Landlord and Tenant Act – a reminder to Commercial Tenants
It is over sixty years since the Landlord and Tenant Act 1954 was enacted to give valuable protections to business tenants. However, at Ridley & Hall, we still regularly see business owners who are not aware of their rights or are too readily prepared to surrender those rights.
The effect of the law is to give protection to business tenants and certain other organisations so that they will be entitled to a new lease once their existing lease has run out, unless the landlord can show a very good reason not to renew the lease. Sometimes a landlord may be able to demonstrate that the tenant has not followed the terms of the lease (e.g. substantial arrears of rent, routinely failed to pay on time, allowed the property to fall into a poor state of repair). Alternatively, through no fault of the tenant, the landlord may need the property back for its own purposes – typically for redevelopment.
If the landlord alleges that there are grounds for opposing a renewal lease, then it must be prepared to prove it in court. For example, if the landlord wishes to redevelop, then it would in all likelihood be expected to produce architects plans, planning consents and proof of funding – the point being that in practice it is quite difficult for a landlord to force a protected tenant to leave.
Further, the landlord should compensate a tenant that is required to leave through no fault of its own.
A tenant can agree to give up these protections on entering into a new lease. Whilst it used to be the case that a court order was required, the procedure was substantially simplified a few years ago, and now all that is required is for the tenant to be given a formal notice and to sign a separate declaration.
A couple of recent examples that Ridley & Hall has dealt with include:-
- We were instructed by a tenant of commercial premises. We were satisfied that the landlord wished to redevelop the property, but it also claimed that the tenant had breached the terms of the lease. We successfully challenged this and achieved compensation for the client in excess of £20,000.
- A business owner was invited to sign a new lease at the end of its existing lease, but was also asked to sign a declaration surrendering its rights of renewal. We successfully argued that the tenant should not lose its protection, and which could have potentially caused substantial disruption to the business.
The lesson for tenants is that it is important to take expert advice before entering into a new lease, and indeed at the end of a lease term.