Non-residential Lease (Landlord) Checklist

1. Final Consent (Standing Order 930(4)(ii))

You will need to log a project on the Property Consents Website so that the three levels of consent can be entered. Please see Step 1 in Section B of the Non-Residential Lease (Landlord) Guidance for Managing Trustees for details of how to log a project. Final Consent to the project must be entered before completion.    

2. Professional advice approved by TMCP (s.119 of the 2011 Act OR s.120 of the 2011 Act)

The appropriate form of professional advice will need to be obtained by the Managing Trustees and approved by TMCP Legal before the lease can be entered into. Please see Step 2 of Section B of the Non-Residential Lease (Landlord) Guidance for Managing Trustees and make sure that your designated adviser has a copy of the Non-Residential Lease (Landlord) Heads of Terms.

If the professional advice will be more than six months old by the time the lease will complete, TMCP will require an update from your designated adviser or confirmation that the original advice remains valid on the firm’s headed paper. This is TMCP policy following recommendations made by the Charity Commission.

2A. Lease term 7 years or less → competent advice required (s.120 of the 2011 Act) 

This must be in writing and provided by a person competent to give advice on such a lease e.g. your designated adviser may be an appropriate person to ask. (See the Non-Residential Lease (Landlord) Guidance for Managing Trustees.). A simple letter would suffice setting out the adviser’s  recommendations for the lease terms. It should confirm:

• Whether it is in the best interests of the charity to enter into a lease of the property in question
• The level of market rent
• Whether the person giving the advice has any particular recommendations for the lease (having seen the Non-Residential Lease (Landlord) Heads of Terms) including; the length of term; rent review; service charge; liability for repairs.

As charity trustees you will need to satisfy yourselves that the person advising you has the ability and experience to give the competent advice you need to secure a lease on terms that are the best you can reasonably get for the charity.

2B. Lease term more than 7 years → full Designated Adviser Report (DAR) required (s.119 of the 2011 Act)

You will need to obtain and consider a DAR prepared by a designated adviser and have the DAR approved by TMCP. To be approved the DAR must address the matters set out in the 2023 Regulations (See the DAR Focus Note (currently being updated)).

If the DAR will be more than six months old by the proposed auction date, TMCP will require sight of an updated DAR or written confirmation from your designated adviser on the firm’s headed paper that the advice and contents of the original DAR remain valid. This is TMCP policy and follows guidance issued by the Charity Commission.

3. Confirmation of market rent (s.119(1)(c) OR s.120(2)(b) of the 2011 Act)

Once a tenant has been found and heads of terms agreed, please obtain a letter signed by the designated adviser confirming that (1) the agreed rent is no less than market rent and (2) the lease terms are the best that can reasonably be obtained for the charity. If the lease is for more than 7 years, the confirmation should also state that the Property has been adequately marketed.

The confirmation will need to be approved by TMCP Legal before the lease can be entered into.

In terms of market rent please note that the starting point is for property to be let for no less than market rent. If the Managing Trustees have any questions or concerns around this then please contact TMCP Legal and we can discuss the same with you and assist with the proposals for your particular project.

4. Connected Persons (s.117(2)(a) of the 2011 Act)

Once a tenant has been found confirmation is required as to whether the tenant is connected to the charity within the meaning of s.118 of the 2011 Act before TMCP can approve the grant of the lease.

If the tenant is NOT a connected person your solicitors must (1) ask the tenant to sign a completed Connected Person Certificate confirming this to be the case and (2) return the Connected Person Certificate to TMCP with confirmation that as far as they and the Managing Trustees are aware the tenant is not connected.

If the tenant IS a connected person the Managing Trustees will need to apply to the Charity Commission for an Order authorising the lease and produce this to TMCP before TMCP can approve the grant of the lease.    

5. Approval of the lease (Standing Order 930(3) & 931(3))

TMCP’s approval to the lease is required before completion. To obtain approval the Managing Trustees’ solicitors will need to (1) include all the template Methodist and Charities Act 2011 clauses (see the Non-Residential Lease (Landlord) Template Clauses); and ensure that the lease; (2) complies with Methodist law, policy and best practice (see the Non-Residential Lease (Landlord) Heads of Terms) and (3) accords with the designated or competent advice obtained by the Managing Trustees.

It is important that Managing Trustees’ solicitors visit TMCP’s website to check that they have up-to-date Non-Residential Lease (Landlord) Template Clauses, the Non-Residential Lease (Landlord) Guidance for Solicitors, Non-Residential Lease (Landlord) Heads of Terms and a copy of the professional advice obtained by the Managing Trustees.