Tenant rights and the Landlord and Tenant Act 1954
Although the rights of commercial tenants are more limited than the rights of residential tenants, commercial tenants are offered protection by the Landlord and Tenant Act 1954.
In this post, we’ll cover the protection that the Act provides.
Landlord and Tenant Act 1954
Commercial tenants may have the protection of the Landlord and Tenant Act 1954. The Act grants Security of Tenure to tenants who occupy premises for business purposes.
The tenancy will continue after the contractual termination date unless it is ended in one of the ways specified by the Act.
Does the Landlord and Tenant Act 1954 apply to my tenancy?
Section 23(1) of the Act says that:
- There must be a tenancy: a lease, not a licence
- The premises must be occupied by the tenant: this can be the tenant themselves, through an agent or manager, or through a company that the tenant owns;
- The premises must be occupied for business purposes: the business must be the main purpose of the occupation, but need not be the sole purpose
However, not all tenancies are covered by the Act. Excluded tenancies include:
- Agricultural, mining, service and farm business leases are excluded by the Act. In addition, railway property, military establishments and dockyards are also excluded
- A tenancy that can be terminated by either landlord or tenant at any time is excluded by the Act
- Fixed term tenancies not exceeding 6 months are excluded unless the tenancy contains a provision for renewing or extending the term beyond the 6 months or the tenant has been in occupation for a period exceeding 12 months
The procedure when the Act applies
If the lease has not been contracted out, the lease will not come to an end on the expiry date. The lease will continue at the same rent. As a result, the tenant must continue to pay rent.
Section 27 Notice
If the tenant is happy for the lease to end on the contractual expiry date, the tenant can serve a Section 27 Notice. This must be done at least 3 months before the end of the current lease.
Section 26 Notice
If the tenant would like the lease to continue, they can serve a Section 26 Notice. This must be served 6-12 months prior to the start date and it must indicate the terms of the new tenancy.
However, a Section 26 Notice cannot be served if the landlord has already served a Section 25 Notice. A landlord would serve a Section 25 notice if they would like the Tenant to leave at the end of the term or they wish to grant a new lease on new terms.
If the landlord wishes to oppose the grant of the new tenancy, they must serve a Counter-Notice on the tenant within 2 months of the tenant’s request. The landlord must state the grounds for opposition. These are provided in Section 30 of the Act and are as follows:
- Tenant’s failure to repair
- Tenant’s persistent delay in paying rent
- Substantial breaches of other obligations by the tenant
- The landlord can offer suitable and reasonable alternative accommodation
- There is currently a lease of part of the property and the landlord of the whole property objects to the lease as a higher rent can be obtained by single letting of the whole building
- The landlord intends to demolish or reconstruct the property and could not reasonably do so without obtaining possession
- The landlord intends to occupy the holding for his own business or as a residence
If the landlord wishes to oppose the grant, the tenant must apply to Court for a new lease in order to remain protected under the Act. The application must be made prior to the commencement date specified in the Section 26 Notice.
If the landlord does not oppose the grant of a new tenancy, negotiations can commence for the terms of the new lease.
The Notice must be given to the tenant 6-12 months before the termination date stated in the Notice and it must state whether the landlord will oppose a new tenancy.
If the landlord opposes a new tenancy, the Notice must state the Section 30 grounds the landlord relies on. The landlord can then apply to Court to terminate the lease. The tenant can also apply to Court for a new lease before the end of the Notice period.
The landlord must indicate the proposals for the terms of the new lease. Negotiations will then commence for the grant of a new lease. Should there be a delay in negotiations, the tenant must apply to Court before the expiry of the Section 25 Notice or the tenant will lose their rights under the Act.
If the tenant does not obtain a new lease, they may be entitled to compensation in certain circumstances.
Speak to our experts today
If you’d like to serve your landlord with a Section 26 or Section 27 Notice, or they’ve recently issued you with a Section 25 Notice, then speak to our commercial property experts today.
Our expert team can ensure that all Notices are prepared and served correctly. Plus, they can also help you consider all of the available options before embarking on this process. Contact us today to learn more.