UK Commercial Property Leases

This assignment examines current trends in UK commercial property leases. It analyzes lease events, legal frameworks surrounding leases (like the Street v Mountford case), and explores the distinction between leases and licenses. The analysis incorporates data from reports on UK commercial property lease trends and delves into sustainable facilities management practices within the context of green leasing.

PRINCIPLE OF
PROPERTY LAW

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................4
REFERENCES ...............................................................................................................................5

INTRODUCTION
Property law is setting of protection of valuable assets. It is important for the owner to
comply with property legislation as it aims at protecting belongings. To enable protection against
leasing and licensing of property, the UK government has regulated regulation which is Law of
Property Act 1925. The essay will outline argument on leasing of property from 1970 to 2017. It
will assist in developing critical understanding over the leasing and licensing concept of property
law.
MAIN BODY
Property law is a prominent term which helps the individuals in protecting their assets
against unethical practices. It is important for the owners to make sure that their property and all
value assets are under contractual agreement. It is the term which helps in maintaining safety of
own safety against any crime. However, with property comes rental and licensing where lease is
the arrangement where person pays certain amount to owner of property for specific period. This
amount is of less economic value in comparison to the real value of property. This procedure
helps temporary residents in renting place for specific period. Value and time are decided by
owner keeping in mind the interest of tenant1. Apparently, licensing is a legal agreement which
reflects owner’s right on his or her property. It is an agreement of property which protects the
interest of tangible asset where the person has all rights of that property. License of geographical
area with person provides individual right to anything with the property which can be renting,
leasing, commercialising etc.
Leasing is an agreement for which there are different codes set by government and
owners which are prepared by stakeholders at the time of relationship in between landlord and
tenant. Like, in 1970's, UK faced serious recessions due to which economy declined rapidly but
it has been argued that renting property has assisted in recovery rents in comparison to normal
annuity in advance revision period2. In accordance with this, owners received higher rents where
1 Sidoli del Ceno, J. (2012). Selective licensing and resident satisfaction in social
housing: a UK case study. International Journal of Law in the Built Environment. 4(2).
126-139.
2 UK commercial property lease trends 2017. (2017). [Online] Available through:
<http://www.glovers.co.uk/news-articles613.html>.
1

tenants paid higher annuity in advance for around 5 to 7 years continuously. Further, with
recovery, institutional owners planned to save themselves from future recession and therefore,
the individuals have focused on revising renting into leasing policy for at least five years and in
1990s, it became standard clause where the owners were allowed to lease their property for 20 to
25 years. This long term leasing clause assisted in improvising the long term bond between
landlord and tenant where resident was responsible for fixing repairs and insurance under
resident clause. In addition, it has been stated that in the 1990s, almost 90 percent of commercial
material possession was valued under IPS which is Investment Property Data Bank.
The most usual way to acquire place is renting in UK. It helps in earning and saving
money in their own values. Like, there are people who will reside at place for short period which
is renting whereas when the person feels for the security of place and living than the individuals
seeks for leasing which is the best option these days for acquiring place with legal terms.
Nevertheless, license is term which is not related to tenancy because these individuals share the
least legal interest in property because according to tenancy, person only wants permission from
owner to reside at for long period3. However, licensing is a complex term as it is related to
ownership rights and it is important for the landlords to draft it carefully. Like in case if any
license is not drafted correctly, then as per the UK government, it lasts maximum for six months
and after that, owners do not share any right on his or her own property. However, in such
conditions, tenant share the right to protect themselves and claim under Landlord and Tenant Act
1954. This act aims at protecting the interest of tenants where these individuals enable security of
tenure and are allowed to reside in property until the contract of tenancy lasts4.
The leading case of leasing and licensing is the best example which assists in
distinguishing between both the terms and helps in attaining actual data and rights of leasing.
The case is of Street v Mountford (1985) where key considerations were leasing which provides
tenant exclusive right of possession over owners' property and rent is payable for lease to
owners. In accordance with the case, it has been argued that leasing is related to long term
3 Collins, D., & Junghans, A. (2015). Sustainable facilities management and green
leasing: The company strategic approach. Procedia Economics and Finance. 21. 128-
136.
4 LEASE OR LICENCE: WHAT IS THE DIFFERENCE?. (2017). [Online] Available
through: <https://levisolicitors.co.uk/news/lease-licence-difference/>.
2

