Principles of Leases in Land Law

Info: 2501 words (10 pages) Essay
Published: 11th Jun 2019

Jurisdiction / Tag(s): UK Law

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“Under s1 (1) (b) LPA 1925 the term of years absolute is a legal estate in land and is also a propriety estate”[1]. A lease is an agreement between the landlord (lessor) and the tenant (lessee), where the tenant will enjoy all the rights over the property that the landlord (lessor) has given unless if there is any limitation expressed in the tenancy agreement.

The basic characteristics of a lease were given by the Lord Templeman in his classic decision in the case of Street v Mountford [1985] UKHL 4, where it established that a lease has three main features, they are as follows:

Exclusive possession, where the tenant has the control over the land or property who enters into the property, he/she has the ability to exclude any more including the land lord means the owner. There are several considerations need to taken into this account. Firstly if for some instant the land lord or freehold owner retains a key that may negate the exclusive possession as it explain in Aslan v Murphy (1990). However such like many aspect of law there is an infect some exception to this rule is that if the key is retained to for example it do repairs or for emergencies purposes may not negate exclusive possession.

The lease must be for an express period of time. The maximum duration of the lease must be fixed from the start of the term. Property let for unsettled time. For Example the duration of the War (Lace v Chandler 1944) will not Form a lease. Under s.146 LPA 1925 where it stated that leases for lives and leases until marriage are statutorily converted into a 90 years term determinable on the death or marriage of the original lease.

Generally a rent will be payable. Rent need not to be sufficient and could be in a form other than money .e.g. in kind. Rent must be given on a particular date. Lease would be implied where it was not expressly included. It was held to be one of the hall marks of a tenancy in Street n Mountford (1985). This has later been debate in Ashburn Anslalt v Arnold (1989) and also in Westminster C.C. v Clarke (1992). The most recently it decided on Bruton v London and Quadrant Housing Trust (1999), where it stated that rent is not necessary for the creation of a tenancy, however rent in practice will be payable “(Quote LPA 1925.S.205(XXIII)”[2].

License is a permission to enter land belonging to another without being a trespasser. Now the permission to enter that component remain till revolved with due notice and time for licence to vacate. The idea of this is that it cannot be transfer or granted or cannot be sold to someone else. A License cannot affect a third party purchased. License is personal not proprietary.

There are several types of Licenses. “Bare Licence which means there is permission given to enter with no consideration provided. There are two type of bare licence. They are Express grant (for example a friends come over for a cup of tea) and Implied grant (for example postman who came to drop post through your letter box).

Contractual License which granted in return for consideration (for example bought a cinema ticket) and also depends on terms of contract. License by Estoppel, where a person has acted to detriment in reliance on an assertion by the land owner that he will acquire an interest in the land”[3]

During the 1960’s and 1970’s, there was a major debate over whether an agreement over a piece of land was a lease or licence. As matter of facts it was not simply but had major practical consequences. These were:

A lease is a right in rem means a thing in itself and the main point about this is that there will be third parties involve and a lease will bind third parties. For example A (the landlord) who grants a lease on his property to B (the tenant) for one year at £ 100 per week. But after four months later, A (the landlord) who sells his property to C (the buyer of A’s property). Now C (the buyer of A’s property) who wants to increase the rent to £150 per week. B (the tenant) refuses to pay £150 showing the formal lease with A (the landlord) still has eight months to run.

A licence by contract is just an agreement between persons (in personum). It will not bind third parties and remedy for breach is damages. For example A(landlord) who does not have a car, therefore grants a licence to park B’s (Licensee) car in his garage for a fee of £30 per week and took ten weeks in advance. After three weeks later A (landlord) sells his house and the garage to C (Buyer/ new owner of property) who wants the garage for his own car. Therefore C (Buyer/ new owner of property) tells B (Licensee) to leave. B (Licensee) must do so because B is a licensee and has no lawful right over the new owner’s property.

There are some tenancy arrangements which will not be leases. Such as, Family Arrangements, the courts are hesitant to identify family arrangements as anything other than a licence. Facchini v Bryson (1952), “where an act of generosity, friendship or a family arrangement was part of the material circumstances to the creation of a ‘lease’, that ‘lease’ would not be created where there was no intent to create a lease” [4].

Exception to this is Ward v Wanke (1990) 22 HLR 496. 4., in this case a father gave his daughter and her boyfriend with their baby a tenancy in his holiday house by the sea, after awhile his daughter and the boyfriend separated, but the father continuous accepting rent from the boyfriend. The court held it was a lease.

