payable
at £37/w which was terminable on two weeks’ notice and subject to the conditions set forth
in the contract which effectively and expressly sought to exclude the key issue on the case
Key issue depended on whether a lease could be found (on the facts), as it would otherwise
be subject to the Rent Act (prior to the Housing Act 1988 which stated that any new
tenancies following the act coming into effect after 1989 were not subject to the Rent Acts)-
provides protections preventing eviction (under normal circumstances) and enabling
