Terms of a lease agreement
Complex written agreements contain information on a lease and leaseholder rights, with the regulated procedure to change the terms of a lease.
Information in a lease
The lease is a written agreement that establishes the relationship of freeholder and leaseholder, and sets out the contractual terms that are binding upon each person named on the lease. Leases are often long, complex documents.
There is no 'standard' lease, although all leases contain certain information:
names of the parties to the lease (the freeholder and leaseholder)
address of the property concerned
length of the lease (the term)
rent (ground rent)
leaseholder's obligations (for example for service charges and repairs)
freeholder's obligations (for example to insure the property or repair the common parts)
A typical lease is made up of a main contract and a set of schedules at the end of the document that deal with specific issues such as service charges. It may also have helpful subtitles or margin titles.
Terms of a lease
As well as the express terms of the lease, certain terms can be implied into the agreement.
An express term is a term actually agreed by the parties and contained in the lease. Any ambiguity in one of these terms would generally be interpreted in favour of the leaseholder.
Sometimes the lease does not give full details of what has been agreed. This can be due to omissions or ambiguity in the lease but also where the law contains provisions that are implied into leases. Statute can impose terms on the parties. Such terms operate even if there is an express term to the contrary in the lease.
For example, the right to a court order or to extend the lease applies no matter what is said about giving up possession in the lease.
Ambiguity and omissions generally arise in one of two circumstances, where either:
only the most important parts of the agreement are set out, leaving the remaining details to be understood
there are certain situations that are not provided for in the agreement
In these cases, it may be possible to find that the freeholder and leaseholder agreed something additional, implicitly, at the time the lease was signed. The question is then whether a court can imply a term to remedy the deficiency or cover the unexpected situation.
Whether or not a term can be implied depends upon the intention of the parties at the time of the agreement, taking into consideration the words of the agreement and the surrounding circumstances.
A court can imply a term in either of the following circumstances:
if it is necessary to give business efficacy to the agreement – the court will add a term on the basis that without it the contract will not work
where the term to be implied represents the obvious, but unexpressed, intention of the parties – the court will not imply such a term unless it is satisfied that both parties would, as reasonable people, have agreed to it, had it been suggested to them at the time of the agreement
The Supreme Court held that were a long lease contained an absolute covenant prohibiting leaseholders from carrying out alterations to the structural parts and provided for the landlord’s enforcement of this covenant at another leaseholder’s request, there was an implied term that the landlord would not be able to prevent this covenant from having effect by permitting one leaseholder to carry out structural works before another leaseholder objected.
Payments to the landlord
Leaseholders may be required to make three different kinds of regular payment to their landlord. These are service charges, ground rent, and administration charges.
Service charges are paid for specific services provided by the freeholder or their agents.
Typical services include maintenance, exterior repairs, insurance, cleaning of common parts, caretaking, and porterage. They are normally payable annually.
Ground rent is a fee, separate from any service charge or administration charge, payable by the leaseholder as a condition of the lease.
The lease specifies how much the ground rent is, when it is due and who it must be paid to.
A leaseholder does not have to pay the ground rent unless they have been given notice of payment in the prescribed form by the freeholder.
The notice must be in the prescribed form and specify the amount of payment and the date on which ground rent is due.
The date on which the ground rent is due must be either:
not less than 30 days or more than 60 days from the date the notice was given
no earlier than the date set out in the lease for payment of the ground rent
The ground rent can be increased if the:
lease contains a term that allows it
leaseholder agrees to an increase
property is sold
An administration charge is an amount payable by the leaseholder, directly or indirectly, in respect of:
an approval under the lease, for example to sublet or carry out works
the provision of information or documents
their failure to make a due payment
their breach of a lease covenant
An administration charge must be reasonable in order for the landlord to recover the charge, and a demand for payment must be accompanied by a summary of the leaseholder’s rights and obligations in respect of administration charges. If the summary is not included, the charge is not regarded as being payable unless, and until, the demand is made with the summary.
