What is Security of Tenure?
Security of tenure means that once a business tenant’s lease expires, the tenant has the right to request a new lease on the same terms as the previous lease, except where the landlord has a statutory ground to refuse the grant of a new lease. The accepted grounds for refusing a new lease are;
Why Might Security of Tenure be Needed?
From a Tenant perspective, Security of Tenure offers long term foundations for a commercial occupation and may be extremely desirable where a tenant wants to “invest” in the property or generates significant goodwill by operating from the premises.
Whilst Landlord will typically want to avoid a Lease with Security of Tenure to maintain flexibility in dealing with the property, offering a Lease with Security of Tenure can be a way to attract Tenants.
Excluding Security of Tenure (“Contracting Out”)
If the Tenant and the Landlord agree that a Lease will exclude Security of Tenure in it’s terms and the correct procedure is followed, the effect is that when the Lease comes to an end the Tenant will not have any right to request a further Lease from the Landlord and, if required to do so, must vacate the property.
There is an agreed statutory procedure for serving and acknowledging this change. The Tenant needs to
Both the Landlord and the Tenant should carefully inspect any Heads of Terms as to whether the lease will be ‘protected’ with security of tenure, or ‘contracted out’/’excluded’ from security of tenure as failure to comply with the statutory procedures could have significant long term effects for both parties.
If you are either a Landlord or Tenant looking to take on a new Lease and would like advise as to Security of Tenure, please contact us here at Walker Solicitors and we will be more than happy to assist.
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