Business Tenancies Flashcards
(37 cards)
Why is a fixed term lease not always sufficient for a business tenant?
Businesses often want to remain beyond the lease term to preserve their location, goodwill, and avoid disruption; otherwise, landlords may exploit this to demand higher rent.
What does “security of tenure” mean under the 1954 Act?
A qualifying business tenant has the right to remain in occupation after the lease ends and to request a new lease, with limited grounds for landlord opposition.
What are the tenant’s benefits from security of tenure?
- Long-term business stability
- Investment in premises and goodwill
- Avoids costly relocation
What are the landlord’s benefits from granting security of tenure?
- More attractive premises
- Better care of premises by tenants
- May support higher market rent on review
What are the three elements required for a lease to qualify under LTA?
- There is a tenancy
- The premises are occupied by the tenant
- For the purposes of a business carried on by the tenant
What types of arrangement do and do not qualify as a “tenancy”?
- Fixed/periodic tenancy: qualify
- Licence or tenancy at will: do not qualify
What happens to security of tenure if the tenant underlets part of the premises?
They lose protection for that part, as they are no longer in occupation of it.
What counts as a “business” under the 1954 Act?
Defined broadly—includes trade, profession, or employment. Examples include charity shops, private clubs, or business-residential mixed use.
What does not count as a business under the Act?
- Sunday schools run without charge
- Lodgers taken for no profit
What types of leases are excluded under section 43 LTA 1954?
- Agricultural or mining leases
- Service tenancies
- Fixed-term leases of 6 months or less (unless tenant has been in occupation 12 months)
Can a periodic tenancy be contracted out of the Act’s protection?
No, only fixed-term leases may be contracted out.
What is contracting out of security of tenure?
An agreement between landlord and tenant that the lease will not have security of tenure protections under the 1954 Act.
What tenancies are commonly contracted out?
- Short-term leases (5 years or less)
- Underleases (often required by head lease)
What is the modern procedure for validly contracting out?
- Warning notice served by landlord
- Tenant declaration:
- Simple declaration (if ≥14 days before completion)
- Statutory declaration (if <14 days)
- Lease must refer to both documents
What happens if the contracting out procedure is not correctly followed?
The lease will retain security of tenure, and the tenant will be protected.
What happens when a protected lease ends?
The tenant may hold over (remain in occupation), and the landlord can only evict using methods in the 1954 Act.
What happens when a non-protected lease ends?
The tenant has no right to remain. If they do, they may be treated as a trespasser.
How can a landlord end a protected tenancy?
- Forfeiture for breach (if allowed by lease)
- Section 25 notice, either friendly or hostile
How can a tenant end a protected tenancy?
- Vacate voluntarily
- Surrender
- Notice to quit (periodic tenancy)
- Section 26 notice (renewal)
- Section 27 notice (termination after holding over)
What is a section 25 notice and when can it be served?
A landlord’s notice ending the tenancy. It must be served 6–12 months before the proposed termination date, which must be on or after the contractual expiry.
What are the two types of section 25 notice?
- Friendly: proposes renewal terms
- Hostile: opposes renewal, citing statutory grounds
What are examples of statutory grounds to oppose renewal?
-Persistent breach of repairing obligation(Ground a)
- Persistent delay in paying rent (Ground b)
- Substantial other breaches (Ground c)
- Suitable alternative accommodation (Ground d)
- Redevelopment intention (Ground f)
- Landlord intends to occupy (Ground g)
Which grounds are mandatory vs discretionary?
- Mandatory: d, f, g
- Discretionary: a, b, c
What are compensatory vs non-compensatory grounds?
- Compensatory: No fault by tenant (e.g., redevelopment) → compensation due
- Non-compensatory: Tenant fault (e.g., breach) → no compensation