residency of tenants. The decision was given to House of Lords where it has been determined
that license for leasing is person agreement between two parties that is owners and tenant. This
leasing license does not enable any right to tenant for acquiring property permanently. Also, it
does not relate to transfer of property instead, it is a lawful process which helps in protecting the
interest of both parties against trespass. The case of Street v Mountford was typically focused on
exclusive possession where the case reflects residential accommodation. The case is an argument
where tenant has no right to restrict entry of owners in any case the person cannot call property
of his own because leasing grant is still termed as tenancy. With regard to these arguments, Lord
Templeton states that occupant may be a service resident. However, in this case, Street, who was
owner allowed Mountford to occupy 2 rooms in his property with exclusive possession. The final
declaration by Mountford was for agreement which was constituted as lease. In this case, the
conflicting question was “ Is the agreement was a lease?, and decision came out to be ‘yes’
where arguments were like, lease is a type of exclusive possession or rent5. The House of Lords
further entitle agreements of tenant and owners where it was discovered that lease was granted
but pretended as license. Thus, in accordance with the decision, agreement between Street and
Mountford was a lease and therefore, Mountford was provided with protection under Landlord
and Tenant Act 1954. This case has set a base for many other cases and conflicts. It assisted
many people in fight for their ownership ad leasing rights which were being exploited either by
tenant and owners.
Apparently, there are legal principles of leasing to protect the relationship of landlord and
tenant. In this the landlords aims at enabling gas safety, fire safety, energy performance
certificates, seeks for deposits, administration fees, electrical system, fire alarm system and
precautions etc. Nevertheless, in 2017, it has been analysed that leasing is more attractive and
comfortable to people in comparison to buying property because as people it allows long term
resident with one agreement which is time saving invest process. Therefore, to buy or rent is a
conflicting process because investing in properties is itself a good decision because there are
many people who struggles to pay rent in regular life. Further, there are many people who are out
of cash very month because of paying rent but on the other hand investment in property is also
huge investment where people needs to t extract money from sources which is also risky process.
5 Street v Mountford [1985]. (2018). [Online] Available through:
<https://webstroke.co.uk/law/cases/street-v-mountford-1985>.
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With regards to these arguments, it can be argued that easing is the best option which person can
opt for because in this the person is not liable to pay money every month and also it does not
require much money which is essential for buying own property. It is an exclusive possession
where the person can enjoy residing for longer period without struggling for rent. It is the most
convenient process which came after the recession of 1970 where the owners and tenants
discovered their own part of benefits. Leasing is the residency where the investment of person
remains safe with owners for specific period and also owners property remains safe with
temporary resident. In accordance to 2017, property princes in UK are rising and have increased
and now it is 5.4% which is very high in comparison to past many years. Further, the average
property price in December 2016 was £472,718 and till September 2017, it has reached to
£483,568. Despite of growing market in UK, it has been discovered that buying and renting both
are narrow concept where buying helps people in saving money for long term. The big difference
I 1970 to 2017 in leasing and licensing is enforcement of government regulations to protect
rights of landlords and tenants. As per __ there are 31 percents of people own their home in UK,
otherwise every other person prefer leasing because according to people it is low maintenance
and afford residence facility available. In contrary, it has been argued that leasing can be disguise
because there are various concerns were people have considered licensing as licenses for
ownership. Leasing is just a legal permission where owner allow tenant to reside for long period
with one given amount. It is an effective concept because it reduces burden on tenants of paying
rent regularly. Despite, from UK lease events reviews, took sample of more than 80000 leases,
where new lease length is of average 7.1 years in year 20176. This denotes a little 0.1 year
decline in ordinary lease length which was in 2016. Thus, as per the study it can be stated that
licensing and leasing are the terms which are misinterpreted by owner's and tenants. Like there
are people who misinterpret leasing as licensing and claim for their rights under Landlord and
tenant Act or in Property law act. The complexity of situation in terms demands formal signing
of agreement where all the terms and conditions for protecting rights of every person. Apart from
this, it has been discovered that licensing is the term which is only related to ownership and it is
important for the owner to have license when leasing property on rent. Hence, Licensing
6 UK LEASE EVENTS REVIEW. (2017). [Online] Available through:
<https://www.realestate.bnpparibas.co.uk/upload/docs/application/pdf/2017-11/
msci_bnppre_lease_events_2017.pdf?id=p_1695101>.
4

agreement aims at securing rights of owners and leasing agreement protect tenant as it is
exclusive possession. 31% of renter chose to rejuvenate their rental at the end of decided term
and there are only 17% relet to new tenants. Rental and lease value various according to owners
choice and will7.
CONCLUSION
The report summarized about property law which plays an important law in managing
licensing and leasing agreement of ownership and residence. It outlined different argument on
leasing which reflects its pros and cons for the people who can not afford to buying property.
Further, the essay analysed case of Street v Mountford (1985) where key considerations
exclusive right of possession and rent is payable for lease to owners. Thus, it concluded with
outlining statistic which demonstrate leasing and ownership occupancy in UK.
7 Fereidouni, H. G., Al-mulali, U., & Mohammed, M. A. H. B. (2013). The effects of
transaction costs, landlord and tenant practices and property rights on foreign real estate
investment. Margin: The Journal of Applied Economic Research. 7(3). 351-370.
5

REFERENCES
Books and journals
Sidoli del Ceno, J. (2012). Selective licensing and resident satisfaction in social housing: a UK
case study. International Journal of Law in the Built Environment. 4(2). 126-139.
Collins, D., & Junghans, A. (2015). Sustainable facilities management and green leasing: The
company strategic approach. Procedia Economics and Finance. 21. 128-136.
Fereidouni, H. G., Al-mulali, U., & Mohammed, M. A. H. B. (2013). The effects of transaction
costs, landlord and tenant practices and property rights on foreign real estate
investment. Margin: The Journal of Applied Economic Research. 7(3). 351-370.
Online
UK commercial property lease trends 2017. (2017). [Online] Available through:
<http://www.glovers.co.uk/news-articles613.html>.
UK LEASE EVENTS REVIEW. (2017). [Online] Available through:
<https://www.realestate.bnpparibas.co.uk/upload/docs/application/pdf/2017-11/
msci_bnppre_lease_events_2017.pdf?id=p_1695101>.
Street v Mountford [1985]. (2018). [Online] Available through:
<https://webstroke.co.uk/law/cases/street-v-mountford-1985>.
LEASE OR LICENCE: WHAT IS THE DIFFERENCE?. (2017). [Online] Available through:
<https://levisolicitors.co.uk/news/lease-licence-difference/>.
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