Security of tenure for commercial leases

Most tenants of commercial premises with a lease of more than 6 months, or if they have been in occupation for more than twelve months, have security of tenure. This means that they have the right to continue to occupy the premises after the lease has come to a natural end on similar terms to the original lease.

This protection is given by the Landlord & Tenant Act 1954:

• Part I Security of Tenure for Residential Tenants.
• Part II Security of Tenure for Business, Professional and other Tenants.

Security of tenure can be important for commercial tenants, for example; if they have installed a lot of equipment, If the location is vital to their operation, if business continuity is important and so on.

If negotiations to permit continued occupation fail at the end of the original lease, the tenant can apply to the Court for a new lease.

To regain possession, the landlord must serve notice under the Act setting out grounds described in the Act for opposing renewal of the lease. This can include:

• If the tenant has not carried out repair and maintenance obligations.
• Persistent delay in paying rent.
• Other substantial breaches of obligations under the tenancy, or any other reason connected with the tenant’s use or management of the holding.
• The landlord has offered alternative suitable accommodation.
• The tenant is a sub tenant of part of the premises, and the landlord would be able to get more rent if they leased the entire premises.
• The landlord intends to demolish or reconstruct the premises.
• The landlord intends to occupy the premises.

The landlord and the tenant can agree to exclude, or ‘contract out’ the right to security of tenure, giving the landlord automatic possession at the end of the lease. This might be agreed, for example, if the landlord intends to redevelop the premises, or to occupy it themselves, or they may simply want flexibility at the end of the lease. See Statutory declaration excluding security of tenure for more information.

[edit] Find out more

[edit] Related articles on Designing Buildings Wiki

• Break clauses in leases.
• Ground rent.
• Landlord and Tenant Act.
• Lease Negotiations - Tenants Checklist.
• Leasehold.
• Penal contractual terms.
• Rent-free period.
• Rent in administration.
• Rent review.
• Sample retail lease.
• Service charge.
• Statutory declaration excluding security of tenure
• Vacant possession.

[edit] External references

• The Landlord & Tenant Act 1954.
• Ashurst, Business Tenancies: Contracting out of the Landlord and Tenant Act 1954.