What is the Landlord & Tenant Act 1954?
The Landlord & Tenant Act 1954 (“LTA 1954” or “the Act”) is one of the most important pieces of legislation governing the leasing of commercial premises imposing regulations and procedures on both landlords and tenants as to how commercial property should be dealt with whilst also offering basic protections to both.
Who does the Act apply to?
The LTA 1954 covers all business tenancies although certain provisions can be wilfully excluded from leases if both parties are in agreement.
What protection does the Act offer tenants?
Most significantly, the LTA 1954 provides tenants with security of tenure. What this means is that the starting point of all business tenancies is that the tenant has a right to a renewal lease on the same terms as their current lease when their existing tenancy runs out. It also means that provided the tenant remains in occupation of the property after the business tenancy runs out, the tenancy does not automatically terminate on the contractual expiry date but instead continues on more or less the same terms until it is renewed or formally terminated.
There are, however, exceptions to this. Most significantly a lease can be excluded from this section of the Act. This is known as “contracting – out”. In order to do this, the tenant must enter into a statutory declaration confirming that they understand that they are waiving their rights under the LTA 1954 and that they understand the implications of that.
Tenancies at will and licences are also excluded from this provision and therefore any tenant occupying a commercial premises in this manner should be aware of that.
However, even if a lease is within the LTA 1954, there are still provisions to allowing the landlord to not offer a renewal lease at the end of the current term. There are seven different grounds upon which the landlord can oppose offering the tenant a renewal lease under the LTA 1954. These include if the tenant has a persistent delay in paying rent, if the landlord intends to occupy the premises himself or if the landlord intends to demolish or carry out substantial construction at the property. It should be noted that some of the grounds bring a prospect of the landlord having to pay statutory compensation to the tenant.
Should your lease be protected by the LTA 1954, the Act sets out a strict procedure of lease renewals.
The landlord can begin the procedure by serving a section 25 notice on the tenant which must state the termination date for the tenancy. Generally, this notice cannot be served more than 12 months but not less than 6 months from the end date of the contractual term of the lease. The notice must state whether the landlord wants to offer a renewal lease or not, and if not, under which of the statutory grounds they oppose it.
Alternatively, the tenant can serve a section 26 notice on the landlord requesting a new lease when their current lease expires. This notice should propose the terms of the new lease. Upon receipt, should the landlord wish to oppose the grant of the new lease, a counter notice must be served on the tenant within 2 months stating the grounds on which the renewal is opposed.
Should the tenant want a new lease and the landlord opposes the same, the tenant can make an application to the court to be granted a new lease. Strict timelines then come into force and should matters not be settled before the final hearing, the court can be left to decide if a lease should be issued and on what terms.
If you require further advice on your rights and obligations as a commercial landlord or tenant under the LTA 1954, get in touch with Farleys’ commercial property specialists on 0845 287 0939 or contact us by email.