Leases

Third, all leases will contain covenants (promises) whereby the landlord and tenant promise to do, or not to do, certain things in relation to the land. These may be ‘express covenants’, being deliberately agreed between landlord and tenant and written into the lease, ‘implied covenants’, being covenants read into the lease as a matter of law (e.g. the repairing covenant implied in certain leases by section 11 of the Landlord and Tenant Act 1985), or ‘usual’ covenants, being those that are not expressly mentioned but are so common in the landlord and tenant relationship that they are taken to be part of the lease unless clearly excluded: for example, the tenant’s obligation to pay rent under an equitable lease (Shiloh Spinners v. Harding (1973)). Typical examples of express covenants are the landlord’s covenant to repair the buildings and the tenant’s covenant to pay rent or not to carry on a trade on the premises. All of these types of covenant are enforceable between the original landlord and original tenant and, as we shall see, in many circumstances are also enforceable between assignees of the lease or reversion. The particular rules concerning the enforceability of leasehold covenants are discussed below in section 6.4, but the important point is that the ability to make rights and obligations ‘run’ with the land is a special feature of the landlord and tenant relationship. It is the reason why the leasehold estate is a particularly useful investment vehicle because the freeholder can generate an income while, at the same time, preserving the value of the land through properly drafted covenants (e.g. that the tenant must repair, may not keep pets, etc.), which will bind the original tenant and any subsequent assignees. Moreover, given that both the benefit of a leasehold covenant (the right to enforce it) and its burden (the obligation to observe it) can run with the land, the use of a leasehold with appropriate covenants can achieve what covenants affecting freehold land cannot: that is, with a landlord and tenant relationship, even positive obligations can be made to run with the burdened estate.2