What is it?
“Security of Tenure” is a statutory right, under the Landlord and Tenant Act 1954 (“LTA 1954”), for an existing Tenant to renew a Lease and automatically applies to any premises occupied for business use.
What does it do?
If your Lease has the benefit of “security of tenure” then a Landlord will only be entitled to refuse the grant of a new Lease on certain specific grounds and must pay statutory compensation if they are seeking to refuse the new Lease. These are defined in the LTA 1954 as follows:
The obligation to enter into further Leases with the Tenant, on expiry of the initial Lease, may not be ideal for a commercial Landlord for many reasons. There is however scope to disapply the provisions of the LTA 1954 in respect of Security of Tenure in a procedure known as “Contracting Out”.
Excluding Security of Tenure aka “Contracting Out”
The procedure to be followed, as laid out in the LTA 1954, is very strict and must be followed correctly:
What are the effects of “Contracting Out”
Provided the correct procedure is followed, when the term of the Lease expires the Lease will come to an end and the Tenant will not have the statutory right to request a renewal which could have serious effects on a tenant’s continued occupation of their business premises.
If your lease has not been “contracted out” and a tenant has the benefit of security of tenure then a Tenant must remember to follow the statutory procedure to request a new lease, referred to as a “s26 Notice”, which includes serving the proper notice and also ensuring that such notice is served within the statutory time periods. The Landlord may also instigate the process by serving a similar notice referred to as a “s25 Notice”.
How we can help
Regardless of whether you are a Landlord or a Tenant it is important that you are fully advised on the effects of all aspects of commercial leases including but not limited to the effects of the LTA 1954 and security of tenure.
Walker Solicitors have an experienced Commercial Property Team who can offer a range of expert legal advice when it comes to entering into commercial Leases.
For more information, contact Zachary Clayton on 01922 639 080.
About the Author, Zachary Clayton.
Zachary joined Walker Solicitors in September 2016.
Conveyancer in our Residential Property Department.
T: 01922 639 080
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