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.
Our commercial team are available to assist at firstname.lastname@example.org, or on 0333 231 6405.
CJCH Solicitors on RENT SMART WALES – 23 November 2016
An estimated 50% of private landlords in Wales have yet to apply to Rent Smart Wales leaving them exposed to potential fines and legal action for non-compliance. If you own a property which is rented out on your behalf, or you manage your own rental property then as of this morning, 23 November 2016, the Housing (Wales) Act 2014 is already in place for you. Here’s everything you need to know:
Rent Smart Wales registration came into effect as of midnight which requires all private landlords to be registered. If you manage the property yourself, there is a further requirement for you to be licenced to do so.
The aim is to improve the standards of management in the private rental sector. Failure to comply is officially an offence and from today the enforcement powers are now active. A potential penalty of either £150 or £250 fine is applicable, with further action including being prevented from managing your properties altogether.
If you have your properties managed by an agent then you are only required to register and do not require a Licence. It is the agent’s responsibility to apply for a Licence (But you are responsible for ensuring that your chosen agent is licensed).
- Registration only:
The registration costs £33.50 if you apply for it on-line and if you want to make a paper application this route will cost £88.50.
- Registration and Licence required:
For private landlords who manage their own properties, in addition to registering there is a course which needs to be taken to enable you to obtain a licence to manage a property. Courses are offered separately and you must obtain a minimum mark of 70% to qualify. Once completed, you then apply for a Licence for which Rent Smart Wales will charge £144.00 (online) or £186.00 (paper application).
If you have not already applied for registration or a Licence you should arrange this as quickly as possible.
As a Landlord the Licence lasts for 5 years, but you have to provide accurate information about yourself and your properties and by law must keep your information up to date. This includes adding any additional properties you may acquire, or indeed sell, or any changes in your personal details.
The Licence may be granted with conditions attached and if you break the conditions or are considered no longer `fit and proper` then the Licence can be revoked which means you will no longer be able to undertake any letting or management activities.
Do not ignore your obligations to register as it may cause you problems in the future when you try to rent your properties
In addition to the penalties mentioned above, Rent Smart Wales can apply for a Rent Stopping Order or a Rent Repayment order. This would mean that if you try to rent a property without being registered or by using an unlicensed agent your tenant would not be liable for rent (would not be legally required to pay you rent) and you would not be able to serve a section 21 Notice to obtain possession of a property as an unregistered /unlicensed landlord.
It is not too late to get compliant. We can assist if you need advice or support.
CJCH Solicitors on twitter, Facebook and LinkedIn.
(Disclaimer: Information in this article is referenced from the Rent Smart and Welsh government Websites, with the Rent Smart Logo provided for identification)