For proceedings that began on or after 6 April 2017, where the lease specifies that the costs of legal proceedings incurred by the landlord are to be paid as an administrative charge by the leaseholder, the leaseholder can apply to the specific court or tribunal to exclude some or all of such costs from the amount demanded.
Varying the terms of a lease
The terms of a lease may be varied by a deed of variation, which is an agreement subsequent to the lease by which the freeholder and leaseholder agree to vary terms in the lease. These may include: the extent of the property, the duration of the lease, or service charges. The lease must be read together with variations.
Most leases are registered at the Land Registry, where any variation should also be registered. To establish the full position, it is necessary to check the registered title and obtain copies of any variations of the lease as well as the lease itself.
Applying for a deed of variation
Part 4 of the Landlord and Tenant Act 1987 enables a leaseholder or a freeholder of a flat held under a long lease to apply to the First-tier Tribunal (Property Chamber) for a variation of the terms of the lease if it is defective in respect of certain terms.
The Act permits holders of long leases to apply for a variation. It defines a long lease as a:
lease or a fixed term exceeding 21 years, whether or not it can be terminated before the end of the fixed term by notice by the leaseholder or forfeiture
lease for a term fixed by law under a grant with a covenant or obligation for perpetual renewal
lease granted as a result of the right to buy or right to mortgage provisions in Part 5 of the Housing Act 1985
Where a single lease applies to three or more flats in the same building, or where the lease comes under the business tenancy regime of Part 2 of the Landlord and Tenant Act 1954, there is no right to apply for a variation.
An application can be made where the lease fails to make satisfactory provision with respect to one or more of the following:
repair or maintenance of the flat, or the building containing the flat
insurance of the building containing the flat, for example where the freeholder is not obliged to insure under the lease or where the insured risks specified in the lease are inadequate
repair or maintenance of any installations reasonably necessary to ensure that the occupiers enjoy a reasonable standard of occupation
recovery of expenditure incurred by one party to the lease for the benefit of the other, for example where the freeholder cannot recover the full costs under the lease
calculation of the service charge
It is a question of fact in each case for the Tribunal to decide whether the lease fails to make satisfactory provisions. While each case is decided on its own merit, the ‘failure to make satisfactory provisions’ usually goes beyond imposing unequal burdens on different leaseholders, generating expenditure for the freeholder that cannot be recovered from leaseholders or causing inconvenience.
In one case, it was held that in the absence of any evidence of the need for major repairs or structural works beyond the means of the freehold company, the fact that one leaseholder was not required to contribute towards the cost of repair or renewal of the structure of the building and employing staff or agents did not make their lease unsatisfactory.
The Tribunal can vary the lease as it sees fit and not necessarily in line with the application. The Tribunal should not make an order for a variation if the effect would be to substantially prejudice any person – whether they are mentioned in the application or not – and that person cannot adequately be compensated for the loss. The Tribunal has the power to award compensation in appropriate cases.
The order varying the lease is binding on the current freeholder, and on past and future freeholders, even if they were not involved in, or notified of, the proceedings. A person not notified of the proceedings may have a right to apply to the Tribunal to modify or cancel the change, or to obtain damages from any person who should have notified them.
The Act also gives leaseholders of houses the ability to apply to the Tribunal to vary the terms of their leases in relation to insurance only.
Where a lease is varied so as to include additional land, this has the effect of a surrender of the original lease and the regrant of a new lease to include the original and additional land. The new lease will have equivalent terms and conditions, and a term equal to the unexpired term under the surrendered lease.
Other leases with the same freeholder
When an application to vary is made, the freeholder or leaseholder can apply to the Tribunal for an order for corresponding variations to other leases of flats with the same freeholder. The other flat or flats need not be in the same building, and their leases need not be drafted in identical terms, but for the application to succeed it must be in the interests of the applicant or the affected leaseholders to have all of the leases varied to the same effect.
