About Commercial Property
A commercial lease is a legally binding agreement between a business tenant and a landlord that gives the tenant permission to use the property for commercial or business use for an agreed period of time. The lease will outline the payment schedule required for the lease as well as the rights and responsibilities of both the tenant and the landlord during the lease period.
Landlord & Tenant Act 1954
The Landlord and Tenant Act 1954 is one of the UK’s most important acts concerning the rights and obligations of landlords and tenants when premises are occupied for business use. The Landlord and Tenant Act 1954 can be vital in protecting businesses which operate in rented premises, as it sets out strict criteria for the termination of a lease and protects the tenant’s right to renew leases at market price.
What is the Landlord and Tenant Act 1954?
The Landlord and Tenant Act was written in 1954 to protect business tenants and provide security of tenure. The act grants the right for commercial tenants to remain in place once a lease has expired and renew the lease at market rates. The only exceptions to this are if the lease is terminated by the landlord in the form required by the 1954 Act or if the landlord can object to the lease renewal by proving one of the following grounds:
- The rent is in arrears
- The property is in disrepair
- There have been other breaches of the covenant
- There is suitable alternative accommodation
- The tenancy was created by subletting
- It is the landlord’s intention to redevelop or occupy the property
How can a tenancy be ended under the Act?
Landlords who wish to terminate a tenancy without breaking the Act may do so in a few ways. The most common is to give notice under section 25 of the Act, which requires that landlords give a tenant between six and 12 months notice within the last year of the term of the lease, as well as stating whether the landlord will oppose any application for a new lease and what the terms for a new lease might be.
Tenants may also agree to surrender the lease, or apply for a new lease under section 26 of the Act. Further options to end a tenancy for both landlords and tenants are possible and can be discussed with solicitors with experience in landlord and tenant law.
Who does the Act apply to?
The Landlord and Tenant Act 1954 applies to any leases which are granted to tenants for the purposes of renting out business premises, and where the tenant is in occupation of the premises. The Act does not apply to contracted out tenancies or tenancies with a term of under 6 months, nor does it apply to tenancies at Will, licences or agricultural tenancies.
What is the purpose of the Act?
The purpose of the Act is to protect business tenants and provide some level of long term security to business owners operating in rented premises. For further advice and information about the Landlord and Tenant Act 1954 and how it affects you, please get in touch with us.
Contracting out of the Act
One important note is that not all tenancies are covered by the Act due to the simple fact that it is possible to contract out of the Act. In order to do this, landlords must give tenants notice that the proposed lease will not be covered by the Landlord and Tenant Act 1954, and the tenant too must confirm that they agree and understand the right that they are giving up.
Further to this, if the landlord only gives notice to the tenant within 14 days of the lease being granted, then the tenant’s confirmation must come in the form of a statutory declaration. The lease must also include reference to the fact that relevant sections of the 1954 Act have been excluded from the contract.