Jennifer Slade

Security of tenure for business leases – Landlord and Tenant Act 1954

Amended by 2003 Order (effective 01.06.04) Handout:

Which tenancies? (p1) Continuation (p4) Methods of termination (p5) Interim rent (p7) Grounds of opposition (p7) Tenant’s compensation (p14) Renewal lease (p15) Contracting out (p16)

Two layers of protection for tenants (s24(1)) (p.1): Continuation Right to renew

Also compensation

Grant ContractualExpiry Date

………………………….

“Continuation tenancy”“Holding over”

Renewal tenancy

Which tenancies (p.1)? Section 23

▪ Tenancy▪ Occupation▪ Business

Tenancy Not licence or tenancy at will

Occupation ss23(1A)/(1B) – occupation through a

company – good for small companies s42 – group companies (see p.3)

Business Fact and degree Examples (p.3)

Tenancies expressly excluded from protection (p.4): s43

▪ Agricultural▪ Mining▪ Service tenancies▪ Six month leases (note provisos)

s38A▪ Contracted out leases (see later)

Section 24 Continue on same terms until terminated in

accordance with the Act Termination

Forfeiture Surrender Notice to quit s25 notice (L) s26 notice (T) s27 notice (T)

Section 25 notice (p.5) L. serves on T. – prescribed form(s) Rationale - hostile vs non-hostile

▪ Hostile – L’s grounds of opposition to new lease▪ Non-hostile – (non-binding) proposals for new lease

Procedure Serve

▪ Not more than 12 months▪ Not less 6 months

Before the termination date specified in the notice(use corresponding date rule)

IT IS NOT POSSIBLE TO TERMINATE PRIOR TO THE CONTRACTUAL EXPIRY DATE OF THE LEASE

CED = 29 August 2008

1. When is the earliest that L can serve s25 notice?

CED = 29 August 2008

1. When is the earliest that L can serve s25 notice?

12 months

Serve notice on29 August 2007

CED = 29 August 2008

2. When is the earliest that L can terminate the lease? (today is 11 March 2008)

CED = 29 August 2008

2. When is the earliest that L can terminate the lease? (today is 11 March 2008)

Serve on11 March 2008

CED = 29 August 2008

2. When is the earliest that L can terminate the lease? (today is 11 March 2008)

Serve on11 March 2008

Expiry date11 September 2008

6 months

Section 25 procedure: L or T can apply to court for a new tenancy

after service T must apply to preserve its rights of renewal

under the Act L can apply for termination if hostile s25 s29A – application to court can be made up to

the expiry date in the notice (parties can agree to extend the time limit)

No need now for T’s counternotice (2003 Order)

Section 26 notice/request: Rationale for T to terminate and renew? see p5

Procedure: T has 12 – 6 month service window (i.e. for

date specified in notice)▪ L can agree to terms OR refuse to renew (cite grounds)

OR agree to renew but on different terms Note: if opposing renewal, L must serve

counternotice to oppose renewal within 2 months of service

Court applications – before date in notice (after 2 month period for counternotice has elapsed)

Competent landlord (p.6): Notices served between tenant and

competent landlord – not always immediate landlord

No problem if letting of freehold For sublettings, identify next landlord in

the “chain” whose tenancy will not expire within 14 months

See manual – pp 264

L (freeholder)

T

Sub-T

Ask – Will T’s lease come to an end within 14 months? Did T sublet the whole of the premises (so out of occupation, so not protected)?

Section 27 notice Served by T on L in order to terminate

lease without renewal s27(1)

▪ Serve at least 3 months before contractual expiry date to determine on that date (cannot terminate before)

▪ Esselte v Pearl Assurance incorporated into Act by 2003 Order – if T vacates on/prior to expiry date, lease no longer protected by the Act so no need for s27(1) notice

Section 27(2) 3 month notice must be served if to

terminate during the continuation tenancy

Section 64 Continuation tenancy at old rent until 3

months after proceedings concludedSection 24A

L or T can apply for “interim rent” (p.7)Section 24B

Payable from earliest date that could have been specified in s25/s26 notice

Sections 24C/D - valuation

Landlord’s grounds set out in s30(1)

Ground (a) – breach of repairing obligation

Ground (b) – persistent delay in paying rent

Ground (c) – substantial breaches

Ground (d) – suitable alternative accommodation

Ground (e) – possession required for disposal of property as a whole

Ground (f) and (g) – popular grounds Ground (f) – L’s intention to

demolish/re-construct/do substantial works Firm and settled intention

▪ Evidence Nature of works

▪ Demolish, reconstruct, substantial L needing possession

▪ s31A - T’s “defence”

Ground (g) – L’s intention to occupy L’s intention s30(2)

▪ 5 year rule“Near miss” cases – s31(2)Discretionary vs mandatory grounds:

Discretionary – (a), (b), (c), (e) Mandatory – (d), (f), (g)

Compensation grounds (e), (f) and (g) – “no fault”

Amount of compensation: Multiple of RV for holding Multiple = 1 … unless continuous

occupation for 14 years, then Multiple = 2

Excluding compensation – s38(2) 5 years occupation

Usually parties agree – else court intervenes

Terms Premises Term Rent (s34 disregards)

Other terms O’May principles Wallis Fashions

▪ AGA in renewal lease?

Old regime (pre 01.06.04/2003 Order): Court order required

New regime (3 elements): L to serve “health warning” notice on T T to make declaration confirming receipt

Note – T’s declaration: If completion 14 days after L’s notice

▪ T makes simple declaration

If completion within 14 days of L’s notice▪ T makes statutory declaration

Also, the lease must include a clause referring to: The agreement to exclude Act for that

tenancy The notice (+ date) The declaration (+ date + whether

simple/statutory) See precedent

Keep documents together!

Agreements for lease No longer can be conditional on

contracting out Notice/declaration procedure prior to

agreement No strict need for clause in agreement

(but should for best practice)