On 1 January 2008, the Property Law Act 2007 came into effect. It replaced the 1952 Act, as well as amending other legislation, and has been described as the largest single change to property law in the past 55 years.
In the area of leasing there are a number of new and amended rules. Some of these rules will apply only to leases which come into operation on or after 1 January 2008 – others will apply to all leases existing as at 1 January 2008, regardless of their terms.
Where a tenant asks a landlord for permission to assign or sublet premises, or to a change of the permitted use of the premises, the landlord cannot unreasonably withhold consent and must respond in writing within a reasonable time. If a landlord does withhold consent or imposes a condition on that consent, the landlord must give reasons for withholding or imposing the condition, if the tenant makes a written request for those reasons.
It is permissible however for a lease to absolutely prohibit assignments, subletting and changes of use. Doing so will give landlords greater protection of their position and investment in retaining control of who their tenants are and what the permitted business use is at their premises. Where a lease expressly does this, landlords will be free to consider such requests in their absolute discretion and not be bound by the obligations of reasonableness under the new Act.
Where a landlord is required to maintain building insurance and the tenant negligently causes damage to the premises, the landlord is now unable to recover the cost of the repairs from the tenant. This rule does not apply if the damage was intentional or was the result of an unlawful act.
Landlords used to have the right to levy distraint against their tenants – being the right of landlords to enter the premises and seize and sell the tenant's goods. The new Act abolishes the right to distrain for rent and other amounts payable under the lease, even if the leases provides for it. In practise, distraint had always been a difficult remedy for a landlord to implement properly.
Landlords wishing to terminate a lease due to a tenant's default now must follow a stricter set of rules, again regardless of the express terms of the lease. There are new notice requirements and the Act stipulates not only new timeframes that relate to the serving of notices but also as to the content of the notices.
All landlords will need to be aware that the new Act has introduced some significant changes in the area of leasing. Certain express terms in existing leases will no longer apply. If you would like any more information on the new Property Law Act and its impact on your lease, please contact us.