14 Arbitration on terms of new tenancy

8.68 The terms of the new tenancy are the same as those of the original tenancy, except that the new tenancy is deemed to include a covenant against assignment and subletting even if the original lease contained no such clause.

(a)What variation in the terms of the tenancy which has been awarded ‘are justifiable having regard to the circumstances of the holding and the length of time since the holding was first let on those terms.’ This is a question of fact for the arbitrator; and

(b)The rent properly payable for the holding at the relevant time. Where question (a) is referred to arbitration, the arbitrator can include in his award compensation payable to the landlord on termination of the deceased’s tenancy, and (similarly) compensation on such termination payable by the landlord.¹²⁷

8.69 If the arbitrator varies the terms of the tenancy, he can make an adjustment of rent to reflect this, whether or not the rent properly payable (question (b)) has been referred to arbitration.¹²⁸

8.70 Where the rent payable is referred to arbitration, the arbitrator must determine what rent might reasonably be obtained on letting by a prudent and willing landlord to a prudent and willing tenant, taking into account all relevant factors, including in every case the terms of the tenancy and all other factors referred to in Sch 2, para 1 to the 1986 Act. The rent must be determined, in other words, as on an ordinary review, and the landlord cannot obtain uplift to market levels on commencement of the succession tenancy.¹²⁹

8.71 Notice demanding arbitration must be served within the three months immediately following the tribunal direction or the ‘relevant time’, whichever is later. The ‘relevant time’ is (somewhat obscurely) defined to mean the end of the 12 months immediately following the end of the year of tenancy in which the deceased died, or where a Case G notice to quit was given the date on which it would expire. The three months will run from the end of that period, or from the tribunal direction if given subsequently.