Preliminary

1 Tenancies to which the Act applies

(1) Sections 3 to 16 and 21 apply only to new tenancies.

(2) Sections 17 to 20 apply to both new and other tenancies.

(3) For the purposes of this section a tenancy is a new tenancy if it is granted on or after the date on which this Act comes into force otherwise than in pursuance of—

(a) an agreement entered into before that date, or

(b) an order of a court made before that date.

(4) Subsection (3) has effect subject to section 20(1) in the case of overriding leases granted under section 19.

(5) Without prejudice to the generality of subsection (3), that subsection applies to the grant of a tenancy where by virtue of any variation of a tenancy there is a deemed surrender and regrant as it applies to any other grant of a tenancy.

(6) Where a tenancy granted on or after the date on which this Act comes into force is so granted in pursuance of an option granted before that date, the tenancy shall be regarded for the purposes of subsection (3) as granted in pursuance of an agreement entered into before that date (and accordingly is not a new tenancy), whether or not the option was exercised before that date.

(7) In subsection (6) “option” includes right of first refusal.

2 Covenants to which the Act applies

(1) This Act applies to a landlord covenant or a tenant covenant of a tenancy—

(a) whether or not the covenant has reference to the subject matter of the tenancy, and

(b) whether the covenant is express, implied or imposed by law,

but does not apply to a covenant falling within subsection (2).

(2) Nothing in this Act affects any covenant imposed in pursuance of—

(a) section 35 or 155 of the [1985 c. 68.] Housing Act 1985 (covenants for repayment of discount on early disposals);

(b) paragraph 1 of Schedule 6A to that Act (covenants requiring redemption of landlord’s share); or

(c) paragraph 1 or 3 of Schedule 2 to the [1985 c. 69.] Housing Associations Act 1985 (covenants for repayment of discount on early disposals or for restricting disposals).

Transmission of covenants

3 Transmission of benefit and burden of covenants

(1) The benefit and burden of all landlord and tenant covenants of a tenancy—

(a) shall be annexed and incident to the whole, and to each and every part, of the premises demised by the tenancy and of the reversion in them, and

(b) shall in accordance with this section pass on an assignment of the whole or any part of those premises or of the reversion in them.

(2) Where the assignment is by the tenant under the tenancy, then as from the assignment the assignee—

(a) becomes bound by the tenant covenants of the tenancy except to the extent that—

(i) immediately before the assignment they did not bind the assignor, or

(ii) they fall to be complied with in relation to any demised premises not comprised in the assignment; and

(b) becomes entitled to the benefit of the landlord covenants of the tenancy except to the extent that they fall to be complied with in relation to any such premises.

(3) Where the assignment is by the landlord under the tenancy, then as from the assignment the assignee—

(a) becomes bound by the landlord covenants of the tenancy except to the extent that—

(i) immediately before the assignment they did not bind the assignor, or

(ii) they fall to be complied with in relation to any demised premises not comprised in the assignment; and

(b) becomes entitled to the benefit of the tenant covenants of the tenancy except to the extent that they fall to be complied with in relation to any such premises.

(4) In determining for the purposes of subsection (2) or (3) whether any covenant bound the assignor immediately before the assignment, any waiver or release of the covenant which (in whatever terms) is expressed to be personal to the assignor shall be disregarded.

(5) Any landlord or tenant covenant of a tenancy which is restrictive of the user of land shall, as well as being capable of enforcement against an assignee, be capable of being enforced against any other person who is the owner or occupier of any demised premises to which the covenant relates, even though there is no express provision in the tenancy to that effect.

(6) Nothing in this section shall operate—

(a) in the case of a covenant which (in whatever terms) is expressed to be personal to any person, to make the covenant enforceable by or (as the case may be) against any other person; or

(b) to make a covenant enforceable against any person if, apart from this section, it would not be enforceable against him by reason of its not having been registered under the [1925 c. 21.] Land Registration Act 1925 or the [1972 c. 61.] Land Charges Act 1972.

(7) To the extent that there remains in force any rule of law by virtue of which the burden of a covenant whose subject matter is not in existence at the time when it is made does not run with the land affected unless the covenantor covenants on behalf of himself and his assigns, that rule of law is hereby abolished in relation to tenancies.

4 Transmission of rights of re-entry

The benefit of a landlord’s right of re-entry under a tenancy—

(a) shall be annexed and incident to the whole, and to each and every part, of the reversion in the premises demised by the tenancy, and

(b) shall pass on an assignment of the whole or any part of the reversion in those premises.