There is also a provision for the variation of other leases held by other leaseholders of the same freeholder. These leases need not be of flats in the same building, nor be drafted in identical terms. An application can only be made if the object of the variation cannot be achieved unless all the leases are varied to the same effect. This provision could be used to make common improvements to a number of leases drafted in defective terms, or to bring into line a number of leases with inconsistent provisions.
There are limitations on such an application. A required number of all leaseholders must consent as follows:
two to eight flats – all but one leaseholder must consent
nine or more flats – 75 per cent of leaseholders must consent and the application should not be opposed by more than 10 per cent
Varying the lease as part of lease extension procedure
Under the Leasehold Reform, Housing and Urban Development Act 1993, where a leaseholder of a flat successfully applies to extend their lease, the new lease will generally be on the same terms as the previous one.
The legislation provides various exceptions which allow for the lease to be varied.
Whether or not a long leaseholder can sublet depends on the terms of the lease.
Where the lease allows subletting subject to the consent of the landlord, the landlord may make a reasonable administration charge for giving consent.
'Airbnb' and holiday lets
The Upper Tribunal has held that a leaseholder who let out her flat for one or two nights at a time to business travellers through the letting agency Airbnb, was in breach of a clause in her lease that required the premises to be used only as 'a private residence'. A traveller who was occupying the flat for a short period of time, such as through Airbnb, was unlikely to consider that they were staying in their private residence. A longer letting might not breach the condition.
Last updated: 13 March 2021
Liverpool CC v Irwin  2 All ER 39 HL.
See Yeung v Potel and Summers  EWCA Civ 481 for an example.
Duval v 11-13 Randolph Crescent Ltd  UKSC 18.
s.166 Commonhold and Leasehold Reform Act 2002; Landlord and Tenant (Notice of Rent) (England) Regulations 2004 SI 2004/3096 as amended by para 29 Sch.2 Transfer of Tribunal Functions Order 2013 SI 2013/1036; Cheerupmate2 Ltd v de Luca Calce  EWCA Civ 2230.
DCLG Guidance August 2011: Application for the apportionment of a ground rent - leasehold land in different ownership.
para 1 Sch.11 Commonhold and Leasehold Reform Act 2002; Proxima GR Properties Ltd v McGhee  UKUT 59 (LC).
paras 2 to 4 Sch.11 Commonhold and Leasehold Reform Act 2002.
para 5A Sch.11 Commonhold and Leasehold Reform Act 2002 as inserted by s.131 Housing and Planning Act 2017; Housing and Planning Act 2016 (Commencement No. 5, Transitional Provisions and Savings) Regulations 2017 SI 2017/281.
ss.35-37 Landlord and Tenant Act 1987.
s.59(3) Landlord and Tenant Act 1987.
s.35(6) Landlord and Tenant Act 1987.
s.35 Landlord and Tenant Act 1987, as amended by ss.162-163 Commonhold and Leasehold Reform Act 2002.
Camden LBC v Morath & Ors  UKUT 193 (LC); Triplerose Ltd v Stride  UKUT 99 (LC); Cleary v Lakeside Developments Ltd  UKUT 264 (LC).
Triplerose Ltd v Stride  UKUT 99 (LC).
s.38 Landlord and Tenant Act 1987, as amended by the Commonhold and Leasehold Reform Act 2002.
s.39 Landlord and Tenant Act 1987, as amended by the Commonhold and Leasehold Reform Act 2002.
s.40 Landlord and Tenant Act 1987, as amended by the Commonhold and Leasehold Reform Act 2002.
Tweedie v Souglides  EWCA Civ 1546.
s.36 Landlord and Tenant Act 1987.
s.37 Landlord and Tenant Act 1987.
s.57 Leasehold Reform, Housing and Urban Development Act 1993.
See, for example (1) Jones (2) Seymour v Roundlistic Ltd  EWCA Civ 2284.
Nemcova v Fairfield Rents Ltd UKUT 303 (LC).