Security of Tenure

Are you approaching the end of your fixed term commercial lease?

If you are running your business from commercial premises subject to a contractual tenancy, it might be worthwhile checking whether your lease says anything about the Security of Tenure provisions to ascertain whether you can renew your lease and continue to run your business from the premises on the expiry of your existing lease term.

Businesses are often forced to move premises at the end of their lease term, which can have a knock on affect on your business and revenue if location is an important factor for you, or you have built up substantial goodwill in the premises. This is more so if the need to move comes unexpectedly. Therefore, it is always worthwhile knowing exactly what your lease says.

Moreover, having knowledge of your rights and the terms of your lease can benefit you not only if you ever encounter a dispute with your landlord, but also if you are ever speaking with any investors or banks with regards to funding.

The Landlord and Tenancy Act 1954 (‘the 1954 Act’)

The 1954 Act was passed to protect commercial tenants, and gives rights in respect of their occupation of commercial premises at the end of their contractual term. The protection provided by this Act means that a tenancy will not come to an end at the expiry of a fixed term, and as an existing tenant, you will have a statutory right to renewal. In essence, it gives commercial tenants an automatic right to renew their lease, and a right to apply to the court for the grant of a new lease in circumstances where the landlord refuses to renew their lease.

Is your Lease excluded from the Security of Tenure?

A landlord who does not wish to give their prospective tenants this automatic right to renewal will have to expressly state this in the lease, and serve appropriate warning notices separately, before a tenant enters into the lease. This is often referred to as ‘contracting out’ or the lease being ‘excluded’ from the Act/Security of Tenure. If you had not been served with such a notice before entering into the lease, then your lease does most likely benefit from the provisions under the 1954 Act.

What happens if your lease is ‘excluded’?

At the end of your contractual term, should you wish to remain in the premises, you will have to negotiate and agree new terms with your landlord, whom will have the right to refuse.

 

For further advice on the above, or if you have any other queries in respect of your commercial premises, please do get in touch with me by calling 01582870822 or email me on vahideh.hojatoleslami@pictons.co.uk and I will be happy to help.

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