FLK2 · Property Practice

Leasehold — grant & assignment

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

PP.06 Leasehold — Grant & Assignment

Two transactions. Grant = landlord creates a new lease out of its estate. Assignment = an existing leaseholder transfers the residue of the term to a buyer. Different docs, different searches, different liability rules.

Grant of a new lease

Documents: the lease itself (and often an agreement for lease where works/conditions precede completion). Term, rent, repair, alienation, user, service charge and forfeiture clauses are the core checks.
Formalities: a lease for more than 3 years must be by deed (LPA 1925 ss.52, 54(2)). A lease over 7 years must be registered with its own title number (LRA 2002 s.27) — failure means it takes effect only in equity. Leases of 7 years or under are overriding interests (Sch 3 para 1).
SDLT is charged on premium and on the net present value of the rent; file and pay within 14 days of completion.

Assignment of an existing lease

Title: check whether registered (assignment of residue of a registrable lease must itself be registered). Investigate the lease, any licences, and consents already given.
Consent to assign: most leases are qualified ("not to assign without consent"). Statute implies that consent must not be unreasonably withheld (LTA 1927 s.19(1)) and the landlord must give a decision and reasons within a reasonable time (LTA 1988) — delay/silence can itself be a breach (Go West v Spigarolo).

Covenant liability — the dividing line (get this right)

"New" leases granted on/after 1 January 1996 (LT(C)A 1995): the outgoing tenant is automatically released on a lawful assignment (s.5). Landlords protect themselves with an AGA (authorised guarantee agreement, s.16) — outgoing tenant guarantees the immediate assignee only.
"Old" leases (pre-1996): original tenant remains liable for the whole term under privity of contract (City of London Corp v Fell), subject to relief mechanisms.

Common traps

AGA guarantees only the next assignee, not the whole chain.
Anti-avoidance: agreements frustrating the 1995 Act release are void (s.25).
Don't confuse the 7-year registration trigger with the 3-year deed/legal-lease threshold.
A breach of a qualified covenant by assigning without consent is a breach even if consent would have been reasonable.

Try a real SQE1 question

This question is taken from the bank. Answer it to see the worked reasoning and the tutor. You do not need to sign up to try it.

A woman is the treasurer of a small amateur football club. Members pay £20 each month in cash. Under the club rules she accepted on becoming treasurer, she must bank the subscriptions into the club's dedicated account within seven days. One month she receives £200 in subscriptions and spends the cash on her own gas bill that same day. She intends to replace the money from her wages before anyone notices, and pays an equivalent £200 into the club account two weeks later. Which statement best explains how section 5(3) of the Theft Act 1968 applies to the subscriptions when she pays the gas bill?

Practise at the real standard

Strong on this topic? SQE1 tests 137 of them, and 58% did not pass in July 2026. See where you stand across all of them.

Complete includes

✓An AI tutor on every question. The tutor already knows the correct answer
✓5 full timed mock papers, plus unlimited drilling — no daily cap
✓The whole 2,263-question bank, with worked answers and references, all 137 topics
✓Your weak-spot map: exactly where you’re losing marks

See what it costs →or try 25 questions free

One payment, nothing recurring. The 25-question diagnostic is free with no card.