Business Tenancy Protection: Landlord and Tenant Act 1954 (“ the 1954 act”)
The 1954 act governs the relationship between the vast majority of landlords and tenants of business premises; the rights and obligations afforded by the 1954 Act supplement those set out in the terms and conditions of any lease.
When does the 1954 act apply to a tenancy?
- There must be a tenancy (as opposed to a licence);
- The tenant must be occupation of the property for the purpose of the tenant’s business; and
- The tenancy must not be specifically excluded from the 1954 Act.
This is not a straightforward area of law and it is recommended that experienced, legal advice is taken before a landlord or tenant takes a decision in respect of his/her business premises. For example, if a landlord were to wrongly terminate a lease protected by the 1954 Act, then he/she would be likely to face a Court injunction and a claim for damages; whereas, if a tenant were to quit business premises without an appreciation of his/her 1954 Act protection, then valuable compensation may be lost.
There are a number of circumstances in which the 1954 Act does not apply, (in addition to specific exclusion of the 1954 Act referred to above); the most typical example of which is where the term granted by the lease is for 6 month or less, (unless the lease provides for an extension of the term) and the tenant’s total period of occupation does not exceed 12 months.
What protection does the 1954 act to afford a tenant?
Subject to the landlord proving a statutory ground for possession, the tenant has a right to a new tenancy of the business premises following the expiry of the term of the old lease.
Notwithstanding the expiry of the term of the current tenancy, a landlord can only seek to terminate a 1954 Act protected business tenancy by the service of a statutory notice providing a termination date not less than 6 months nor more than 12 months to the notice has been served. Following the service of the statutory notice, a landlord can only resist the grant of a new business tenancy, if he/she can prove a statutory ground for possession.
How can a tenant terminate a 1954 act protected lease?
By leaving the business premises on or before the termination date under the lease, or by the service of a statutory notice (to terminate no earlier than the termination date specified in the lease) giving the landlord 3 months notice and by vacating on or before the termination date specified in that notice.
What are the consequences of the 1954 act for a landlord?
In order to terminate a 1954 Act protected business lease, a landlord must first serve a statutory notice providing a termination date of not less than 6 months nor more than 12 months after the notice is served.
Further, a landlord must prove a statutory ground for possession; the most common examples of which are a landlord’s intention to demolish, reconstruct or carry out substantial works of construction to the premises, or his/her desire to occupy the premises, either for their own business purposes or as a residence. If matters cannot be agreed with the tenants, then it is necessary for a landlord to satisfy the Court that it has a genuine intention to do so.
A landlord has to pay statutory compensation to a tenant of business premises, which is a multiplier of the rateable value, on his/her obtaining possession of the premises based on a statutory ground.
If a landlord does not oppose the grant of a new business tenancy to the tenant, then this affords the landlord in opportunity to be paid the current market rent for the premises under the terms and conditions of the new lease. This obviously assumes a rising rental market.
In recessionary times, as has now been the situation for a number of years, a landlord will be less keen to terminate leases of business premises, if that will lead to a new lease and a new, lessor market rent. The opposite is obviously true of a tenant, who is likely to be keen to take advantage of any fall in the market rent.
Prince Evans Solicitors LLP are joining with Brendons Commercial Agents to offer a series of free seminars to landlords and tenants of business premises to provide essential advice and information on the effects of the 1954 Act on the occupation premises to include, office space, industrial units, shops and restaurants. It is our intention to explain the best way to minimise costs and risk and maximise parties’ positions, whether as landlord or tenant.
The first seminar is due to take place on Tuesday, 25 September 2012 from 5:30pm at Ealing Golf Club,Perivale Lane,GreenfordUB6 8TS.
Booking is essential for this ‘need to know’ seminar. To book a place, you must register with Louise Heasman on (07950) 248038, or e-mail her louise@moderndaymarketing.co.uk
Anthony Best
Partner