SQE FLK2: Property Practice (Leasehold Transactions) for SQE2 about:srcdoc
SQE FLK2: Property Practice (Leasehold
Transactions) for SQE2
1. grant of a right to exclusive possession
for an agreed time
2. estate in land providing the holder with
What is a lease?
rights of possession and use
3. contractual relationship between
landlord and tenant
Standard for renting residential properties (6 or
What is an assured shorthold tenancy? 12 months)
Tenants pay market rent
Grant of a business tenancy of commercial
property
What is a commercial lease?
Typically shorter term (up to 15 years) granted
within the LL&T Act, unless contracted out
Typically for long periods, involving paying a low
What is a long-term residential lease? ground rent, often symbolic.
Common in flats or older houses
1. exclusive possession
2. fixed duration (fixed term or periodic
tenancy)
What are the essential characteristics of a lease?
3. formalities (deed?)
4. rent
5. reversion
How is a commercial lease usually structured? 1. Prescribed clauses
2. Commencement date and parties
3. Definitions and interpretation
4. Grant of the lease
5. Rent and rent review
6. Tenant’s covenants
7. Landlord’s covenants
1 of 62 01/09/2025, 10:06
,SQE FLK2: Property Practice (Leasehold Transactions) for SQE2 about:srcdoc
8. Provisos
9. Schedules
10. Execution clause
Appear at the beginning of the lease.
What are prescribed clauses? Compulsory if granted after 19 June 2006, where
LL’s title is registered and lease is substantively
registrable
When must a leasehold transaction include
If longer than 7 years
'Prescribed Clauses'?
LR1L: Date of lease
LR2: Title number
LR3: Parties
LR4: Property
LR5: Prescribed statements
LR6: Term for which property is leased
LR7: Premium
LR8: Prohibitions/restrictions on disposal of
What prescribed clauses set by HMLR must lease
appear at the beginning of registrable leases?
LR9: Rights of acquisition
LR10: Restrictive covenants given by LL to other
land
LR11: Easements
LR12: Estate rent charge burdening property
LR13: Application for standard form of
restriction
LR14: Declaration of trust where there's +1
person comprising T
HMLR relies on this when registering a lease and
What is the purpose of the prescribed clauses? when making entries in registers in respect of
rights created/reserved
What will HMLR do if the lease does not contain Rejects application for registration if drawn up
all the prescribed clauses? incorrectly or incomplete
What is the purpose of the prescribed clauses Ensures their rights are properly noted in the
for LL and T? title register if completed properly
2 of 62 01/09/2025, 10:06
,SQE FLK2: Property Practice (Leasehold Transactions) for SQE2 about:srcdoc
1. Leases granted out of registered land
and are compulsorily registrable
What registrable leases must contain prescribed
2. Leases required to be completed by
clauses dated on/after 19 June 2006?
registration following a triggering event
for first reg of superior title
Date of the grant of the lease
What is the commencement date for a lease? Doesn’t have to be the same date that the term
commences
What are ancillary rights? Rights granted to the tenant
Rights reserved for the benefit of the landlord
What are excepted and reserved rights? • right of access and parking
• rights of entry for repair purposes
Rent for T’s occupation but can also include
insurance rent or service charge
What is rent?
Annual rent is the basic rent - what you think of
when paying the rent.
Basic rent - what you think of as rent
What is annual rent? Exclusive of repairing, insurance rent, service
charge etc.
March 25
June 24
What are the rent quarters for commercial rent?
September 29
December 25
• Quiet enjoyment
• Insurance
What are the landlord’s covenants? • Additional services (maintenance)
usually through T paying a service
charge
Conditions or qualifications attached to the
What are provisos? grant of the lease.
Usually for re-entry/forfeiture.
If expressly referred to in the main body to be
How can a schedule to a lease have effect?
incorporated
3 of 62 01/09/2025, 10:06
,SQE FLK2: Property Practice (Leasehold Transactions) for SQE2 about:srcdoc
Leases usually need to be executed by deed
What is an execution clause?
unless they don’t exceed three years
What is a commencement date that starts after
Reversionary lease
the lease is dated called?
If the term of a lease is “from and including” a
certain day of the year, when does the term The day before that day of the year
expire?
The day of that day of the year
If the lease is “from” a certain day of the year,
when does the term expire? e.g. - a term of 10 years from 1 April 2010, starts
on 2 April 2010 and ends on 1 April 2020
1. private investors
Who are commercial landlords? 2. institutional investors (pension funds)
Make money from rent and capital appreciation
What is a full repairing and insuring lease Lease requiring the tenant to be responsible for
(FRI)? the costs of repairing and insuring the premises
T’s assets and financial health help ensure lease
Why is an FRI preferable for commercial compliance
landlords? Allows LL to receive a clean rent with minimum
financial responsibilites
One granted on acceptable FRI terms, such that
it would be suitable as an investment for an
What is an institutionally acceptable lease? institutional investor who will be keen to get a
steady stream of income and a capital gain over
time
• Market rent
What are signs that a lease is acceptable?
