Last edited 11 Sep 2014

Statutory declaration excluding security of tenure

Most tenants of commercial premises with a lease of more than 6 months have security of tenure. This means 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 and 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.

To regain possession, the landlord must serve notice under the Act setting out the grounds for opposing renewal of the lease, for example if the tenant has not carried out repair and maintenance obligations.

However, 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 refurbish or redevelop the premises, or to occupy it themselves, or they may simply want flexibility at the end of the lease.

To contract out security of tenure, the landlord must issue a Landlord’s Notice to Exclude Security of Tenure and in response to this the tenant completes a Declaration confirming that they understand and accept they are entering into a lease with no security of tenure. The notice and the declaration must follow a prescribed format.

If the landlord's notice is served at least 14 days before the lease is entered into, then a simple declaration can be used. If the landlord's notice is served less than 14 days before the lease is entered into then a statutory declaration is required, signed before a solicitor.

The lease must then refer to the notice, the declaration and the agreement to exclude security of tenure.

Leases that exclude security of tenure may have a lower rent.