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Security of Tenure

Did you know that the default legal position for a tenant is that they have a right to remain in a property once a commercial lease has expired, thanks to security of tenure?

Did you know that the default legal position for a tenant is that they have a right to remain in a property once a commercial lease has expired, thanks to security of tenure?

You would expect that if a commercial lease is validly ended by the landlord e.g. by effluxion of time or the service of a break notice (see: Ending a Lease), then the default rule would that the tenant no longer has a right to remain in the property. However, thanks to the Landlord and Tenant Act 1954, this is not the default legal position, but in fact the opposite!

Security of tenure

(Landlord and Tenant Act 1954)

The Landlord and Tenant Act 1954 grants the tenant of a commercial lease something that is called “security of tenure” as the default position. Security of tenure means that a lease will not end automatically at the expiry of the lease term but will continue in existence until it is ended in accordance with statutory notice provisions.  These provisions involve the giving of at least six months’ notice.  The tenant will then usually be entitled, when the original lease ends (and if it wishes to do so), to take a new lease of up to 15 years at the then prevailing market rent but otherwise on the same terms as the existing lease subject to minor updatings.

For more information on security of tenure & commercial leases

Please do not hesitate to contact an Everyman Legal Solicitor on 01993 893620 for a free discussion or email natalie.hopkins@everymanlegal.com

Can the security of tenure provisions be excluded from a commercial lease?

Yes, this default rule can be excluded from a lease. The parties have to agree, at the start of the lease, that the 1954 Act will not apply to the lease, and comply with certain notice and declaration requirements in order that the 1954 Act will not take effect.

However, excluding security of tenure from a commercial lease will have some effect on the bargaining power of the tenant at the end of the lease. If the tenant wants to stay in the same premises the lease negotiations will effectively start from scratch and the landlord can use this to better his position. With security of tenure, a tenant is entitled to a lease of up to 15 years at market rent but otherwise on the same terms as the existing lease, as the minimum.

 

Can a landlord stop a lease from renewing under the 1954 Act where the lease has security of tenure?

A landlord can only oppose renewal on certain limited grounds such as the need for him to occupy the property himself or because he intends to redevelop the property. If a landlord succeeds on one of these grounds he will, however, usually have to pay the tenant a potentially large amount of compensation.

Is there anything else I should know about the 1954 Act?

Tenants should note that the 1954 Act also prevents them from just walking away from an existing tenancy where they have security of tenure.  So long as they are in occupation of the property, if they wish to leave when the lease ends, they must serve a notice and comply with the Act’s provisions before the lease will end.  A tenant who takes new premises may find that it is liable for two lots of rent if it does not validly end its old lease.

 

My lease is coming to an end – what should I do?

When the contractual term of a lease is coming to an end, both landlord and tenant should plan in advance as to how they will want to proceed. If the lease has security of tenure then both the landlord and the tenant should take legal advice on the steps that need to be taken in order to protect their interests. The 1954 Act is complicated and prescriptive so it is incredibly easy to fall foul of the law and lose any legal protection that you have. Any notices received from the other side should be acted upon immediately and time limits complied with.  Only this way can the interests of both parties be properly protected.

If the lease excludes the security of tenure provisions then the tenant has no right to remain in the property after the lease ends. If the tenant does so, it is effectively trespassing and can be removed at any time by the landlord without the need for a court order.  The only way to remain in the property would be to negotiate a new lease or lease extension with the landlord.  Again, legal advice should be taken early as this is not as simple as copying the old lease and re-dating it.

Our dedicated team of solicitors, based in Witney, Oxfordshire, would be happy to answer your questions.

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