Acts of kindness: An act of generosity or kindness will almost inevitably be a licence. In “Heslop v Burns [1974] 1 WLR 1241 Court of Appeal, where the owner of a cottage allowed MR and MRs Burns to live-in his cottage without rent. Later the owner, old man died and the executor of his will sought the property. The Burns remained in the cottage until after the death of the owner. They sought to establish that their occupation was under a tenancy. But the court held that as an act of kindness, it was clearly a licence”[5].

Lodgers are the persons who ‘lodge’ in another person’s house and they are always licensees. In ”AG Securities v Vaughan [1990] case, where AG Securities, who had along lease over a building, licensed each rooms to separate individuals at different times and under independent agreements. Could the licensees claim that they collectively held a lease over the building? The answer was no. Although parties cannot contract out of landlord and tenant legislation (the Rent Act 1977 at the time), a shifting population could not be joint tenants of a lease and therefore they were each licensees”[6].

Sometimes the boundary between a lease and licence is exceedingly narrow. Much will depend on the surrounding circumstances. In “Antoniades v Villers [1988] 3 WLR 139 case, where four tenants paying a collective rent but the landlord reserving the right to nominate a new tenant if one left. Therefore it was held Licence”[7].

When the nature of the agreement is not clear, the courts will look at the facts of the case, the surrounding circumstances, the intention of the parties and the approached established since “Street v Mountford [1985] UKHL 4”[8].

A landmark case and its aftermath Street v Mountford [1985] UKHL 4. This was agreement between a landlord and tenant which expressly attempted to get around the Rent Act 1977 by calling itself ‘Licence agreement’. The term licence was written many times on the agreement which expressly rules out the normal right of a lessee such as fair rent, security of tenure etc. The tenant agreed. Despite her agreement the tenant complained to the rent officer who decided the rent was unfair and considerably reduced the rent. The landlord pointed out two points. Firstly the tenant appeared to have ‘opted out’ not to have a lease and secondly the agreement itself was called an ‘a licence agreement’.

The case reached the House of Lords where law lord, the Lord Templeman stated that “tenancy agreements will be judged objectively. The courts were concerned about landlords trying to get around the Rent Acts by creating ‘Sham Licence Agreements’. Despite the wording of the agreement, any agreement would be a lease provided it gave the tenant certain rights and had two other elements (certainty of duration and rent). The principle right of a tenant was ‘exclusive possession’. The other two aspects of lease were certainty of duration and rent”[9].

According to the Lord Templeman judgement, if these were present, then the agreement is a lease, regardless of any wording in the agreement. ‘A cat does not become a dog because two people agreed to call it a dog’.

However, the same facts were brought back again by the Law Lords in Bruton v Quadrant (1999). London & Quadrant Housing Trust had given accommodation to a group of homeless people, which was for a short term, because the property was due to be knocked down by the Southwark Borough Council. The council made it clear to the housing trust that the agreement was a licence, which they accepted. When it came to rehousing the tenants, they all went, except Mr Bruton, who used Street v Mountford [1985] UKHL 4 for exclusive possession as his defence to stay. The judgement by Lord Hoffman was that since Mr Bruton had exclusive possession, he had a ‘non proprietary lease’, which meant his agreement Quadrant Housing Trust was a lease, but it would not bind a third party such as Southwark Borough Council.

There have been various criticisms of this decision by academics, such as Pearce and Stevens called it ‘bizarre’. Kevin Gray suggested that the decision ‘muddied the waters over the already confused boundaries of lease-licence’. However Martin Dixon, the leading critic has said: Lord Hoffman gave no sources for his concept of ‘non proprietary lease’, and simply made this up. He also criticised that it was far from clear in Lord Hoffman’s describing the differences between ‘non proprietary lease’ and ‘licence’, saying the difference between a licence and a normal lease is it cannot bind a third party.

Since the case of Bruton v Quadrant (1999) the Court of Appeal has followed its reasoning for the case of Kay v Lambeth (2006) and Islington v Green (2005) to make its decisions. However Martin Dixon pointed out ‘the Court of Appeal was bound to accept the Lord Hoffman ruling in the case of Bruton v Quadrant (1999) anyway, and the cases of Kay v Lambeth (2006) and Islington v Green (2005) decisions appear not to distinguish between Lord Hoffman’s concept of ‘non proprietary lease’ and ‘licence’ ’. Martin Dixon asked ‘in these circumstances we are entitled to ask why there were leases at all and not contractual licences’.

Even though there are lots of positive and negative points on both lease and licences, in the case of Street v Mountford [1985] UKHL 4, it has shown us that the judges should look at the individual facts of the case, rather than basing decisions on a previous ruling of a similar case Bruton v Quadrant (1999).