10 news/legal expert
Security of tenure in commercial leases ...
Glanvilles solicitor Akbar Shah considers what is likely to occur at the end of a protected tenancy
Security of tenure is a statutory right allowing business tenants to remain at a property after their lease has ended and enter into a renewal lease (except in limited circumstances). This right allows tenants to carry out a business and build up goodwill at a property without the risk of having to leave the property as soon as their tenancy is up.
Security of tenure can be specifically excluded from leases but this must be agreed between both parties before the lease is completed. Such leases are referred to as “excluded“ while a lease benefiting from security of tenure is classed as “protected“.
Once the contractual term of a protected tenancy comes to an end, the tenant is entitled to remain in occupation at the property. A
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tenant who does remain will be “holding over“ and, while holding over, both the tenant and the landlord will still be bound by the terms of the lease.
If a landlord wishes to remove a protected tenant, either at the end of the contractual term or while the tenant is holding over, the landlord must serve a Section 25 notice on the tenant. A Section 25 notice will specify the landlord’s intention to terminate the tenancy, the grounds for termination (of which there are only a limited number – eg the landlord planning to redevelop the property or the tenant being in arrears with rent payments) and the proposed termination date. The tenant is not obligated to agree to the termination of the lease and can make an application
for a court order for a renewal lease to be granted.
In cases where a landlord does not oppose a renewal lease, a landlord may still serve a Section 25 notice, but this time offering the tenant a renewal lease and specifying the terms of the renewal lease. The terms should be similar to the original lease but amendments can be made, including increasing the rent to the market rent at the time of the renewal. Terms can be negotiated and an application to the courts can be made to set the terms of the new lease.
If a tenant does receive a Section 25 notice from a landlord, the best thing to do is to obtain specialist legal advice as to the terms of the notice and how
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best to react. Failure to deal with a Section 25 notice correctly or within set time frames can have significant consequences for a tenant. This can range from the tenant having to accept more onerous terms (including a severely increased rent) in a renewal lease to losing a premises altogether.
As there is a strict procedure to follow, landlords should also consider taking legal advice when attempting to end protected tenancies or offering renewal leases. Landlords must also know whether their tenants have excluded or protected tenancies; at the end of a contractual term, landlords cannot simply allow excluded tenants to stay at a property as they would a protected tenant. This could result in a previously excluded tenant gaining security of tenure and therefore gaining the upper hand in subsequent negotiations for a renewal lease.
Details: Akbar Shah 01329-282841
akbar.shah@
glanvilles.co.uk www.glanvilles.co.uk
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