The Landlord and Tenant Act 1954 is an important piece of legislation when it comes to commercial leases as it confers security of tenure on commercial tenants and regulates the manner in which commercial leases can be terminated. It offers a great deal of protection to commercial tenancies and ensures that established and successful businesses can continue their trade in confidence.
The protection given to tenants under the 1954 Act is twofold. Firstly, a commercial tenancy does not cease at the expiration of a fixed term or periodic tenancy. Instead, the tenancy automatically continues until the Landlord terminates the lease under one of the specified methods required under the 1954 Act. Secondly, upon expiration, the commercial tenant has rights in law to apply to the court for renewal of the lease.
Whilst the 1954 Act offers security of tenure to the commercial tenant, the rights provided are still subject to limitations and exceptions. One of these limitations is that the protection afforded by the 1954 Act only applies to commercial tenancies. The elements that make up a commercial tenancy are as follows:
- There must be a tenancy;
- The premises must be occupied by the tenant;
- The premises must be occupied for the purposes of a business carried on by the tenant.
The 1954 Act also sets out how the landlord can terminate a commercial lease, following the expiration of the lease term, through the serving of a Section 25 Notice. This, in effect, prevents the tenancy from automatically continuing past the expiration date. In order to issue a Section 25 Notice however, it must first comply with a series of requirements.
In order to be effective, the notice must be in the prescribed form and be issued to the tenant no less than six months, nor more than 12 months, before the date of termination specified in the lease. The notice must also state on which statutory grounds the landlord intends to oppose the grant of new tenancy. The statutory grounds specified under the 1954 Act are particularly narrow in scope in order to ensure that landlords only refuse new grants of commercial tenancy with substantially good reason. The grounds specified under the 1954 Act include:
a) Tenant’s failure to repair;
b) Persistent delay in paying rent;
c) Substantial breaches of other obligations;
d) Alternative suitable accommodation provided by the landlord;
e) Possession required for letting/disposition purposes;
f) Demolition or reconstruction of the property;
g) Landlord’s intention to occupy the holding for their own commercial purposes.
The 1954 Act therefore provides commercial tenants with a significant amount of security when it comes to occupying their business premises and ensures that, unless a substantially good reason can be established, the landlord is unable to refuse a new grant of tenancy following the expiration of a fixed term. At Seatons, our team of highly trained legal professionals have a wealth of experience in commercial property and provide clear, easy to understand legal advice at low sensible fees. For more information, feel free to give us a call on 01536 276300.
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