If you are a landlord you will know that leasing a property, whether residential or commercial, comes with a certain amount of responsibility and risk. Whilst all lease agreements should specify the length of the tenancy most of us have heard stories where tenants refuse to leave or are granted new leases by the Court.
A lot of the time this is because the original tenancies have not been contracted outside of the Landlord and Tenant Act 1954 (‘LTA 1954’). Provisions in this Act entitles the tenant to a certain amount of protection against sudden or early termination of the lease and gives right to renew the contract at the end of the term.
However, there are ways to terminate such agreements and if you are looking for a step-by-step guide on how to do it, keep reading.
The safest way to terminate a protected tenancy under LTA 1954 is to serve a Section 25 Notice (‘The Notice’). Whilst there is no standard template of this Notice, it should be drafted carefully, using clear language. It should also include the following:
- Grounds on which you wish to terminate the tenancy:
- Premises are in disrepair;
- Arrears of rent;
- Other breaches of covenants;
- Offer of suitable alternative accommodation;
- Tenancy was created by sub-letting;
- Landlord’s intention to redevelop;
- Landlord’s intention to occupy.
You must specify all grounds you wish to rely on as you may not be allowed to amend these at a later stage. It is worth noting that if you rely on grounds that purport termination through no fault of the tenant (i.e. if your main grounds are intention to redevelop or occupy) the tenant will be entitled to a compensation of a rateable value upon termination. Both parties can rely on a surveyor to value the premises. In addition, if the tenant or its predecessor has enjoyed the use of premises for 14 years of more, the compensation doubles.
The Notice must be served not more than 12 months not less than 6 months before the termination date. So if you are looking to terminate a lease as soon as possible, you will have to wait for a minimum six months (from the date of service) before it could be terminated;
The Notice must be validly served. Your lease will have a clause specifying how and in what way serve could take place. Pay attention to any exclusions of service by email etc.;
If there are multiple tenants, the Notice must be served on all of them;
It is always a good idea to specify, in the cover letter to the tenant, that your Section 25 Notice doubles as a notice to quit. You would have complied with those requirements if you provide the tenant a notice period and a termination date (which should be included in your Notice).
Once the Notice is served it cannot be withdrawn or amended. The tenant then has an option to simply accept your Notice or to serve a counter-notice. If an amicable solution cannot be reached, try to resolve the matter through a form of alternative dispute resolution such as mediation. However, if you have exhausted all options and the matter proceeds to Court it would be up to the judge’s discretion to grant the tenant a new lease based on the same terms as the previous agreement.
Finally, it is worth noting that the tenant does not have to run their business from the leased address. It is sufficient for the tenant to store items relating to the business at the premises to attract protection under the LTA 1954.
For further commercial property advice, please contact Farleys’ commercial property solicitors on 0845 287 0939 or email us today.