The relationship between a landlord and tenant of business premises is governed by the Landlord & Tenant Act 1954 (“the Act”). Unless the parties have agreed (by following the prescribed procedure) to exclude the terms of the Act that provides security of tenure for the tenant, at the end of the fixed term of the lease, the tenant:
- Has a right to remain in occupation; and
- Has a right to apply to court for a new lease.
How can landlords remove a tenant?
Where the business tenant has security of tenure, in order to seek to regain possession, the landlord will need to serve what is called a Section 25 Notice. The termination date specified in the Section 25 Notice cannot be more than 12 months or less than 6 months from service of the notice and cannot be earlier than the last day of the term of the lease.
Once a Section 25 Notice has been served, a business tenant can apply to court for a new lease (so long as the court proceedings are lodged at court before the expiry of the Section 25 Notice).
Opposing an application for a new lease:
The landlord can only successfully oppose an application for a new lease if:
- The tenant has failed to repair the premises; or
- The tenant has persistently delayed in paying rent; or
- There have been substantial breaches of the lease by the tenant; or
- The landlord can offer suitable alternative accommodation; or
- There are complex sub-tenancies and the landlord can obtain a better rental return if the premises are let/sold as part of a larger unit; or
- The landlord intends to demolish or reconstruct the premises; or
- The landlord intends to occupy the premises for his own business.
If the landlord relies on grounds 5., 6. or 7. then statutory compensation is payable by the landlord.
Serving a Section 26 Notice
A tenant can also activate the renewal procedure by serving what is called a Section 26 Notice specifying a termination date and proposing new terms for a lease. A landlord then has two months to serve a Counter Notice. The start date for the new lease must not be more than 12 months and not less than six months from the notice. A Section 26 Notice cannot be served once a Section 25 Notice has been served by the landlord. If no agreement can be reached the tenant must apply to court for a new lease before the Section 26 Notice expires.
For more information on security of tenures, please contact Partner, Anna Barnes in our Dispute Resolution team on 0161 475 7676.