Please note that this News item is not maintained, and reflects the law as at the date of publication or update.
Under the Landlord and Tenant Act 1954 (the “1954 Act”), the starting position for a tenant of commercial premises is that it will have a statutory right to renew its lease at the end of the lease term, with such renewal to be broadly on the same terms as the previous lease save for modernisation. This right is sometimes referred to as “security of tenure” with the lease in question being referred to as a “protected tenancy”.
However not all tenants of commercial premises are entitled to this right and, even if they are, the parties can agree to “contract out” of the security of tenure provisions of the 1954 Act at the time the lease is granted.
Further, where a lease has not been contracted out of the 1954 Act and does have security of tenure, there are certain specific grounds upon which a landlord can oppose a lease renewal.
Specifically, there are seven grounds which a landlord can seek to rely on if it wishes to obtain possession at the end of the term. Four of these are grounds on which the court can exercise a discretion, and the remainder are mandatory grounds where the court must decide in favour of the landlord if the facts are proven.
Where a lease has security of tenure and is terminated on one of the mandatory grounds, the landlord may be obliged to pay the tenant compensation. Compensation is calculated by reference to the rateable value of the property.
On 1 April 2023, the Valuation Office Agency updated the rateable values of all business and non-domestic properties in England and Wales. The updated list of rates will be in effect for three years until 31 March 2026.
The 1954 Act sets out precise rules and timeframes which must be followed. They apply whether or not a commercial lease is to be granted with security of tenure or not and, also, whether or not any protected tenancy is then renewed.
If you are a business tenant or a landlord of commercial premises, please get in touch so we can advise you on what steps need to be taken to ensure you do not fall foul of the relevant provisions within the 1954 Act.
