The Landlord and Tenant Act 1954 was introduced to govern the rights and obligations of landlords and tenants of business tenancies. It provides business tenants with greater security of tenure and when applies to a business tenancy will give the business tenant a nearly automatic right to renew their lease.

When Will the Act Apply?

The Act applies to leases granted over premises which are occupied for business purposes, it does not apply to tenancies at will, agricultural tenancies, licenses, tenancies of less than 6 months and those contracted out of the Act.

It is possible for the parties to agree to exclude the Act in relation to a new lease, but by agreeing to this the tenant will lose any right to renew the lease. If the parties agree the Act is not to apply, the landlord will serve notice on the tenant confirming this and the tenant must formally agree before completion, either by way of a simple declaration (where the notice is served more than 14 days before the start date) or by a statutory declaration (that must be declared in the presence of a solicitor) if the notice is served less than 14 days before the start date.

The Effect of the Act and What Happens if it is Excluded:

When the Act continues to apply to a business lease, the business tenancy does not automatically end on expiry of the fixed term.

Instead, the tenant will have the right to renew their lease on the same terms. The Landlord can oppose a renewal on certain grounds, although they may have to compensate the tenant if the new lease is not granted and they have to vacate the premises.

The grounds in which a landlord may retain possession include where the landlord wants to retain the property for development purposes or to occupy it themselves, where the tenant has a history of non-compliance with the lease and/or non-payment of rent and where the premises has been split into units for the purpose of subletting.

A protected lease can only be brought to an end by service of a notice by one party on the other. The landlord can serve notice offering a new lease to the tenant (or refusing a new lease on the grounds referred to above), and the tenant can serve a notice on the landlord requesting a new lease. However, if a tenant vacates the property before the end of the fixed term the Act will cease to apply, and the lease will end on expiry of the fixed term.

If the landlord and tenant agree at the outset that the lease should be outside the protection of the Act, then the tenant will have no right to renew the lease, which will simply come to an end at the end of the fixed term. The tenant will have to vacate at that point. The parties may negotiate a new lease, but the landlord does not have to negotiate or grant a new lease.

About the Author

Darci Martin

Darci Martin

Trainee Solicitor