Release of covenants on assignment

5 Tenant released from covenants on assignment of tenancy

(1) This section applies where a tenant assigns premises demised to him under a tenancy.

(2) If the tenant assigns the whole of the premises demised to him, he—

(a) is released from the tenant covenants of the tenancy, and

(b) ceases to be entitled to the benefit of the landlord covenants of the tenancy,

as from the assignment.

(3) If the tenant assigns part only of the premises demised to him, then as from the assignment he—

(a) is released from the tenant covenants of the tenancy, and

(b) ceases to be entitled to the benefit of the landlord covenants of the tenancy,

only to the extent that those covenants fall to be complied with in relation to that part of the demised premises.

(4) This section applies as mentioned in subsection (1) whether or not the tenant is tenant of the whole of the premises comprised in the tenancy.

6 Landlord may be released from covenants on assignment of reversion

(1) This section applies where a landlord assigns the reversion in premises of which he is the landlord under a tenancy.

(2) If the landlord assigns the reversion in the whole of the premises of which he is the landlord—

(a) he may apply to be released from the landlord covenants of the tenancy in accordance with section 8; and

(b) if he is so released from all of those covenants, he ceases to be entitled to the benefit of the tenant covenants of the tenancy as from the assignment.

(3) If the landlord assigns the reversion in part only of the premises of which he is the landlord—

(a) he may apply to be so released from the landlord covenants of the tenancy to the extent that they fall to be complied with in relation to that part of those premises; and

(b) if he is, to that extent, so released from all of those covenants, then as from the assignment he ceases to be entitled to the benefit of the tenant covenants only to the extent that they fall to be complied with in relation to that part of those premises.

(4) This section applies as mentioned in subsection (1) whether or not the landlord is landlord of the whole of the premises comprised in the tenancy.

7 Former landlord may be released from covenants on assignment of reversion

(1) This section applies where—

(a) a landlord assigns the reversion in premises of which he is the landlord under a tenancy, and

(b) immediately before the assignment a former landlord of the premises remains bound by a landlord covenant of the tenancy (“the relevant covenant”).

(2) If immediately before the assignment the former landlord does not remain the landlord of any other premises demised by the tenancy, he may apply to be released from the relevant covenant in accordance with section 8.

(3) In any other case the former landlord may apply to be so released from the relevant covenant to the extent that it falls to be complied with in relation to any premises comprised in the assignment.

(4) If the former landlord is so released from every landlord covenant by which he remained bound immediately before the assignment, he ceases to be entitled to the benefit of the tenant covenants of the tenancy.

(5) If the former landlord is so released from every such landlord covenant to the extent that it falls to be complied with in relation to any premises comprised in the assignment, he ceases to be entitled to the benefit of the tenant covenants of the tenancy to the extent that they fall to be so complied with.

(6) This section applies as mentioned in subsection (1)—

(a) whether or not the landlord making the assignment is landlord of the whole of the premises comprised in the tenancy; and

(b) whether or not the former landlord has previously applied (whether under section 6 or this section) to be released from the relevant covenant.

8 Procedure for seeking release from a covenant under section 6 or 7

(1) For the purposes of section 6 or 7 an application for the release of a covenant to any extent is made by serving on the tenant, either before or within the period of four weeks beginning with the date of the assignment in question, a notice informing him of—

(a) the proposed assignment or (as the case may be) the fact that the assignment has taken place, and

(b) the request for the covenant to be released to that extent.

(2) Where an application for the release of a covenant is made in accordance with subsection (1), the covenant is released to the extent mentioned in the notice if—

(a) the tenant does not, within the period of four weeks beginning with the day on which the notice is served, serve on the landlord or former landlord a notice in writing objecting to the release, or

(b) the tenant does so serve such a notice but the court, on the application of the landlord or former landlord, makes a declaration that it is reasonable for the covenant to be so released, or

(c) the tenant serves on the landlord or former landlord a notice in writing consenting to the release and, if he has previously served a notice objecting to it, stating that that notice is withdrawn.

(3) Any release from a covenant in accordance with this section shall be regarded as occurring at the time when the assignment in question takes place.