• T has sufficient control
What is peppercorn rent? Token or nominal rent
What do rent provisions usually cover in a 1. amount of rent payable
commercial lease? 2. date to pay rent
3. if rent is paid in advance or in arrears
4. date from which rent is payable
5. rent payment method
6. calculation of first rent payment (if
apportionment applies)
7. payment of VAT on rent
4 of 62
01/09/2025, 10:06
SQE FLK2: Property Practice (Leasehold
Transactions) for SQE2
1. grant of a right to exclusive possession
for an agreed time
2. estate in land providing the holder with
What is a lease?
rights of possession and use
3. contractual relationship between
landlord and tenant
Standard for renting residential properties (6 or
What is an assured shorthold tenancy? 12 months)
Tenants pay market rent
Grant of a business tenancy of commercial
property
What is a commercial lease?
Typically shorter term (up to 15 years) granted
within the LL&T Act, unless contracted out
Typically for long periods, involving paying a low
What is a long-term residential lease? ground rent, often symbolic.
Common in flats or older houses
1. exclusive possession
2. fixed duration (fixed term or periodic
tenancy)
What are the essential characteristics of a lease?
3. formalities (deed?)
4. rent
5. reversion
How is a commercial lease usually structured? 1. Prescribed clauses
2. Commencement date and parties
3. Definitions and interpretation
4. Grant of the lease
5. Rent and rent review
6. Tenant’s covenants
7. Landlord’s covenants
1 of 62 01/09/2025, 10:06
,SQE FLK2: Property Practice (Leasehold Transactions) for SQE2 about:srcdoc
8. Provisos
9. Schedules
10. Execution clause
Appear at the beginning of the lease.
What are prescribed clauses? Compulsory if granted after 19 June 2006, where
LL’s title is registered and lease is substantively
registrable
When must a leasehold transaction include
If longer than 7 years
'Prescribed Clauses'?
LR1L: Date of lease
LR2: Title number
LR3: Parties
LR4: Property
LR5: Prescribed statements
LR6: Term for which property is leased
LR7: Premium
LR8: Prohibitions/restrictions on disposal of
What prescribed clauses set by HMLR must lease
appear at the beginning of registrable leases?
LR9: Rights of acquisition
LR10: Restrictive covenants given by LL to other
land
LR11: Easements
LR12: Estate rent charge burdening property
LR13: Application for standard form of
restriction
LR14: Declaration of trust where there's +1
person comprising T
HMLR relies on this when registering a lease and
What is the purpose of the prescribed clauses? when making entries in registers in respect of
rights created/reserved
What will HMLR do if the lease does not contain Rejects application for registration if drawn up
all the prescribed clauses? incorrectly or incomplete
What is the purpose of the prescribed clauses Ensures their rights are properly noted in the
for LL and T? title register if completed properly
2 of 62 01/09/2025, 10:06
,SQE FLK2: Property Practice (Leasehold Transactions) for SQE2 about:srcdoc
1. Leases granted out of registered land
and are compulsorily registrable
What registrable leases must contain prescribed
2. Leases required to be completed by
clauses dated on/after 19 June 2006?
registration following a triggering event
for first reg of superior title
Date of the grant of the lease
What is the commencement date for a lease? Doesn’t have to be the same date that the term
commences
What are ancillary rights? Rights granted to the tenant
Rights reserved for the benefit of the landlord
What are excepted and reserved rights? • right of access and parking
• rights of entry for repair purposes
Rent for T’s occupation but can also include
insurance rent or service charge
What is rent?
Annual rent is the basic rent - what you think of
when paying the rent.
Basic rent - what you think of as rent
What is annual rent? Exclusive of repairing, insurance rent, service
charge etc.
March 25
June 24
What are the rent quarters for commercial rent?
September 29
December 25
• Quiet enjoyment
• Insurance
What are the landlord’s covenants? • Additional services (maintenance)
usually through T paying a service
charge
Conditions or qualifications attached to the
What are provisos? grant of the lease.
Usually for re-entry/forfeiture.
If expressly referred to in the main body to be
How can a schedule to a lease have effect?
incorporated
3 of 62 01/09/2025, 10:06
,SQE FLK2: Property Practice (Leasehold Transactions) for SQE2 about:srcdoc
Leases usually need to be executed by deed
What is an execution clause?
unless they don’t exceed three years
What is a commencement date that starts after
Reversionary lease
the lease is dated called?
If the term of a lease is “from and including” a
certain day of the year, when does the term The day before that day of the year
expire?
The day of that day of the year
If the lease is “from” a certain day of the year,
when does the term expire? e.g. - a term of 10 years from 1 April 2010, starts
on 2 April 2010 and ends on 1 April 2020
1. private investors
Who are commercial landlords? 2. institutional investors (pension funds)
Make money from rent and capital appreciation
What is a full repairing and insuring lease Lease requiring the tenant to be responsible for
(FRI)? the costs of repairing and insuring the premises
T’s assets and financial health help ensure lease
Why is an FRI preferable for commercial compliance
landlords? Allows LL to receive a clean rent with minimum
financial responsibilites
One granted on acceptable FRI terms, such that
it would be suitable as an investment for an
What is an institutionally acceptable lease? institutional investor who will be keen to get a
steady stream of income and a capital gain over
time
• Market rent
What are signs that a lease is acceptable?
• T has sufficient control
What is peppercorn rent? Token or nominal rent
What do rent provisions usually cover in a 1. amount of rent payable
commercial lease? 2. date to pay rent
3. if rent is paid in advance or in arrears
4. date from which rent is payable
5. rent payment method
6. calculation of first rent payment (if
apportionment applies)
7. payment of VAT on rent
4 of 62
01/09/2025, 10:06
