Giving Business tenants security of tenure
If you are a landlord letting out commercial property or a tenant looking for premises from which to run your business, understanding how the Landlord & Tenant Act 1954 (the Act) will apply to your tenancy agreement is crucial to safeguarding your business interests.
The Act regulates the ways in which business tenancies can be terminated and provides business tenants with much needed security of tenure. Broadly speaking, this means that if the lease is a “business lease” as defined by the Act, then even though the term of the lease has ended, business tenants have:
- a right to remain in occupation of the premises at the end of the term;
- the right to request a new lease; and
- if terms are not agreed with the landlord, the right to make an application to court to determine the terms of the new lease.
When does the Act apply?
To qualify for protection under the Act:
- a tenant must be occupying the premises for the purposes of its business;
- there needs to be a qualifying tenancy – ie: the tenancy provides for exclusive possession, for a term and at a rent; and
- the tenancy must not be specifically excluded from the application of the Act (however see Exclusion of security of tenure – contracting out of the Act)
How can the landlord regain possession?
If the tenant wants to renew its lease at the end of the term, under the Act, the landlord can only deny the tenant a new lease and regain possession of the premises if:
- the landlord requires the premises back either for development purposes, or to occupy himself;
- the tenant has a history of non-payment of rent, or not compliance with the lease obligations; or
- the premises have been split up by subletting into a number of units and the whole premises would command a higher rent if let together under one lease.
Lease renewals are often concluded by agreement between landlord and tenant without either party having to resort to court. However, in many cases the procedure set out in the Act is invoked, in order to protect the position of the parties.
To find out how to terminate a business tenancy covered by the Act, see our article here.
To find out how to exclude the security of tenure provisions of the Act, see our article here.
The Landlord and Tenant Act 1954 is highly technical, imposing strict deadlines that if not met can have very serious consequences for one or both parties. Nothing in this article should be taken to constitute legal advice but should therefore be treated as a guide only. Legal advice should always be sought before entering into or terminating a business tenancy agreement, or for any other legal matter.