(4) In this section—

(a) “the tenant” means the tenant of the premises comprised in the assignment in question (or, if different parts of those premises are held under the tenancy by different tenants, each of those tenants);

(b) any reference to the landlord or the former landlord is a reference to the landlord referred to in section 6 or the former landlord referred to in section 7, as the case may be; and

(c) “the court” means a county court.

Apportionment of liability between assignor and assignee

9 Apportionment of liability under covenants binding both assignor and assignee of tenancy or reversion

(1) This section applies where—

(a) a tenant assigns part only of the premises demised to him by a tenancy;

(b) after the assignment both the tenant and his assignee are to be bound by a non-attributable tenant covenant of the tenancy; and

(c) the tenant and his assignee agree that as from the assignment liability under the covenant is to be apportioned between them in such manner as is specified in the agreement.

(2) This section also applies where—

(a) a landlord assigns the reversion in part only of the premises of which he is the landlord under a tenancy;

(b) after the assignment both the landlord and his assignee are to be bound by a non-attributable landlord covenant of the tenancy; and

(c) the landlord and his assignee agree that as from the assignment liability under the covenant is to be apportioned between them in such manner as is specified in the agreement.

(3) Any such agreement as is mentioned in subsection (1) or (2) may apportion liability in such a way that a party to the agreement is exonerated from all liability under a covenant.

(4) In any case falling within subsection (1) or (2) the parties to the agreement may apply for the apportionment to become binding on the appropriate person in accordance with section 10.

(5) In any such case the parties to the agreement may also apply for the apportionment to become binding on any person (other than the appropriate person) who is for the time being entitled to enforce the covenant in question; and section 10 shall apply in relation to such an application as it applies in relation to an application made with respect to the appropriate person.

(6) For the purposes of this section a covenant is, in relation to an assignment, a “non-attributable” covenant if it does not fall to be complied with in relation to any premises comprised in the assignment.

(7) In this section “the appropriate person” means either—

(a) the landlord of the entire premises referred to in subsection (1)(a) (or, if different parts of those premises are held under the tenancy by different landlords, each of those landlords), or

(b) the tenant of the entire premises referred to in subsection (2)(a) (or, if different parts of those premises are held under the tenancy by different tenants, each of those tenants),

depending on whether the agreement in question falls within subsection (1) or subsection (2).

10 Procedure for making apportionment bind other party to lease

(1) For the purposes of section 9 the parties to an agreement falling within subsection (1) or (2) of that section apply for an apportionment to become binding on the appropriate person if, either before or within the period of four weeks beginning with the date of the assignment in question, they serve on that person a notice informing him of—

(a) the proposed assignment or (as the case may be) the fact that the assignment has taken place;

(b) the prescribed particulars of the agreement; and

(c) their request that the apportionment should become binding on him.

(2) Where an application for an apportionment to become binding has been made in accordance with subsection (1), the apportionment becomes binding on the appropriate person if—

(a) he does not, within the period of four weeks beginning with the day on which the notice is served under subsection (1), serve on the parties to the agreement a notice in writing objecting to the apportionment becoming binding on him, or

(b) he does so serve such a notice but the court, on the application of the parties to the agreement, makes a declaration that it is reasonable for the apportionment to become binding on him, or

(c) he serves on the parties to the agreement a notice in writing consenting to the apportionment becoming binding on him and, if he has previously served a notice objecting thereto, stating that that notice is withdrawn.

(3) Where any apportionment becomes binding in accordance with this section, this shall be regarded as occurring at the time when the assignment in question takes place.

(4) In this section—

• “the appropriate person” has the same meaning as in section 9;

• “the court” means a county court;

• “prescribed” means prescribed by virtue of section 27.

Excluded assignments

11 Assignments in breach of covenant or by operation of law

(1) This section provides for the operation of sections 5 to 10 in relation to assignments in breach of a covenant of a tenancy or assignments by operation of law (“excluded assignments”).

(2) In the case of an excluded assignment subsection (2) or (3) of section 5—

(a) shall not have the effect mentioned in that subsection in relation to the tenant as from that assignment, but

(b) shall have that effect as from the next assignment (if any) of the premises assigned by him which is not an excluded assignment.

(3) In the case of an excluded assignment subsection (2) or (3) of section 6 or 7—

(a) shall not enable the landlord or former landlord to apply for such a release as is mentioned in that subsection as from that assignment, but

(b) shall apply on the next assignment (if any) of the reversion assigned by the landlord which is not an excluded assignment so as to enable the landlord or former landlord to apply for any such release as from that subsequent assignment.

