Allowable premiums on long leases: HA 1988 s. 115
HA 1988 s. 115 amends Rent Act 1977 s. 127 on allowable premiums for long tenancies where landlords cannot terminate the grant within twenty years.
With respect to — any premium received or required to be paid after the commencement of this Act, or any loan required to be made after that commencement, section 127 of the Rent Act 1977 (allowable premiums in relation to certain long tenancies) shall have effect subject to the amendments in subsections (2) and (3) below. For subsections (2) and (3) there shall be substituted the following subsections— The conditions mentioned in subsection (1)(a) above are— that the landlord has no power to determine the tenancy at any time within twenty years beginning on the date when it was granted; and that the terms of the tenancy do not inhibit both the assignment and the underletting of the whole of the premises comprised in the tenancy; but for the purpose of paragraph (b) above there shall be disregarded any term of the tenancy which inhibits assignment and underletting only during a period which is or falls within the final seven years of the term for which the tenancy was granted. The reference in subsection (2) above to a power of the landlord to determine a tenancy does not include a reference to a power of re-entry or forfeiture for breach of any term or condition of the tenancy. Subsections (3C) and (3D) shall be omitted and in subsection (5) for “(2)(c)” there shall be substituted “(2)(b)”. Expressions used in subsection (1) above have the same meaning as in Part IX of the Rent Act 1977.
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
This provision amends section 127 of the Rent Act 1977 regarding upfront premiums and mandatory loan requirements on long tenancies. It establishes when payments required upon the grant, assignment, or renewal of a long lease are legally permissible.
Under these rules, a premium or loan requirement is permitted if the landlord holds no power to terminate the tenancy at any time within twenty years from the date it was granted. Forfeiture or re-entry powers exercised solely due to a breach of lease terms or conditions are excluded from being treated as a landlord's power to terminate.
In addition, the lease agreement must not restrict both assignment and underletting of the entire premises. Any term inhibiting assignment and subletting only during the final seven years of the lease term is ignored when applying this restriction.
When it applies
- A landlord charging an upfront fee or premium on the grant of a long lease that cannot be determined by the landlord within twenty years.
- A tenant questioning whether a required loan or premium attached to a long tenancy grant complies with statutory limits.
- A dispute over whether a lease restriction on assigning or underletting during the final seven years invalidates an allowable premium.
What this section does not say
- Repairing obligations under short residential leases, which are governed by section 116.
- Legal assistance provisions for tenants in landlord acquisitions, which fall under section 107.
- Jurisdiction details for county court landlord and tenant disputes, handled under section 113.
Related sections
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This page reproduces the text of HA 1988 s. 115 in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in England and Wales.