Understanding your rights as a commercial tenant is essential prior to entering into a lease for your business.

What is the Landlord and Tenant Act 1954?

The Landlord and Tenant Act 1954 is a central piece of legislation which impacts the rights and responsibilities of both landlords and tenants. It governs landlords and tenants’ obligations in relation to premises occupied for business purposes.  Whilst the Landlord and Tenant Act 1954 has significant consequences for both landlords and tenants, we shall consider it from a tenant’s perspective as it provides a degree of protection to those who wish to navigate the commercial property market.

Security of Tenure

Commercial leases currently benefit from ‘security of tenure’ ensuring that qualifying business tenancies do not automatically come to an end upon the expiration of their term. It provides a statutory right of protection to tenants allowing them to remain in occupation of the premises and renew their lease when the contractual term comes to an end. Where security of tenure applies, the Landlord will only be able to oppose the renewal of the new lease on certain limited grounds. Security of tenure, as a general rule, is automatic however, the tenant may agree with their Landlord to “contract out” of the security of tenure provisions (Section 24-28 of the Landlord and Tenant Act) from the outset if the correct procedure is followed. This requires the tenant to make a statutory or simple declaration confirming that they understand the rights that they are giving up.

Security of tenure provides stability and certainty for tenants who wish to remain in the premises for a longer period. It provides a sense of business continuity for the tenant’s future business plans, especially for those working in the retail sector but also for tenants who have established themselves with a market presence in a certain area. Tenants may also want to consider the amount of investment and planning that they require to put into the property to ensure that it meets the standard of their business. For instance, where the tenant will need to carry out fit-out works prior to the commencement of the contractual term and they may need to consider the expense in carrying out the same on a new premises. Where security of tenure is obtained, the tenant benefits from legal safeguards as the Landlord will only be able to object to the renewal of a new business tenancy on specific grounds in accordance with Sections 30(1)(a) – (f) of the Landlord and Tenant Act 1954.

By opting out of Section 24-28 of the Landlord and Tenant Act 1954, the tenant will have no statutory right to renew the tenancy at the end of the contractual term meaning that they will have:

Due to the nature and complexity of the security of tenure provisions, it is important that you seek clear advice from your solicitor prior to entering into a new lease to enable you to make the best decision for your business.

 For further advice and assistance, please contact our Commercial Property team on 01604 828282 or email them at info@franklins-sols.co.uk.

 

The year 2024 is poised to bring about significant changes to property law in England and Wales, with the introduction of reforms set to impact residential and commercial property owners, landlords, and tenants alike. In this article, we will explore some key developments expected this year.

Leasehold and Freehold Reform Bill

King Charles III’s announcement in November signalled the government’s intent to reform the procedures for enfranchisement and lease extension. The subsequent introduction of the Leasehold and Freehold Reform Bill to parliament aims to simplify and reduce the cost of enfranchisement and lease extensions for tenants.

Current legislation grants leaseholders the statutory right to extend their lease by 90 years at a peppercorn rent for a premium. The proposed changes give the tenant the right to extend their lease by 990 years and removes the two-year ownership requirement on the tenant.

The bill is also expected to include measures that require more transparency over service charges and a possible ban on the creation of new leasehold houses.

The timeline for the passage and implementation of this legislation remains uncertain at present.

BSA 2022 Implementation

The Building Safety Act 2022 has already brought much-needed reforms to the building safety regime. However, due to its size and complexity, the Act is being gradually implemented. Provisions related to high-risk residential flats and information storage for high-risk buildings are already in force. This year is expected to witness the implementation of provisions concerning the new New Homes Ombudsman and additional building safety measures.

As the industry adapts to the new building safety regime, an increase in litigation related to the Building Safety Act is anticipated.

Reform of security of tenure provisions for business tenancies

Commercial leases currently benefit from ‘security of tenure’ provisions, ensuring that a qualifying business tenancy does not automatically end upon the expiration of its term. Landlords can contract out of these provisions by following the procedures outlined in the Landlord and Tenant Act 1954. To contract out, the landlord must serve a warning notice on the tenant and the tenant must make either a declaration or a statutory declaration (if within 14 days of completion). In 2023 the Law Commission announced that there would be a consultation on the Landlord and Tenant Act 1954 which is due to start early this year.

Other expected changes include:

In summary, 2024 promises crucial property law reforms in England and Wales. From extended lease rights to heightened building safety measures, staying informed is essential for successfully navigating these upcoming changes.

 For further advice and assistance please contact our Commercial Property team on 01604 828282 / 01908 660966 or email info@franklins-sols.co.uk