Security of Tenure Flashcards
(14 cards)
Protection afforded
Protection afforded under s.24 (1) LTA 1954 is twofold
(1) Commercial tenant at end of lease can stay put - called HOLDING OVER after the Contractual Expirty Date of the lease (‘CED’)
(2) Entitled to request a new protected lease on similar terms at market rent.
All under the LTA 1954
Note s.24 LTA says that A PROTECTED TENANCY CAN ONLY BE TERMINATED IN ONE OF THE WAYS PROVIDED UNDER THE 1954 ACT.
(1) Does the 1954 Act apply?
To see if 1954 Act applies, must look to s.23 LTA 1954
- Tenancy: Street v Mountford test
- Occupation: Tenant must be the occupier, at least of part
(therefore, if they’ve sublet the whole premises, they’ve relinquished occupation and will lose LTA 1954 protection! (say!!) - Business: ‘any trade, profession or employment’.
Is the tenancy excluded?
Certain tenancies are excluded from the 1954 Act by s.43.
- Tenancies at will (type which is terminable at any time by either party) - not specified in s.43 by excluded by case law.
- Tenancies of agricultural holdings
- Mining leases
- Service tenancies (i.e. connected to employment)
- Fixed term tenancies less than 6 months
- CONTRACTED OUT TENANCIES!!! - This means that when the lease was first granted, the protection of the 1954 Act was excluded!!! (s.38A)
Contracted-out tenancies: procedure
Parties can agree to contract out of 1954 Act protection, but special procedure.
STANDARD NOTICE
IF AT LEAST 14 DAYS BEFORE TENANT WILL BE CONTRACTUALLY BOUND TO TAKE LEASE:
- Landlord must serve warning notice, wth a copy of the agreed draft lease attached;
- Tenant must sign a SIMPLE DECLARATION that it has receievd and accepted the consequences of the notice; and
- the Lease must contain wording that security of tenure is excluded and reference to both the Landlord’s warning notice and the Tenant’s simple declaration.
SHORT NOTICE
IF LESS THAN 14 DAYS BEFORE TENANT WILL BE CONTRACTUALLY BOUND TO TAKE LEASE:
- Landlord must serve warning notice, as above
- Tenant must sign a STATUTORY DECLARATION, made before an independent solicitor
- Lease must contain same wording as above.
Landlord’s s.25 Notice: HOSTILE
If Landlord wants to end the tenancy, must give a notice under s.25 LTA that is HOSTILE - i.e. will be oppose Tenant’s application for new tenancy.
s.25 (2) - the notice must contain a Specified Termination Date - (‘STD’)
The Notice must be given not more than 12 months but not less than 6 months before the STD
(i.e. the Specified Termination Date must not be later than a year after the Notice is given, but must give the Tenant at least 6 months before lease will come to an end).
Note: the STD cannot precede the CED! - S.25 (3)(a)
AFTER SERVICE
- Landlord can then apply to court under s.29 (2) for termination of the tenancy
or - Tenant can apply for a new tenancy and challenge the grounds cited by the landlord for terminating (s.24 (1))
- Can apply to court any time after service of s.25 Notice.
- At the latest, application nmust be served on the STD - s.29A)
- Deadline can be extended by agreement made between parties before STD (s.29B)
NOTE: ONCE AN APPLICATION MADE BY ONE PARTY AND SERVED ON THE OTHER, THE OTHER PARTY CANNOT SUBMIT A FURTHER APPLICATION.
IF THE TENANT DOES NOT MAKE AN APPLICATION, THE TENANT LOSES ALL RIGHTS TO RENEW !!!
Landlord’s s.25 Notice: FRIENDLY
If landlord willing to allow tenant to stay in propery, better to grant a new lease than to allow holdover indefinitely, because:
- will have peace of mind that T tied into further term during which L will get guaranteed rent;
- market rent may have increased, but if T simply holding over, it will continue to pay old level of rent.
Landlord must serve s.25 Notice:
- stating that new tenancy will not be opposed; and
- including proposals for new lease (not binding but starting point for negotiations)
Court only needs to intervene if parties can’t agree the terms between themselves.
Specified Commencment Date of the lease (‘SCD’) must be at least 6 months more but less than 12 months from the Noitce (‘SCD’).
(If acting for T, T should still make application to court in time, just in case parties agree - just make sure application lodged in time - if parties agree, can simply remove application).
Tenant’s s.26 Request
If T wants to stay in premises, may be better to apply for a new lease, rather than hold over indefinitely, because:
- comparable rents have fallen but T is stuck on a hight rent;
- T wants to make improvements to premises but wants to know it has a new tenancy before incurrng expenditure;
- T wants to assign interests before the CED, any potential assignee will want certainty of occupation!
Tenant can serve notice under s.26 requesting landlord to terminate current tenancy and commence a new one.
Must contain Specified Commencment Date (‘SCD’).
