Landlords urged to initiate a formal lease

Year Published: 2012

Times are still tough so it’s easy to understand the temptation for landlords to do everything possible to fill an empty property. Allowing a tenant to move into a property before a lease is in place is one way to avoid losing an interested tenant, but landlords should bear in mind that by doing this you can, inadvertently, create a protected tenancy.

That said it may be possible to argue that a tenancy at will has been created if there is no agreed lease – a move which means that notice can be served at any time.

Nevertheless this may not work in every case and there is the risk of finding yourself stuck with a tenant on less favourable terms than you would have included in a formal lease. In particular, it is usual for landlords to exclude the statutory right of the tenant to renew the lease at the end of the term – a clause which keeps the control with the landlord as to what happens with the lease in the future.

More importantly, it is the norm in commercial leases for landlords to forfeit the lease for non-payment of rent. Some say this is rather archaic but it remains one of the most powerful tools in a landlord’s armoury for getting the rent paid.

So what should you do if faced with a keen tenant who is pushing to move into your premises before a lease is in place?

Firstly you should ask the tenant to provide details in writing of why they need to be in the premises before a lease is in place. It is also useful to ask the tenant for details of where they have previously rented premises, because enquiries made with previous landlords could uncover the serial offenders.

If you are going to allow early occupation, it is always wise to get the tenant to sign up to a tenancy at will or a tenancy for a term of less than six months. The statutory right to renew does not apply to either of these tenancies.

For further information on landlord and tenant disputes, please contact our Litigation team on 0161 475 7676.

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