RENT
Outgoings - Rent, Service Charges and Insurance
One factor that neither the landlord
nor the tenant is likely to ignore, is negotiating the rent, the vast majority of leases will contain an express covenant to pay rent, in the absence of an express covenant the common law will almost certainly
imply such a covenant it
is usually expressed as a fixed yearly amount, payable monthly or quarterly either in advance or in arrears during
the period of the tenancy. Rent may also be variable, for example, where the rent payable takes account of profits
generated by your business. Landlords often require the rent to be paid by standing order and you should keep receipts
of payment of rent as proof of payment. Failure to pay can lead to forfeiture of the lease.
If you rent directly from a landlord, he is not allowed by law to demand a special premium payment in addition
to normal rent, nor may he impose an excessive charge for furniture, fixtures or fittings, it is also illegal for
a landlord, agent or outgoing tenant to demand key money.
If you have been asked to pay any such extra sum, you can sue for its return in the county court or, if it was
paid to the landlord, you can deduct it from your rent payments. Always view the premises before agreeing to rent
them, make sure that everything is in working order before you move in - if not, ask the landlord to have repairs
made.
The exact time when your rent must be paid is the subject of a strange rule which takes us a long way back into the past. if your agreement says that you must pay rent on a certain day, your rent is due in the morning of that day but cannot be demanded until just before sunset. Further it is not in arrears until after midnight, and so the bailiffs cannot be put in until the beginning of the next day.
It has been suggested that it is because in days of old rent was very often made payable on religious feast-days,
and the church felt that the unpleasant consequences that would follow on rent being in arrears would disgrace
the sacred of the feast day. The importance of the time when rent can be demanded is not so great today as it used
to be. At one time if rent was not paid, the landlord, before he could forfeit the leases (that is claim back the
land), had to go onto the land which was let and make a demand for the money, however, a lease for any length of
time almost always provides that the landlord may forfeit the lease and enter the premises if the rent is not paid
within twenty-one days after the date, whether it has been demanded or not.
The time when the rent is in arrears is still important, because the bailiffs cannot come in before that time. Another quaint old rule dating from this time was that a demand had to be made before it had become dark otherwise the tenant would not be able to see to count the money. If your rent is due on a bank holiday the landlord cannot demand it until the next day, and the same rule applies to Christmas Day
Where, however, your tenancy is to last for some years and where possibly you have paid a lump sum, known as a premium, at the beginning of your tenancy for your lease, this clause may be a very serious thing for you. On the face of it this means that if you are three weeks late with your rent or break any of the terms of your agreement the landlord may turn you out, and you will lose all the rest of your lease without any compensation.
This, however, is one of the strange cases in which a landlord is not allowed to take advantage of what appear
to be his clear rights, for, as it is put, you may be granted "relief" against the forfeiture of your
tenancy. Your exact rights will depend on whether the clause you have broken is the clause requiring you to pay
your rent or some other of the clauses in the agreement. Where you have failed to pay the rent within the time,
the landlord, without giving you any notice, may either bring an action against you claiming possession of your
house or, without bringing any action, may enter into possession of your house if he can do so peaceably. He cannot
forcibly turn you out without first bringing an action in the court, for to do so is a crime.
Tenants who pay rent weekly must have a rent book, containing the name and address of the landlord and his agent, the amount of rent and rates due and details of local RENT ALLOWANCE and RATES rebates schemes. If a landlord refuses to provide a rent book, complain at the local council, who can prosecute him.Tenants who pay at longer intervals are not entitled to a rent book, but should ask for receipts if they are paying rent in cash.
If there is no rental agreement, these receipts or the bank's record of a tenant's cheques to the landlord may be the only available proof that he is the legal tenant. Rent should be paid promptly - failure to pay within 21 days is one of the principal grounds on which a landlord can sue for eviction. However, if a tenant pays all arrears before the case comes to court, the landlord is unlikely to get a possession order but will probably be awarded costs.
