Landlord and Tenant update

Landlord and Tenant update

16:42 25 March in Blog, Commercial Property & Leases, For Businesses

A frequent headache for commercial landlords, particularly those with a sizeable portfolio that needs keeping track of, is the position when leases that have been contracted out of the Landlord and Tenant Act 1954 expire. In such cases where the appropriate notices were served and declarations made by the tenant prior to the commencement of the lease, the tenant is not entitled by statute to a lease renewal at the end of the term. In order to prevent a tenant becoming a periodic tenant with security of tenure, what steps need to be taken when the tenant wishes to renew the lease?

It seems that the question hinges upon negotiations between the parties. If landlord and tenant are in discussion over the terms governing a renewed tenancy, any rent received during the tenant’s continued occupation will not serve to establish security. In the recent Court of Appeal case of Erimus Housing Ltd v Barclays Wealth Trustees (Jersey) Ltd [2014] it was held that provided some negotiations over the tenancy were underway, the tenant’s occupation would not be construed as anything other than a tenancy at will with no security. In that case it was in fact the landlord who was trying to maintain that the tenancy had become an annual periodic tenancy in order to tie the tenant in for a further 13 months rent.

This decision is useful for a landlord trying to resist a claim by a tenant that it has gained security by remaining in the property after expiry of an excluded lease. In that case, at times there was a period of 10 months between exchanges of correspondence on the new tenancy. Even this scant evidence of ongoing discussions was considered sufficient to resist security being established by the tenant although such a course would not be recommended. The case would be of no assistance in circumstances where the tenant has merely held over under the expired lease on the same terms and with rent being received by the landlord with no such negotiations being commenced. In this instance a periodic tenancy would be deemed established and the tenant would gain security of tenure.

For further help with this and in relation to leases of business premises please contact one of our commercial property team or Amanda Ashby directly on 01943 609969 or email [email protected] 

Amanda Ashby

[email protected]