(4) Where subsection (2) or (3) of section 6 or 7 does so apply—

(a) any reference in that section to the assignment (except where it relates to the time as from which the release takes effect) is a reference to the excluded assignment; but

(b) in that excepted case and in section 8 as it applies in relation to any application under that section made by virtue of subsection (3) above, any reference to the assignment or proposed assignment is a reference to any such subsequent assignment as is mentioned in that subsection.

(5) In the case of an excluded assignment section 9—

(a) shall not enable the tenant or landlord and his assignee to apply for an agreed apportionment to become binding in accordance with section 10 as from that assignment, but

(b) shall apply on the next assignment (if any) of the premises or reversion assigned by the tenant or landlord which is not an excluded assignment so as to enable him and his assignee to apply for such an apportionment to become binding in accordance with section 10 as from that subsequent assignment.

(6) Where section 9 does so apply—

(a) any reference in that section to the assignment or the assignee under it is a reference to the excluded assignment and the assignee under that assignment; but

(b) in section 10 as it applies in relation to any application under section 9 made by virtue of subsection (5) above, any reference to the assignment or proposed assignment is a reference to any such subsequent assignment as is mentioned in that subsection.

(7) If any such subsequent assignment as is mentioned in subsection (2), (3) or (5) above comprises only part of the premises assigned by the tenant or (as the case may be) only part of the premises the reversion in which was assigned by the landlord on the excluded assignment—

(a) the relevant provision or provisions of section 5, 6, 7 or 9 shall only have the effect mentioned in that subsection to the extent that the covenants or covenant in question fall or falls to be complied with in relation to that part of those premises; and

(b) that subsection may accordingly apply on different occasions in relation to different parts of those premises.

Third party covenants

12 Covenants with management companies etc

(1) This section applies where—

(a) a person other than the landlord or tenant (“the third party”) is under a covenant of a tenancy liable (as principal) to discharge any function with respect to all or any of the demised premises (“the relevant function”); and

(b) that liability is not the liability of a guarantor or any other financial liability referable to the performance or otherwise of a covenant of the tenancy by another party to it.

(2) To the extent that any covenant of the tenancy confers any rights against the third party with respect to the relevant function, then for the purposes of the transmission of the benefit of the covenant in accordance with this Act it shall be treated as if it were—

(a) a tenant covenant of the tenancy to the extent that those rights are exercisable by the landlord; and

(b) a landlord covenant of the tenancy to the extent that those rights are exercisable by the tenant.

(3) To the extent that any covenant of the tenancy confers any rights exercisable by the third party with respect to the relevant function, then for the purposes mentioned in subsection (4), it shall be treated as if it were—

(a) a tenant covenant of the tenancy to the extent that those rights are exercisable against the tenant; and

(b) a landlord covenant of the tenancy to the extent that those rights are exercisable against the landlord.

(4) The purposes mentioned in subsection (3) are—

(a) the transmission of the burden of the covenant in accordance with this Act; and

(b) any release from, or apportionment of liability in respect of, the covenant in accordance with this Act.

(5) In relation to the release of the landlord from any covenant which is to be treated as a landlord covenant by virtue of subsection (3), section 8 shall apply as if any reference to the tenant were a reference to the third party.

Joint liability under covenants

13 Covenants binding two or more persons

(1) Where in consequence of this Act two or more persons are bound by the same covenant, they are so bound both jointly and severally.

(2) Subject to section 24(2), where by virtue of this Act—

(a) two or more persons are bound jointly and severally by the same covenant, and

(b) any of the persons so bound is released from the covenant,

the release does not extend to any other of those persons.

(3) For the purpose of providing for contribution between persons who, by virtue of this Act, are bound jointly and severally by a covenant, the [1978 c. 47.] Civil Liability (Contribution) Act 1978 shall have effect as if—

(a) liability to a person under a covenant were liability in respect of damage suffered by that person;

(b) references to damage accordingly included a breach of a covenant of a tenancy; and

(c) section 7(2) of that Act were omitted.

14 Abolition of indemnity covenants implied by statute

The following provisions (by virtue of which indemnity covenants are implied on the assignment of a tenancy) shall cease to have effect—

(a) subsections (1)(C) and (D) of section 77 of the [1925 c. 20.] Law of Property Act 1925; and

(b) subsections (1)(b) and (2) of section 24 of the [1925 c. 21.] Land Registration Act 1925.