Here is an overview of the Landlord and Tenant Act 1954 Part II (Sections 23-28) (Act), which is a wide-ranging piece of legislation affecting commercial leases. We always recommend tenants seek their own legal advice as there is a lot more to this than what we have outlined below.
- Security of tenure: a tenant is protected by the Act and has an automatic right to renew their lease at expiry, unless the landlord objects on certain grounds (see s.25 below)
- Inside/Outside the Act: being ‘inside’ the Act means a lease is protected by the Act provisions and the tenant benefits from security of tenure.
- Contracting out: for a tenant to be ‘outside’ the Act they have to ‘contract out’, meaning that the provisions of s.24-28 do not apply. This is usually done by the landlord serving a specific notice to the tenant which the tenant must accept and sign. The lease will also expressly state that it is contracted out.
This states that to be protected by the Act, there has to be a business tenancy in place. There are six basic elements to this, including the premises must be used for a business and the tenant must occupy at least part of the premises.
Tenancies protected by the Act do not expire unless the landlord or tenant terminates the lease by serving a notice in accordance with the Act. This is known as ‘holding over’.
This is a notice served by a landlord to end a tenancy which is protected by the Act and can be served 6-12 months before the termination date There are a number of criteria that the notice must comply with, including whether the landlord objects to the granting of a new tenancy or not. If the landlord is happy to grant a new lease, they will state the terms they propose for the renewal. Where they oppose the granting of a new tenancy, they have to state what grounds they object on – there are seven set grounds (see s.30 of the Act).
Tenants can serve a notice requesting a new tenancy 6-12 months before the date they wish the new tenancy to commence. It must be in the prescribed form and include proposed terms. If the landlord objects to a new tenancy, they must serve a counter notice within 2 months.
Notice served by a tenant where they intend to leave with 3 months’ notice after the lease expiry date.
The landlord and tenant both agree to a lease renewal and terms are agreed in writing.