It’s fair to say the British Royal Family has been no stranger to controversy in recent years, but few events have sparked as much public interest as the looming eviction of Prince Andrew from the Royal Lodge, an historic residence that has been his home since 2004. Here, Beyond Corporate’s Davina Mordanti and Home Property Law’s Charles Farrington look at Prince Andrew’s tenancy of the royal lodge and discuss what the King’s options are as a Landlord.
Prince Andrew secured a 75-year lease on the Royal Lodge in 2003 which allows him to live in the mansion for the nominal sum of £250 per week. This long-term lease agreement appears to grant Prince Andrew substantial legal protection, effectively preventing King Charles from legally forcing him out of the property, despite any personal or political motivations. This situation highlights the challenges that both residential and commercial landlords face when attempting to terminate a lease and reclaim a property.
Commercial Leases
If Prince Andrew occupied a property under a commercial lease, the most common ways that King Charles could bring a lease to an end are by either:
- exercising their break rights (should they have any);
- pursuing forfeiture; or
- negotiating a surrender.
Break Clauses
A break clause gives both the landlord and tenant (or just one party, where stipulated) the option to end a commercial lease on a predetermined break date. There is no standard format for a break clause, so it is important that a landlord complies with the break provisions stated in their lease when exercising their ability to terminate the lease. These typically involves serving a notice on the tenant at least 6 months before the specified break date.
Forfeiture
Forfeiture provisions grant commercial landlords’ the ability to re-enter a property and terminate the lease on one of the grounds outlined in the lease. Again, these grounds can differ from lease to lease however, they typically include the following:
- the tenant’s failure to pay rent within 21 days of the rent payment date;
- the tenant breaches any condition/covenant within the lease (e.g. underletting the lease without consent); or
- an insolvency event.
As forfeiture is subject to complex statutory and common law limitations, it is recommended that landlords seek legal advice before proceeding with any forfeiture actions. A landlord’s failure to adhere to the correct procedures and principles could result in them losing/waiving their right to forfeit.
Surrender
A lease surrender is a mutual agreement between a landlord and tenant that the lease will terminate before the end of the contractual term. This is usually documented by way of a deed of surrender. Once completed, a deed of surrender will release the landlord and tenant from their lease obligations and bring the lease to an end. As there is no obligation on a landlord to accept the surrender of a commercial lease, landlords can require the tenant to pay a premium for terminating the lease early. Alternatively, landlords may be willing to accept a surrender if they intend to redevelop the property or where another tenant is willing to occupy the property on improved terms.
Residential Leases
If the property is held under a residential lease Prince Andrew’s continued occupancy will be contingent upon him upholding the terms of his lease which commonly contain restrictive covenants (things that an owner of a property cannot do) and positive covenants (things that an owner must do), some examples include:-
- Payment of ground rent and/or service charge;
- Using the property strictly for a permitted purpose (i.e. dwellinghouse); and
- Obligation to keep the property in good repair and tenantable condition
This list is not exhaustive and will vary from lease to lease, and thus the onus is on the leaseholder to make sure that they understand the terms of their lease otherwise they run the risk of breaching it.
Penalties for breaching a lease can include:-
- Damages – a landlord may sue a tenant for any losses they have suffered as a result of the breach, for example the costs incurred for remedying any damage;
- Legal costs – a landlord may seek to recover their legal costs from the tenant;
- Forfeiture – this simply means that the landlord may apply to the court for an order to terminate the lease, resulting in the eviction of the tenant; and
- Injunction – a landlord may seek an injunction to prevent a leaseholder from continuing with a breach
There is speculation that Prince Andrew has faced financial difficulties in recent years, particularly following his legal settlement with Virginia Guiaffre who brought a claim of sexual misconduct against Prince Andrew and was reported to have been awarded a sum in the region of £12 million, raising the question of whether the Duke of York has failed to fulfil his tenant obligations due to a lack of finances.
It is widely being reported Prince Andrew has a period of 2 months to demonstrate he has the financial capability to comply with the Lease obligations, namely that he can repair and maintain the Royal Lodge, if he fails to do so it is likely steps will be taken by the Crown to forfeit the Lease.
If you’d like advice on leases, our experts can help you whether you’re looking for help with Commercial Leases or help with Residential Leases.