Security of Tenure for Commercial Leases – What does it mean?
Security of Tenure for Commercial Leases
The Landlord and Tenant Act 1954 Part II (‘the Act’) confers security of tenure on business tenants and regulates the manner in which business tenancies can be terminated.
What does this mean? Sam Pearson, our commercial law trainee explains that firstly, a business tenancy will not come to an end at the expiration of a fixed term. Secondly the tenancy cannot be terminated unless the Landlord gives sufficient notice to quit.
The statutory right of renewal can be triggered if either the Landlord gives notice of termination or the Tenant requests a new tenancy. Notices must be prepared and served in the required format and within strict time periods. There are many pitfalls with the notice, drafting and procedure and we strongly recommend seeking professional advice.
A Landlord can only oppose a business tenancy protected by the Act on certain statutory grounds:
- tenant’s failure to repair.
- persistent delay in paying rent.
- substantial breaches of other obligations.
- offering suitable alternative accommodation.
- demolition or reconstruction.
- landlord’s intention to occupy the holding.
Compensation may be payable to the Tenant if the Landlord’s application is successful. If the Landlord’s opposition to a new tenancy fails and new terms are not agreed, then an application to Court will be required. A Judge will set the terms and rent after receiving expert evidence.
On taking a new commercial lease the parties may have agreed that the tenancy will not have any statutory right of renewal. In order to do so the Landlord must serve a notice on the Tenant in the prescribed form. The Tenant must make a formal declaration confirming receipt of the notice and accepting the absence of any statutory right of renewal.
Whether you’re looking to renew a commercial lease, seeking advice on a contested lease renewal or looking to contract out of the Act our experts at CJCH Solicitors are ideally placed to provide you with the right advice to suit your business needs.