Business Tenancies Pursuant To The Landlord And Tenant Act 1954

What is a Business Lease?

The Landlord and Tenant Act 1954 (“the Act”) provides that leases of a fixed term of over 6 months or where the tenant has been in occupation for 12 months can gain protection from the Act. In order to gain protection from the Act, there must be a tenancy, the tenant must be in occupation of the property for the purposes of the tenant’s business and the lease must not have specifically excluded the Act from applying.

What benefit does the Act give to a Tenant?

If the Act applies the tenant has a right to a new tenancy of the business premises following the expiry of the term of the old lease. If the landlord wishes to bring a tenant’s occupation of the business premises to an end, the landlord may well have to pay compensation to the tenant where they have protection under the Act.

The general rule is that the tenant will be entitled to a sum equal to the rateable value of the premises, or if you have been in occupation for more than 14 years then you will be entitled to twice the rateable value. If as a tenant you want to bring your tenancy to an end, you will need to vacate the property before the end of the term or give the landlord as least 3 months notice if you are still in occupation at the end of the term.

What does the Act mean for Landlords? If a landlord wants to bring the business tenancy to an end, the landlord will need to serve notice which has to be served in a specific form and specify specific grounds which justify terminating the tenancy. In the alternative the landlord may try to bring the tenancy to an end by forfeiting the lease or negotiating a surrender of the lease with the tenant.

Avoiding the Act If you wish to avoid the Act applying then you need to contract out of the Act but strict procedures must be followed in order to ensure that the tenancy is contracted out. The application of the Act is not straightforward. The notices that have to be served have to follow the specific statutory guidelines and there are stringent time limits that must be followed when serving notices. In addition, Court applications may have to be made and again the timing of such an application can be critical. It is vital that you seek expert advice in relation to landlord and tenant matters of this type.