Where residential leases provide for a ground rent to be paid, it’s not uncommon for the ground rent to be subject to review. The lease will set out the mechanism for the review, including the date(s) on which the review can be undertaken.

It’s not uncommon for the revised rent to be determined by a surveyor (appointed by the landlord), and for the review to be undertaken ‘at any time’ after a certain number of years have passed.

But what happens if a landlord doesn’t act particularly quickly in undertaking the review?  Can a leaseholder give notice that time is now of the essence, and stipulate that the review must be completed by a specified date and time?

This was the question for the Upper Tribunal (Lands Chamber) in Proxima GR Properties Limited v Spencer [2017] UKUT 450 (LC).

 

Terms of the lease

In this case, the lease provided that the revised rent was to be determined by a surveyor, appointed by the landlord. The review was to be undertaken ‘at any time’ after certain years of the lease term expired.

The first rent review should have been on 1st December 2005.

No review was undertaken.

On 13th January 2010, the leaseholder wrote to the landlord’s agents, and pointed out that there had been a failure to complete the outstanding review.

The leaseholder gave notice that time was now of the essence, and required the review to be completed (including the leaseholder being informed of the result in writing) ‘no later than 4pm on 1st March 2010’.

The landlord didn’t do this.

In fact, it wasn’t until 3rd March 2016 that the landlord eventually appointed a surveyor to review the rent, with the new rent being finally determined on 29th September 2016.

 

Proceedings in the First Tier Tribunal

The FTT decided that the leaseholder’s January 2010 letter had made time of the essence in relation to the 2005 rent review.

Because the landlord failed to deal with the review in accordance with the time scale specified in the notice, the FTT decided that the landlord had become debarred from implementing the review after that time. This meant that the surveyor’s appointment and revised rent were invalid.

Appeal to the Upper Tribunal

Unsurprisingly, the landlord appealed. The landlord argued that the lease’s terms did not allow for time to be made of the essence.

The Upper Tribunal agreed with the landlord.  This was because the lease provided that the landlord could appoint a surveyor ‘at any time’, and it was not therefore open to the leaseholder to make time of the essence in relation to the rent review. The lease did not place a time limit on the landlord taking steps to appoint a surveyor to decide the new rent.

 

Commentary

This case underlines that interpreting a lease requires consideration of its actual terms, and their effect. There can be no substitute for reading, understanding and implementing the terms of the lease!