Security of tenure under a business lease- fs Flashcards
(14 cards)
Security of Tenure (LTA 1954)
A statutory right that allows business tenants to request a new lease after the expiry of their current one, on the same terms (except rent), unless validly contracted out or opposed by the landlord on statutory grounds.
What are the eligibility criteria for security of tenure protection under the Landlord and Tenant Act 1954?
- There must be a tenancy (not a licence)
- The premises must be occupied by the business
- The occupation must be for the purposes of a business
- Lease must be more than 6 months in term (or renewable beyond 12 months)
Statutory Grounds for Landlord to Oppose Renewal (LTA 1954, s.30)
- Failure to repair
- Persistent rent arrears
- Substantial breach of tenant obligations
- Suitable alternative premises available
- if the lease was a Sub-lett of whole; better rent possible by letting whole
- Redevelopment or demolition of premises
- Landlord intends to occupy the premises
✖ Not valid grounds: higher rent from new tenant, desire to sell
How does a landlord contract out of security of tenure?
- If the tenant receives the landlord’s warning notice 14 days or more before lease grant
→ The tenant must sign a simple declaration confirming receipt and agreement. - If the tenant receives the landlord’s warning notice less than 14 days before lease grant
→ The tenant must make a statutory declaration before an independent solicitor, acknowledging they are giving up statutory rights.
What are the key procedural requirements for renewing a lease under the 1954 Act?
- Either party must serve a Section 25 (landlord) or Section 26 (tenant) notice
- Must be served not more than 12 months and not less than 6 months before lease expiry
- Court may fix new rent and new lease length (not exceeding 15 years)
Section 25 Notice (Landlord’s Notice)
A notice served by a landlord to either propose a new lease or oppose renewal. It must be served 6–12 months before lease end and state whether renewal is opposed and on what grounds (if any).
What powers does the court have if the landlord and tenant cannot agree terms for renewal?
The court may order a new tenancy with:
- Terms as it sees fit under the 1954 Act
- A duration of up to 15 years
- A new market rent, even if it differs from previous rent
- May modify other terms (e.g., break clauses)
In what time window must a landlord serve a Section 25 notice to terminate or propose renewal?
The notice must be served no more than 12 months and no fewer than 6 months before the contractual lease end date.
Why might a landlord serve a Section 25 notice first in the lease renewal process?
To gain a tactical advantage by offering renewal on more favourable terms, such as a higher rent, before the tenant serves their own notice.
Key Warnings in the Contracting-Out Notice (LTA 1954)
- Tenant will lose the right to remain after lease expiry
- No right to compensation for loss of premises
- No right to ask court to set a fair rent
- Tenant should seek legal advice before signing
- Must sign a simple or statutory declaration
When is a tenant entitled to double compensation under the Landlord and Tenant Act 1954?
A tenant is entitled to double compensation if their occupation exceeds 14 years by the time the lease expires. To secure this, the tenant should serve a section 26 request for a new tenancy to start in 12 months’ time, ensuring their occupation surpasses the 14-year threshold.
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What must a landlord do if they wish to oppose the grant of a new lease under a section 26 request?
The landlord must serve a counter-notice on the tenant within two months of receiving the tenant’s section 26 request, stating the grounds for opposition.
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Under the Landlord and Tenant Act 1954, how is the ‘competent landlord’ determined when a sub-tenant serves a section 26 reques
The ‘competent landlord’ must be identified by examining the chain of tenancies. A sub-tenant’s immediate landlord can be the competent landlord only if they have 14 months or more remaining on their lease. If not (as in the case where only 13 months remain), or if that landlord is not in occupation, they do not qualify for security of tenure and cannot grant a new lease. The competent landlord is then the next party up the chain, such as the freeholder.
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Under the Landlord and Tenant Act 1954, what is the effect of a tenant sub-letting the whole of the premises on their right to a new lease?
a tenant sub-lets the whole of the premises, they are no longer in occupation and therefore do not qualify for protection under the LTA 1954. As a result, they do not have the right to be granted a new lease. However, the sub-tenant may qualify for such protection.
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