What is the Landlord and Tenant Act 1954 (Landlord and Tenant Act)?

Businesses that lease premises need to be familiar with the 1954 Landlord and Tenant Act. The Act was created to protect businesses after their commercial tenancy ends.

This protection is provided by the’security of tenure’. It outlines the responsibilities of commercial landlords upon ending a commercial lease agreement.

If Part II of the Landlord and Tenant Act 1954 applies to your commercial tenant, you have the legal right to renew your contract at the end.

Landlord and Tenant Act 1954, Part II

Part I of 1954 Landlord and Tenant Act was applicable to residential tenancies and has been superseded now by other legislation. Part II of Act is still relevant to commercial tenancies.

This applies to commercial properties that you rent for business purposes. There are some exceptions. It grants you security of tenure. This is a legal right that allows the contract to continue on the same terms at the end of the agreement until it’s terminated.

The majority of business tenancies fall under the Landlord and Tenant Act 1954 and have security-of-tenure. There are exceptions to this rule, such as:

• certain agricultural tenancies
• service tenancies
• Certain tenancies granted for less than six months
• Contracted out tenancies are when the landlord and tenant have taken formal measures to ensure that security in tenure does not apply.

What does the Landlord and Tenant Act 1954 “security of tenure” mean?

Knowing security of tenure will help you to understand your rights at the termination of your commercial lease agreement. You might not know your rights and end up having to vacate your business premises. This could be detrimental for your business, especially if it has been influenced by your location.

You can renew your lease at the end of your contractual term if Part II of 1954’s Landlord and Tenant Act 1954 is applicable to your agreement.

Only a limited number of grounds can be used by the landlord to oppose renewal, as set out in section 30, Landlord and Tenant Act 1954.

• The premises are in disrepair
• Rent arrears
• Other breaches of the covenant
• A landlord may be able to provide alternative accommodation
• A sub-letting created tenancy
• Landlord’s intent to redevelop
• Tendency of landlord to occupy

Sometimes, a landlord may want the tenant to “contract out” of the Act. This means that the tenant will give up their legal rights. If you contract out, you:

• You have no right to stay in the property after the expiration of the lease
• You must vacate the property by the end of your lease, unless you are offered a new lease.
• If the landlord offers a different lease, you are not allowed to ask the court for a fixation of the rent or terms of the lease.
• You do not have any right to receive compensation from the landlord if you leave the property at the expiration of your lease.

The 1954 Landlord and Tenant Act provides compensation

You may be eligible for compensation if your landlord denies you a statutory right of renewing your lease on no-fault grounds at the expiration of the term.

Paragraphs (e), f, and (g) of section 30-(1) of the Act provide details of the no-fault grounds.

• The tenant was leasing a portion of the property. The landlord plans to re-let the entire property for significantly more rent than they could get by reletting the individual parts (e).
• The landlord plans to demolish the property or rebuild it (f).
• The landlord plans to use the property as a residence or for business purposes.

The rateable value of the property is used to calculate compensation. These calculations are:

• less than 14 years of occupation – The rateable value x the appropriate multiplier x 1
• for 14 or more years – The rateable value of the property multiplied by the appropriate multiplier x 2.

What are the Landlord and Tenant Act 1954 section 24 to 28?

Section 24 Landlord and Tenant Act 1954

Section 24 states that a business tenancy will continue to be subject to section 24(1) of Landlord and Tenant Act 1954 after the expiration of the contractual term. It can only be terminated by one the prescribed methods.

Section 25 Landlord and Tenant Act 1954

The landlord serves a section 25 notice to end the lease. It proposes a new one, or refuses renewal.

Notices must not be given more than 12 months prior to the termination date and not less than six months prior. The tenant must receive the notice in the prescribed format with all required information.

It must state whether the landlord proposes to grant a new lease or opposed new lease. The landlord must also state why they are opposing the lease, if so.

Section 26 Landlord and Tenant Act 1954

Section 26 permits the tenant to ask for a new lease by serving notice to the landlord.

The notice must be given for maximum 12 months prior to the termination date and minimum six months prior to the termination date. It must be in the correct format and contain all required information.

If the landlord does not agree to the renewal they must serve a counter-notice within 2 months of receiving the tenant’s request. This will specify the reasons they are opposing the renewal pursuant to section 30(1).

Section 27 Landlord and Tenant Act 1954

Section 27 notices allow the tenant to terminate the lease by notifying the landlord. The lease will be terminated if the tenant gives notice to the landlord at least three months prior of the expiration of the contract under section 27.

Section 28 Landlord and Tenant Act 1954

When the landlord and tenant agree to abide by section 28, the Act ceases to apply to any tenancy that is still in effect upon completion of the agreement.

The Act does not protect the existing tenancy. It will continue unprotected until the specified starting date of the future agreement.

What is interim rent for renting business premises?

The interim rent is different from the rent due under the lease terms. This is what you will need to pay while your lease remains under section 24 of this Act.

After service of a Section 25 notice or section 26 request, either the landlord or tenant can apply for interim rent to be determined by the court. The court has the discretion to determine whether interim rent is payable and, if so, how much.

Learn more about legal expenses insurance

Legal expenses insurance protects you against potential legal actions brought against your business. This covers legal claims related to property damage, nuisance or trespass.

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