The Landlord and Tenant Act 1954 (1954 Act) is an important piece of legislation for landlords and tenants of premises which are occupied for business purposes.
Here we give an overview of the workings of the 1954 Act.
Security of Tenure
Broadly speaking, the 1954 Act provides tenants of business premises with security of tenure. This means that upon the fixed term of their lease expiring, the tenant cannot simply be evicted by the landlord, instead tenants of business premises have i) a right to remain in occupation even after the end of the contractual term; and ii) the right to apply to the court for the grant of a new lease.
It is often found that Landlords do not find the 1954 Act protection for tenants very attractive. It is possible to contract out of this, but there is a strict procedure which must be followed for it to be effective and enforceable.
Bringing a 1954 Act protected lease to an end
A tenancy protected by the 1954 Act will not terminate automatically at the end of its contractual term. The tenancy will continue to run until it is brought to an end by one of the following ways:
- The Landlord serves a section 25 notice.
- The Tenant serves a section 26 request.
- The Tenant serves a section 27 notice.
It is important for both the Landlord and Tenant to start considering whether to take steps to bring the lease to an end when a lease is nearing expiry as it may be in their interest to be the one to serve the notice. Once the Landlord serves a section 25 the tenant cannot then serve a section 26 notice and vice versa.
It is vital that the notices which have a prescribed form are served in accordance with that prescribed form. Even small, technical errors could render a notice invalid, and this can have serious consequences. Therefore, legal advice should always be obtained when serving such a notice or upon receiving such a notice.
Application to the Court
For a tenant to protect its statutory right to a lease renewal an application to the court must be made before the date of termination set out in the section 25 notice or before the date of commencement specified in the section 26 request. The parties can agree to extend this timescale, which is quite usual, often to allow negotiations to progress between the parties for the terms of the new lease (when the landlord is not opposed to granting the tenant with a new lease).
If no application is made, or if a new lease is not completed by the end of timescale, known as the statutory period, the tenant will lose its right to a new lease.
Opposing the Grant of a New Tenancy
The Landlord can oppose the grant of a new tenancy but only on specified grounds set out in section (30)(1) of the 1954 Act.
The Landlord must state which ground or grounds that they rely upon in their section 25 notice.
If the Landlord receives a section 26 request from the tenant requesting a new tenancy but the landlord wishes to oppose this, the landlord must serve a counter notice on the tenant within 2 months after the section 26 request is served stating the ground or grounds that they rely upon to oppose the renewal. If the landlord does not serve a counter notice within this time limit, the landlord cannot oppose the tenant’s renewal application and will have to grant the tenant a new lease.
If you are a landlord or a tenant of business premises and the lease is nearing expiry, you will want to give some thought about starting the statutory lease renewal process. It can be very much in the interest of either the landlord or the tenant to start the process.
Should you need to start the lease renewal process or if you have received a section 25 notice or a section 26 request please do not hesitate to contact solicitor, Danielle Dyer or our Dispute Resolution team for specialist advice.
Please note, this blog is intended for general information purposes only and should not be taken as legal advice. If you need legal advice pertaining to Dispute Resolution and/or Property Litigation, please contact your local BakerLaw office or email us at email@example.com.