9 Business tenancies

Question 1

What is security of tenure?

Answer 1

provides the tenant with the automatic right to remain in possession of leasehold business premises after the lease term reaches its natural end.

Question 2

3 requirements for security of tenure

Answer 2

• only applies to tenancy
• occupied by tenant
• premises used for business purposes including ‘trade, profession or employment’

Question 3

does the tenant have a right to occupy beyond the contractual term for a non-protected tenancy (under security of tenure)?

Answer 3

No, if they do, then landlord treats them as trespasser

Question 4

Meaning of a section 25 notice for a landlord ending a protected tenancy?

Answer 4

an intention to recover the premises (friendly) or oppose a renewal lease (hostile)

Question 5

7 grounds on which the landlord can oppose renewal of the tenant’s lease

Answer 5

1. persistent and serious breach by tenant of repairing obligation
2. persistent delay in paying rent
3. serious and persistent breaches of covenants
4. the land offers suitable alternative accommodation
5. landlord intends to demolish or reconstruct the premises or carry out substantial construction work which will require possession
6. landlord intends to occupy premises

Question 6

Hostile section 25 notice = 4 grounds categories

Answer 6

1. mandatory ground - if the landlord establishes the ground, the court must grant possession to the landlord.
2. discretionary ground - even if the landlord shows the ground, it is down to the court’s discretion.
3. compensatory ground - If the ground relies on no fault of the tenant, then the tenant may be entitled to compensation.
4. non-compensatory ground - if the ground relies on the tenant’s fault, then the tenant is not entitled to compensation.

Question 7

How can a tenant end a protected tenancy? (5 options)

Answer 7

• vacate the premises at the end of the contractual term
• to surrender the lease with the landlords agreement
• serve a notice to quit
• serve a section 26 notice (request new tenancy)
• serve a section 27 notice (to leave the premises)

Question 8

why would a tenant want to serve a section 26 notice to renew the lease?

Answer 8

The tenant may want the certainty of a fixed term, particularly if it is planning to carry out improvements to the premises, or to assign the lease as part of a business sale.

Question 9

When must tenant serve section 27 notice on landlord?

Answer 9

no less than 3 months of the intended termination date

Question 9

When must date of termination be when landlord serves section 25 notice?

Answer 9

On or after date when contractual term ends

Question 9

what is the deadline for applying to court on a section 26 notice?

Answer 9

The day before the proposed commencement date of the new lease

Question 10

Once a tenant has serves a section 26 notice (renewal notice) how long does landlord have to respond and how will they respond?

Answer 10

2 months to serve a counter-notice i.e opposing the grant of a renewal lease

Question 11

Once a section 27 notice has been served by tenant to landlord can a section 26 or 25 be served?

Answer 11

No

Question 12

If a tenant is underleasing their lease, and the untertenant wants to serve a section 26 notice, who would it serve it on, the tenant or the tenants landlord?

Answer 12

Tenant’s landlord

Question 13

How long does a tenants notice need to be for them to serve a section 26 notice (renewal of a lease)

Answer 13

1 year

Question 14

A ten-year lease of shop premises has just expired. The lease was not contracted out of the Landlord and Tenant Act 1954 (LTA 1954). The tenant wishes to continue trading from the premises and, as the business has been doing well, undertake some significant improvements to the premises. He has not yet received any notice from the landlord, but thinks that the landlord will be happy to fit in with his wishes. The tenant consults his solicitor as to what action he should now take.

Which one of the following statements best describes the advice the solicitor should give?

a) Vacate the premises, as the contractual term of the lease has now expired and the tenant therefore has no security of tenure under the LTA 1954.

b) Remain in possession of the premises, continue to pay the rent and await a landlord’s notice under s25 of the LTA 1954.

c) Remain in possession of the premises, but do not pay any rent and serve a notice under s27(2) of the LTA 1954.

d) Vacate the premises as the contractual term of the lease has now expired, but make an application to the court under the LTA 1954 for the grant of a new tenancy.

e) Remain in possession of the premises, continue to pay the rent and serve a tenant’s notice under s26 of the LTA 1954.

Answer 14

E

Question 15

A company tenant of business premises is in the process of renewing its expired lease. The contractual term of the lease was 25 years. The lease was not contracted out of the Landlord and Tenant Act 1954 (LTA 1954). The company has applied to the court for a new tenancy, which has been opposed by the landlord. The company would like the court to order the grant of a new tenancy for the same duration as the original lease, if possible.

Which one of the following is the longest term the court could order under the LTA 1954 in these circumstances?

a) Twenty-five years.

b) Twenty years.

c) Fifteen years.

d) Ten years.

e) Five years.

Answer 15

C

Question 16

The tenant of a commercial property under an existing lease has consulted their solicitor as to whether they are entitled to rights under Part II of the Landlord and Tenant Act 1954 (the 1954 Act), including a right to renew the lease. The solicitor advises the tenant that they will be entitled to those rights, provided certain requirements under the 1954 Act are met.

Which of the following statements best describes one of those requirements under the 1954 Act?

a) The tenant must be a private individual not a company.

b) The tenant must reside in the property.

c) The lease must be registered at HM Land Registry.

d) The property must be occupied for business purposes.

e) The lease must have been ‘contracted out’ under the 1954 Act.

Answer 16

D

Question 17

A house is owned jointly by a husband and wife, who are getting divorced and wish to sell it. A quick sale to a cash buyer has been agreed and the wife has given instructions to a solicitor to act in the sale. She has confirmed to the solicitor that the husband agrees to the sale and wishes the solicitor to act for him in the sale as well. The property is currently mortgaged to a high street lender. Another firm of solicitors is acting for the husband in the divorce proceedings; the wife is acting for herself in those proceedings.

Which one of the following statements best describes whether the solicitor can act for both the husband and the wife in the sale?

a) The solicitor can act for both the husband and the wife in the sale provided the husband confirms his instructions directly to the solicitor.

b) The solicitor cannot act for both the husband and the wife in the sale because a clear conflict of interest exists between the husband and the wife.

c) The solicitor can act for both the husband and the wife in the sale provided the firm of solicitors acting for the husband in the divorce proceedings agree to this.

d) The solicitor cannot act for both the husband and the wife in the sale because there is a significant risk of a conflict of interest arising between the husband and the wife.

e) The solicitor can act for both the husband and the wife in the sale provided the mortgage lender consents to this under the terms of the mortgage on the house.

Answer 17

A