We offer practical, cost effective, and tailored advice for both Landlords and Tenants on all aspects of commercial lease renewals and the implications of the Landlord & Tenant Act 1954 (“the 1954 Act”).
The Landlord and Tenant Act 1954 deals with security of tenure, which means that (subject to certain exceptions, getting the procedure right or opting out the 1954 Act) as a tenant, you have a right to renew a commercial lease on similar terms when it expires.
When Does the 1954 Act Apply?
The Act applies to tenancies where the tenant is occupying the property. With regards to business tenancies, there is an extra condition that the tenant must occupy the property for the purpose of his/her business. It is important to check that the provisions of the 1954 Act have not been “excluded” in your lease. If they have, you will not have any of the rights granted by the 1954 Act.
The Act will not apply in circumstances where the lease is for less than 6 months. An exception applies where the lease makes an allowance for its extension or renewal, or where the tenant’s full duration of occupation is more than 12 months. Additionally, if the tenancy’s extension or establishment is connected with the tenant’s employment, the 1954 Act will not apply.
How can a Protected Tenancy be terminated if the 1954 Act does apply?
If the landlord wants to end a tenancy, he/she may be able to do this by serving a section 25 notice using the 1954 Act. This would involve either the refusal of a new tenancy, or the offer of a new tenancy. The date to terminate must be between 6 and 12 months from the date the notice has been served. It is possible for the tenant to use section 26 of the 1954 Act in order to request a new tenancy. The start date for this new tenancy must also be between 6 and 12 months after the date the request was made. Failure to meet these strict timetables or getting the paperwork wrong or not serving the paperwork correctly can have severe consequences.
It is important to note that both a section 26 and a section 25 notice cannot be used to terminate the tenancy before the original expiration date, which would have been agreed between the parties in the lease.
Opting out of 1954 Act for a lease renewal
It is common in many commercial leases when the lease is first granted that the landlord will seek to negotiate that the tenant “contracts out” of the statutory right to renew. There is a set process for this, and whether to contract out or not is a decision which should be based after receiving legal advice. If the original tenant contracted out, and successor (assignee) who has since acquired the lease will be stuck with the contracted-out position.
How our Dispute Resolution Team can help
If you are seeking a Solicitor, whether as a tenant looking to renew an existing commercial lease, or negotiating a new one, or a landlord requiring advice on the Landlord & Tenant Act 1954 or would like to find out about our services more generally, please contact our Dispute Resolution team at TV Edwards Solicitors.
T: 0203 440 8139
35-37 Mile End Road, London, E1 4TP