The most significant issues after the commencement of a tenancy, will generally be the rent review which may take place at 3, 5, or 7 year intervals, usually on the anniversaries of the commencement date of the lease.
Usually it is to decide how much a tenant would be prepared to pay at that date for such premises were on the open market. The figure will be arrived at either informally, by formal negotiated rent review procedures or, failing agreement, by appointment of an independent valuer.
A wide variety of factors may be taken into account including the duration of the lease, the type and condition
of the premises, goodwill, the state of the premises and the state of the market. In addition, the terms of the
agreement will need to be considered
| 1. | The tenant's obligations; |
| 2. | Restrictions on disposal of the lease; |
| 3. | Restriction on use; |
| 4. | Improvements to the premises; |
| 5. | Any break clause in the landlord's favour; |
| 6. | If the landlord has waived the VAT in respect of the premises. |
Time limits will rarely be rigidly enforced for negotiated reviews. However, with more formal rent review proceedings
(e.g. where the landlord makes a proposal in the form of a notice with the tenant serving a counter notice) the
lease may require closer adherence to deadlines.
Where a third party is involved in the review (e.g. a surveyor agreed between parties or appointed by the Royal
Institute of Chartered Surveyors), it should be made clear whether the third party is to act as an arbitrator (formally
imposing a rent) or as an expert (in which case he acts in an advisory capacity).
SERVICE CHARGE
The landlord will recover the expenses
he incurs in maintaining the building by requiring his tenants to pay a service charge to cover their portion of
the overall expenditure. This charge will normally cover the landlord's costs of repair and maintenance of the
premises but probably excludes structural faults. The landlord should provide you with certified evidence of the
expenditure.
Where you occupy part of the premises, ensure that your share of the overall expenditure is based on a fair formula,
e.g. a proportion of floor space. Where a landlord is to carry out repairs, he ought to be required to put the
work out to tender and to select the best of, say, three quotes. Service charges are usually demanded by the landlord
in advance based on an estimate of requirements. Tenants may also be required to contribute to fund for major items
of occasional expenditure.
You should seek if possible to have the service charge excluded.
INSURANCE
When your tenancy covers part of a building, it is common practice for the landlord to arrange insurance to cover all leased premises and the common parts of the building, so that all are covered under one policy.However, you will be required to reimburse the landlord for the part of the cost of insurance attributable to your premises. You should satisfy yourself that the cover is appropriate and sufficient (ideally covering full reinstatement value) and that the apportionment between the tenants is acceptable.You should ask the landlord to have the insurance in joint names giving you joint control over the insurance proceeds or, failing that, your name and interest should be noted on the policy. In either case you will want to be advised by the insurer if there is a risk of insurance lapsing.
You should consider the position if damage occurs to the premises. Normally the lease will continue and the loss
will fall on the party with the obligation to repair. Rent will continue to be payable unless the lease specifically
excludes payment of rent if damage is caused by an insured risk - accordingly risks covered by insurance should
be carefully scrutinised.
RENT AFTER THE EXPIRY OF THE NOTICE TO QUIT
If the tenant offers rent on the day on which the notice to quit expires, the Landlord is safe to accept it if it is in respect of a previous period of time. But if his rent is payable in advance, then what he offers you is in respect of a period subsequent to the expiry of notice and your acceptance will cancel that notice. You should be careful to remember whether his rent is payable in advance or not.
Every lease for any length of time nearly always contains a clause somewhat on the following lines . " Provided always and it is expressly agreed that if the rent hereby reserved or any part thereof shall be in arrears for twenty-one days (whether formally demanded or not), or if there shall be a breach of any of the lessee's covenants herein contained, then it shall be lawful for the landlord to re-enter upon the premises and thereupon the tenancy shall absolutely come to an end."
The lease may give your landlord a similar right if you should become bankrupt or if creditors should seize your goods under a judgment. Where you are a weekly, monthly, or quarterly tenant this clause will not give you any great concern and indeed you will probably not find it in your agreement.
