14 November, 2017
Whether or not the security of tenure provisions contained in the Landlord and Tenant Act 1954 ("the LTA 1954") are included in a commercial lease, can often be one of the most important considerations for a landlord.
Sections 24 to 28 of the LTA 1954 provide a framework for lease renewal in relation to commercial properties. The important thing to note is that if these provisions are not expressly excluded from a commercial lease, a tenant will have a right of renewal come the expiry of the initial term of the lease. There are certain grounds contained within the LTA 1954 upon which a landlord can refuse to grant a new lease but obviously these may be subject to challenge by the tenant and they are limited to certain circumstances.
It is therefore crucial, if a landlord requires the tenant to vacate upon expiry of the initial term, to ensure that the security of tenure provisions of the LTA 1954 are correctly excluded from a commercial lease. Failing which a landlord could find itself in a position where it may be very time consuming and expensive to try and resist the tenant's wish for a new tenancy and in some cases it may not be possible to resist the same.
The steps required to exclude the LTA 1954 from a commercial lease comprise of a notice being served by the landlord on the tenant notifying it that the proposed lease is to be excluded from the LTA 1954 security of tenure provisions. The tenant must then make a Statutory Declaration confirming it has been notified accordingly and has no objections to the same. This will then be recorded in a clause in the proposed lease. All of this must take place before the proposed lease is completed by the parties.
It is very easy for even a minor error (for example the Statutory Declaration to have been incorrectly made) in the above process to mean that the LTA 1954 has not been excluded from the proposed lease and therefore the tenant has the right of renewal. This is why it is very important to instruct a specialist commercial property solicitor who can ensure that the correct procedure is followed and therefore ensure that these issues are avoided. This is particularly true where a landlord has multiple commercial properties or the leases are of high value.
Forbes Solicitors has a team of experienced commercial property specialists who can assist with all aspects of buying, selling and leasing commercial property. For more information please contact the Commercial Property team on 0333 207 1130.