Commercial Leasing Security of Tenure

Remain In Leasehold Business Premises

In short, under the Landlord & Tenant Act 1954, Security of Tenure is a statutory right that allows tenants to remain in the property after the lease has expired. For instance, if you’re the tenant of a commercial property, leaving the property on the day the lease expires could have a serious impact on your business. So, Security of Tenure is a legal provision that will allow business continuity until such time when you’re ready to move your business to another location. Without the 1954 Act, the only option for a tenant who needs to remain in the premises is an application to the courts for a new lease.

Landlords Security of Tenure Exclusion

Often landlords will exclude Security of Tenure from the lease agreement because they want control over the property occupation. They anticipate the 1954 Act will give tenants to liberty to remain in the property and continue to trade. This restricts landlords in a variety of ways, including plans to increase the rent after a period of time. With a rent rise, the present tenant could decide to leave, giving way to a new tenant who’s prepared to pay the new rent. Other plans could include selling the property, complete refurbishment and leasing it to a new tenant with more cash and a business with more profitability.

Issue of Notice to Quit

If a landlord needs to regain possession of leased property, the tenant must be served with a notice to quit the premises. The notice is served under the 1954 Act setting out grounds for reasons to vacate the premises. The reasons may include rent payment delays or non-payment, failure to keep maintenance obligations, any breaches of contract, landlords plans to refurbish or redevelop the property, any business plans and intending to occupy the premises.

Staying After Notice to Quit

The landlord could have automatic repossession of the property if the tenant agrees to exclude Security of Tenure from the lease agreement. But this will limit the tenant’s right to remain in the property once the lease is up. It could prove to be an inconvenience for the business and there might not be an alternative location for the business to continue. It will be up to the landlord’s discretion to decide if the tenant can stay in the premises and for how long. Depending on the circumstances, the tenant might be able to appeal to the courts to remain for a limited period of time whilst running their business, before vacating the premises.

If you’re a commercial landlord or tenant please give us a call to review or draft a lease agreement that includes or excludes Security of Tenure. If you’re already in a leasing agreement and are affected by any of the above issues, please give us a call for an initial consultation. SG

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June 28, 2021 at 9:00 am
Category: Commercial Property, Contracts, Leasing Buying Selling, Property

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