Legal News | 25.06.21
Security of Tenure and the Landlord and Tenant Act 1954
Part II of the Landlord and Tenant Act 1954 (LTA 1954) provides business tenants with the right to ‘Security of Tenure’, meaning that when the term of their lease expires, they have the right to renew it on the same terms as the previous lease. However, the landlord may be able to apply one of the statutory grounds and refuse the grant of a new lease.
In order for the LTA 1954 to apply, there are certain requirements, which need to be met. These include the tenant being in occupation themselves and they must be carrying out a business in the property. If the lease benefits from Security of Tenure, it is still possible for the landlord, or the tenant, to terminate the lease. This can be done in three ways:
1. The landlord can serve a Section 25 Notice on tenant. This can be done in a ‘friendly’ manner, whereby the landlord does not oppose to the tenant’s application for a new lease at the end of the term. Or it could be done in a hostile manner, whereby the landlord will oppose the tenant’s application for a new lease and will need to state the ground or grounds for opposing.
These are contained in Section 30(1) of the LTA 1954, and are listed below:
Ground (a) – tenant’s failure to keep the property in a good state of repair.
Ground (b) – persistent delays from the tenant in paying rent.
Ground (c) – substantial breaches by the tenant of other obligations under the lease.
Ground (d) – the landlord is able to offer alternative accommodation to the tenant.
Ground (e) – the current lease was created by a sub-letting of part only of property in superior tenancy.
Ground (f) – the landlord wishes to demolish, reconstruct or build on the premises.
Ground (g) – the landlord intends to occupy the premises themselves.
For any landlord, it is wise to seek professional legal advice to ensure your intentions are clear and the grounds will be valid in opposing any request for a new lease by a tenant. It must also be noted that once a ground of opposition has been specified, it cannot be changed for an alternative ground, or the use of additional grounds at a later date.
Compensation will be due to the tenant if the landlord quotes certain grounds to end the lease. Compensation will be at the rateable value if the business has occupied the premises for up to 14 years, or double the rateable value if it has occupied the business for more than 14 years. A lease can exclude the right to compensation.
2. The tenant could serve a Section 26 Notice, this terminates the old lease and requests a new one and must be 6-12 months before the specified commencement date.
The landlord cannot serve a counter notice within 2 months of the tenant making the s.26 request if he intends to oppose, including the grounds for opposing, as above.
3. The tenant could serve a Section 27 Notice on landlord terminating the current lease, but not requesting a new one. The notice must be served at least 3 months before the tenant wishes to leave. If a s.27 has been served, the tenant cannot later serve a s.26 notice.
Security of Tenure and the Landlord and Tenant Act 1954 is a complex area of property law, for both landlords and tenants. If you need to speak about this topic further, please contact josh.taylor@wansbroughs.com or your usual contact at Wansbroughs.
