Business Tenancies

Question 1

What is the main distinction between section 25 and section 26 notice?

Answer 1

The court application date differs: section 25 is the day of the statutory termination date, while section 26 is the day before the proposed commencement date.

Question 2

What does the Landlord and Tenant Act 1954 provide for qualifying business tenants?

Answer 2

It provides security of tenure, allowing tenants to continue occupying premises at the end of the contractual term.

Question 3

What are the benefits of security of tenure for the tenant?

Answer 3

Tenants can invest in premises, benefit from goodwill, and avoid upheaval from moving at the end of the term.

Question 4

What are the benefits of security of tenure for the landlord?

Answer 4

It makes premises more appealing, encourages tenants to care for the property, and may lead to higher market rent at review.

Question 5

What is required for security of tenure to apply?

Answer 5

There must be a tenancy occupied by the tenant for the purposes of a business.

Question 6

What types of tenancies benefit from security of tenure?

Answer 6

Fixed term and periodic tenancies can benefit from security of tenure.

Question 7

What types of arrangements do not benefit from security of tenure?

Answer 7

Licences and tenancies at will do not benefit from security of tenure.

Question 8

What happens if a tenant leaves the premises vacant?

Answer 8

They are not entitled to claim security of tenure.

Question 9

What are examples of business purposes under the Landlord and Tenant Act 1954?

Answer 9

Charity shops and tennis clubs for members only are considered business purposes.

Question 10

What types of tenancies are excluded from security of tenure?

Answer 10

Agricultural tenancies, mining leases, service tenancies, and fixed term tenancies of six months or less are excluded.

Question 11

What is ‘contracting out’ in the context of security of tenure?

Answer 11

It allows parties to agree to exclude a fixed term lease from security of tenure provisions.

Question 12

What is the procedure for contracting out?

Answer 12

A warning notice must be served, and a declaration must be provided by the tenant before completing the lease.

Question 13

What are the implications of security of tenure for a non-protected tenancy?

Answer 13

The tenant has no right to occupy beyond the contractual term and may be treated as a trespasser if they stay.

Question 14

What rights does a tenant of a protected tenancy have?

Answer 14

They are entitled to remain in occupation (hold over) at the end of the contractual term.

Question 15

What is a section 25 notice?

Answer 15

It states when the current tenancy will end and must be served 6 to 12 months before termination.

Question 16

What is a friendly section 25 notice?

Answer 16

It indicates the landlord’s willingness to renew the lease and proposes rent and terms for the new tenancy.

Question 17

What are the grounds for a hostile section 25 notice?

Answer 17

Grounds include tenant breaches, landlord’s intention to occupy, or offering alternative accommodation.

Question 18

What is the difference between mandatory and discretionary grounds for opposing renewal?

Answer 18

Mandatory grounds require the court to grant possession, while discretionary grounds depend on the court’s decision.

Question 19

How is compensation calculated if the landlord needs possession for no fault of the tenant?

Answer 19

Compensation is calculated at 1x the rateable value for less than 14 years, and 2x for 14 years or more.

Question 20

What is required for a current tenant to carry on a previous tenant’s business?

Answer 20

The current tenant must take over the same business, which likely requires a transfer of goodwill.

Question 21

When can a protected lease contract out of paying compensation?

Answer 21

It is only possible if the tenant has been in occupation for less than five years.

Question 22

What is rateable value?

Answer 22

Rateable value is based on the estimated annual rental value of premises and is fixed by the local authority for calculating business rates due for the premises.

Question 23

What is required for Ground (a) – breach of tenant repairing obligation?

Answer 23

Evidence of a serious breach is required. It is discretionary and not compensatory.

Question 24

What is required for Ground (b) – persistent delay in paying rent?

Answer 24

Evidence of the length of delay and number of failures to pay rent on time is required. It is discretionary and not compensatory.

Question 25

What is required for Ground (c) – other substantial breaches of tenant obligations?

Answer 25

Evidence of serious and persistent breaches is required. It is discretionary and not compensatory.

Question 26

What is required for Ground (d) – availability of suitable alternative accommodation?

Answer 26

The landlord must have made an offer of alternative accommodation suitable to the tenant. It is mandatory and not compensatory.

Question 27

What is required for Ground (f) – intention to demolish or reconstruct premises?

Answer 27

A firm and settled intention to redevelop is required, possibly with planning permission or a construction contract. It is mandatory and compensatory.

Question 28

What is required for Ground (g) – landlord intends to occupy premises?

Answer 28

A firm and settled intention by the landlord is required, who must have owned the reversion for at least 5 years before the termination date. It is mandatory and compensatory.

Question 29

What is the minimum and maximum notice period for a section 25 notice?

Answer 29

The notice must specify a date of termination no earlier than the end of the contractual term, and no less than six months and no more than 12 months from the date of the notice.

Question 30

What are the two types of section 25 notices?

Answer 30

A section 25 notice may be friendly (not opposing renewal) or hostile (opposing renewal).

Question 31

What happens if the landlord seeks to recover possession?

Answer 31

The landlord may only do so on statutory grounds.

Question 32

What is a surrender in lease terms?

Answer 32

A surrender is when the tenant gives up its leasehold interest to the landlord, bringing it to an end.

Question 33

Why might a tenant serve a section 26 notice?

Answer 33

A tenant may want the certainty of a fixed term or to avoid being stuck on a higher than market rent while holding over.

Question 34

What is the minimum notice period for a section 26 notice?

Answer 34

The minimum notice period is 6 months, and the maximum is 12 months before the proposed commencement date of the renewal lease.

Question 35

What is required for a section 27 notice?

Answer 35

A section 27 notice must give three months of the intended termination date, which must be no earlier than the date on which the contractual term ends.

Question 36

What is the procedure following a section 25 or section 26 notice?

Answer 36

Either party may apply to the court for a renewal lease or to recover possession after the notice is served.

Question 37

What is interim rent?

Answer 37

Interim rent is payable during the period of holding over and negotiation, based on the open market rent.

Question 38

What happens if a tenant is not happy with the court's terms?

Answer 38

The tenant has 14 days to ask the court to revoke the court order.

Question 39

What is the effect of a court order for the grant of a new lease?

Answer 39

The new lease will start the day after the termination of the existing lease.

Question 40

What is the difference between a friendly and hostile section 25 notice?

Answer 40

A friendly notice proposes renewal, while a hostile notice opposes it on statutory grounds.

Question 41

What is the competent landlord?

Answer 41

The competent landlord is the first in the chain of landlords who owns a reversionary interest that will not end in 14 months.

Question 42

Who must serve a section 26 notice?

Answer 42

It must be served on the tenant’s landlord, not the tenant.

Question 43

Who is entitled to serve a section 25 notice on the undertenant?

Answer 43

The tenant’s landlord, not the tenant.

Question 44

How are notice periods expressed?

Answer 44

Notice periods expressed in numbers of months run from the calendar date of service to the same calendar date in the appropriate month.

Question 45

What happens if notice is served at the end of a month?

Answer 45

If the notice expires in a shorter month, the last day of the month is used.

Question 46

What must be taken into account when calculating termination or commencement dates for section 25 or 26 notices?

Answer 46

Both the end of the existing contractual term and the notice periods must be taken into account.

Question 47

Who must conduct section 25 and 26 notice procedures?

Answer 47

The procedures must be conducted between the tenant and the competent landlord, who may not necessarily be the immediate landlord.