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Part II of the Landlord and Tenant Act 1954 is one of the key pieces of law that governs the landlord and tenant relationship for commercial property. This blog explores the basic principles of the Act and the considerations which should be kept in mind when negotiating a new tenancy agreement.
Who does the Act apply to?
The Act applies to all ‘business tenants’ meaning anyone who occupies their premises under a lease for the purpose of conducting their business.
What protections does the LTA offer?
The key principle which underpins the Act is the protection known as ‘security of tenure’. This is the fundamental framework that allows business tenants the right to renew their tenancies when they would have otherwise come to an end. The two main elements to this are as follows:
1. A protected business tenancy does not automatically end on the date specified within the lease but continues on the same terms until renewed or terminated in one of the ways mentioned in the Act or;
2. If the landlord or tenant cannot mutually agree a new lease, either party can apply to the Court to determine what the terms should be.
How can the Tenant terminate the lease?
The tenant is able to end the tenancy in various ways if they wish to. These are:
1. By leaving the premises on or before the end date of the lease;
2. By serving notice which gives at least 3 months’ notification for the tenancy to expire either on or after the end date.
3. By not taking up a new lease if offered.
What is the procedure to follow?
The Act imposes a strict procedure to follow for both renewing and ending a lease agreement. The time limits are critical and the Court will not extend these regardless of the circumstances.
The landlord can serve notice stating that they wish to terminate the lease. The end date must not be more than 12 months and not less than 6 months from the actual end date set out in the lease. Within the notice, the landlord must say whether they oppose a new lease and the reasons for this or suggest new terms for a new tenancy. The landlord can only use the specific grounds set out in the Act to oppose a new lease.
The tenant can also serve notice to state an end date or propose terms for a new lease. The same rules apply in terms of timescales. If the landlord does not agree to the new tenancy request, they must then serve a counter notice within two months, again setting out the specific grounds for their opposition.
If the tenant disagrees with the reasons given by the landlord for opposing a new tenancy, they can apply to the court to impose a new lease agreement.
If the terms of a new lease cannot be agreed, either the landlord or tenant can apply to the Court to have the terms decided. The tenant should bear in mind the time limits for this as the protection of the Act will come to an end if an agreement is not reached by the end date specified in the original lease.
Most lease renewals are resolved by agreement and negotiation. It is also possible for a business tenancy to not be protected by the Act if both parties choose to include a term within the lease that the Act does not apply.
If you need further advice regarding a business tenancy dispute or agreement, call us on 01484 821500 or email us at email@example.com to speak to one of our dispute specialists today.