11 May 2012 #Real Estate
Various considerations apply at the end of a business lease and a landlord should be aware of the following:
If the lease is not protected by the Landlord and Tenant Act 1954 which means that the tenant has no statutory right to renew the lease or to remain in the premises at the end of the term, then the most straightforward way of ensuring that the tenant leaves is to write to him before the end of the fixed term reminding him that the landlord expects him to leave on the last day of the term.
If the landlord allows him to stay after the last day of the term, the tenant continues to pay rent and there is no negotiation for a new lease, then it is possible that a periodic tenancy which is protected by the Landlord and Tenant Act 1954 will come into effect. It then becomes much more complicated to remove the tenant from the premises, as we discuss later in this update.
If the lease is protected by the Landlord and Tenant Act 1954 which means that the tenant has the statutory right to renew its lease at the end of the term then the tenant is entitled to continue in occupation at the end of the term, paying the same rent and on the same terms and conditions as the lease that has expired. This is known as “holding over” under the 1954 Act.
If the landlord wants to remove a tenant who has such protection then it is obliged to serve a Section 25 Notice under the Landlord and Tenant Act 1954. Unless the Landlord is able to establish one of the grounds opposing the grant of a new tenancy (specified in Section 30 of the Landlord and Tenant Act 1954) then the tenant is entitled to require the grant to it of a new lease for a term of not more than 15 years on the same or no more onerous terms than the existing lease and at the then current market rent. The grounds on which the landlord may validly oppose the grant of a new tenancy include:
So, in the case of a lease protected by the 1954 Act the tenant can be removed at the end of a lease if one of the grounds mentioned above can be proved, but the landlord will be obliged to give not less than six months’ and not more than 12 months’ notice to the tenant, such notice to expire not earlier than the date of expiry of the term granted by the lease.
Where a ground of opposition can be proved by the landlord, the landlord should be aware that the tenant will be entitled to compensation as he will be deprived of his right to renew through no fault of his own. Compensation is calculated having regard to the rateable value of the property.
Notice by the Tenant?
Finally, a tenant does not need to give him any notice if he intends to vacate the premises on or before the expiry of the fixed term of the lease. The tenant is entitled to move out from the premises without any notification to the landlord. However, if the tenant stays on after the expiry of the fixed term of the lease and then decides that he wishes to leave, he is then obliged to give the landlord three months’ notice of his intention to vacate.
Accordingly, if the lease in question has not yet come to an end, and is not protected by the 1954 Act, the best way to be certain that your tenant vacates on the due date is to send him a reminder that you will require him to vacate on or before the expiry date.
In any other situation where the landlord requires vacant possession, the landlord will be obliged to comply with the strict technical requirements of the Landlord and Tenant Act 1954 and professional advice should be taken to ensure that all notices are properly served within the correct time periods.