SCD must be no more than 12 months, but at least 6 months, from Notice and not earlier than the CED.
Better for tenant than rolling over, if market rents have gone down.
POST SERVICE
- Landlord can serve a COUNTER-NOTICE within 2 months of T giving s.26 request, if L intends to oppose new tenancy. L must state its statutory grounds. (s.26 (6)
- Note, if Landlord does not serve a counter-notice, it cannot object to new tenancy; can only oppose certain terms.
- T then applies to court for new lease; OR
- L applies to court for new lease, OR for an order that no new lease be granted - but will have lost this right if L hasn’t served counter notice within 2 months
- Application can be made any time after L has served counter-notice, or if it fails to do so, after 2 months have passed since s.26 request.
APPLICATION MUST BE MADE BY THE DAY BEFORE THE SCD.
IF TENANT FAILS TO APPLY IT LOSES RIGHT TO RENEW !!! (assuming L doens’t apply for new lease)
Counting time rules
CORRESPONDING DATE RULE
- applies where notice is given in a period of months
- the notice will expire on the ‘same date’ as when it was served
- e.g. if a s.25 notice is served on 1 January and landlord wants to give the minimum 6 months notice, then the STD will be 1 July
‘FROM AND INCLUDING’
- for calculating the CED of a lease (as lease won’t say CED itself)
- if the lease is stated to be for a number of years “from and includng” a certain date, or “commencing on” a certain date, it will expire the DAY BEFORE that date in the relevant year
- e.g. Lease granted for 10 years “from a including 15 April 2010) - will expire 14 April 2020.
BUT, if the lease just says “FROM” then the lease will actually commence the followinf day and expire on that date in the relevant year.
- e.g. Lease of 5 years ‘granted from 24 March 2015’ - means that lease starts on 25 March 2015 - the CED is 24 March 2018.
Competent Landlord
A s.25 Notice must be served by, and a s.26 Request must be on, the COMPETENT LANDLORD.
Defined by s.44 - means the person who has a superior tenancy with at least 14 months left to run (either actually or by virtue of security of tenure! - so look to see whether a s.25/26/27 notice has been received on or served by that person).
(See diagram on SGS description).
Landlord’s GROUNDS OF OPPOSTION - s.30 (1)
MANDATORY GROUNDS - i.e. if Landlord establishes these grounds, automatically no renewal
(d) If landlord has offer of suitable alternative accomodation (must be reasonable etc., having regard to the tenant’s goodwill);
(f) landlord intends to demolish or reconstruct the premises, or a substantial part, and could not reasonably do it without obtaining possession; Landlord must have a firm and settled intention to redevelop;
(can prove with planning permissions, building quotes etc.)
(g) landlord intends to occupy the premises itself - genuine intention to occupy for more than short-term - RESTRICTED BY THE ‘5 YEAR RULE’ - if landlord purchased the reversion within 5 years of the SCD/STD, cannot rely on ground (g)! (s.30 (3))
NON-MANDATORY GROUNDS (court’s discretion)
(a) (serious) breach of repairing obligation by tenant
(b) persistent delay by tenant in paying rent
(c) tenant’s other subsantial breaches of obligations
(e) if sub-tenancy of part, possession of whole is required to letting or disposing of property as whole.
COMPENSATION AVAILABLE FOR GROUNDS WHERE TENANT NOT AT FAULT (except ((d) - suitable alternative.
Interim Rent
Either party may apply to court for market level INTERIM RENT -s.24A - payable from the earliest STD or SCD which could have been stated in the s.25 notice / s.26 request.
This applies while the new lease is being finalised, or pending termination of the old lease, where no new lease is being granted.
If no new lease is being granted, because L is opposed to it, interim rent will be lower than market level.
Terms of the new lease
When considering the terms of the proposed new lease, the current tenancy is the starting point, and proposed deviations must be reasonable by those proposing them - (O’MAY)
Where an ‘old lease’ is renewed, the new alienation provisions can only require an AGA where reasonable - (WALLIS FASHION GROUP).
Tenant’s s.27 Notice
If tenant wishes to end the tenancy without requesting a new lease, it can serve notice under s.27.
Should be served on immediate landlord and not the competent landlord.
Only necessary to serve a s.27 notice if tenant does not plan to vacate the property by the CED.
Must serve notice at least three months before the date it wishes to leave.
May not then serve a s.26 request.
Form of notices and requests
Statutory notices and requests must be validly served and in the correct form.
Once landlord has served a s.25 notice, the tenant cannot then serve a s.26 request !!! (and vice versa)
All times of notice bust be in a prescribed form - pre-printed versions are available.
MANNAI INVESTMENT COMPANY v EAGLE STAR
- errors of form can affect validity of notice
- court will consider whether notice is sufficiently clear to leave a reasonable recipient in no reasonable doubt as to the terms of the notice.
- E.G. a slight error on the property address unlikely to confuse the recipient.
