Chapter 10: Business Tendencies

Question 1

1 Introduction to security of tenure

Answer 1

This section is an introduction to security of tenure in the context of business tenancies.

Question 2

1.1 Limitations of a fixed contractual term

Answer 2

Most commercial leases are for a fixed term, say 10 years. However, the lifetime of most businesses do not fit into a convenient 10 year block. If a tenant’s
business is not doing well, it may be able to get out of the premises early, whether through a break clause or by assigning or subletting the lease. However, what about the end of the lease? What if the tenant wants to stay beyond the 10 year term?

Question 3

1.1 Limitations of a fixed contractual term

Answer 3

The problem here is that the landlord is in a significantly stronger negotiating position than the
tenant. Why? Because the tenant has settled their business in the premises. For example, a
restaurant business will have fitted out the premises and have goodwill, ie, regular customers who
know where to find them. A landlord might seek to exploit this by charging a higher than market
rent, judging that the tenant will pay it rather than disrupt their business and lose money that way.

Question 4

1.1 Limitations of a fixed contractual term

Answer 4

This is exactly the kind of thing that was happening in the UK after the Second World War. Bombing raids had contributed to a chronic shortage of commercial premises. Tenants coming to the end of their contractual terms found themselves vulnerable to exploitative landlords who would demand inflated rents.

Question 5

1.2 The Landlord and Tenant Act 1954

Answer 5

The response to this was the Landlord and Tenant Act 1954 which was introduced under Winston
Churchill’s government. Amongst other things, the Act provided qualifying business tenants with
security of tenure.

Question 6

1.2 The Landlord and Tenant Act 1954

Answer 6

The tenant in a lease with security of tenure may continue to occupy the premises at the end of
the contractual term. They may request a new tenancy, and the landlord’s ability to recover the
premises from the tenant is limited. Although the 1954 Act has undergone many changes, it is still
an important piece of legislation and the overriding rationale behind it has not changed.

Question 7

1.2.1 Benefits of security of tenure for the tenant

Answer 7

• The tenant being able to treat the premises as a long term prospect means that the tenant can
  invest in fitting out the premises and making them suitable for their purposes.
• A retail or restaurant business know that they can reap the benefits of goodwill from their
  location.
• A tenant does not have to worry about the considerable upheaval that could be caused by
  having to move at the end of the contractual term.

Question 8

1.2.2 Benefits of security of tenure for the landlord

Answer 8

Although the tenant stands to gain more from security of tenure, there are benefits for the
landlord as well in offering security of tenure.
* The premises will be more appealing to prospective tenants
* The tenant may be encouraged to treat the premises as their own, and therefore look after
them. Of course, there will be repairing obligations in the lease anyway, but it is better if the tenant observes them without being coerced into doing so.

Question 9

1.2.2 Benefits of security of tenure for the landlord

Answer 9

• It may be beneficial to the landlord at rent review, as the market rent may be higher for a lease
  enjoying security of tenure. That said, there are disadvantages for the landlord as well. Security of tenure by its nature limits the landlord’s freedom over their own property. Complying with its requirements can also be quite complicated

Question 10

1.3 Summary

Answer 10

• Before the Landlord and Tenant Act 1954, commercial tenants were vulnerable to exploitation
  by unscrupulous landlords at the end of their contractual term.
• The Landlord and Tenant Act 1954 introduced security of tenure provisions for commercial
  tenants.
• Security of tenure offers advantages for both the tenant and landlord.

Question 11

2 Application of security of tenure

Answer 11

Section 23(1) of the Landlord and Tenant Act 1954 sets out when the security of tenure provisions
apply:
…any tenancy where the property comprised in the tenancy is or includes premises which are
occupied by the tenant and are so occupied for the purposes of a business carried on by him
or for those and other purposes…

Question 12

2.1 ‘any tenancy’ – leases distinguished from other arrangements

Answer 12

Security of tenure provisions only apply to a tenancy. It is therefore useful to distinguish other
similar arrangements. Landlords might use these arrangements to try to avoid security of tenure provisions being implied, but care should be taken as if the substance of a transaction is a tenancy, the
arrangement could still become protected with security of tenure.

Question 13

2.1.1 Fixed term tenancy

Answer 13

A fixed term tenancy creates exclusive possession and a proprietary interest. It binds successors in title to the landlord. The tenant can use the property as if they were the owner. It can benefit from security of tenure.

Question 14

2.1.2 Licence to occupy

Answer 14

A licence is a personal permission to be on the land and is not a proprietary interest. It does not bind successors in title to the owner granting the licence.
It cannot benefit from security of tenure.

Question 15

2.1.3 Periodic tenancy

Answer 15

A periodic tenancy creates exclusive possession and a proprietary interest. It binds successors in title to the landlord. However, it can be brought to an end by notice. It can benefit from security of tenure.

Question 16

2.1.4 Tenancy at will

Answer 16

A tenancy at will is similar to a licence as it is a personal permission but unlike a licence, the
tenant can have exclusive possession. However, the important feature is that either landlord or tenant can end the tenancy at any time. It cannot benefit from security of tenure.

Question 17

2.2 ‘occupied by the tenant’

Answer 17

This requirement is reasonably straightforward. If the tenant leaves the premises vacant, then it is
not entitled to claim security of tenure. However, note also that if the tenant underlets the whole or the part of the premises, then it follows that it cannot be in occupation and will lose security of tenure over the whole or part of the premises accordingly

Question 18

Example

Answer 18

A tenant has an office lease of floors 2 and 3 of a building. It underlets floor 3 for a term ending
one day before its own. At the end of the contractual term, the tenant has security of tenure for floor 2 but not 3.

Question 19

2.3 ‘for the purposes of a business’

Answer 19

This requirement is widely defined by the Landlord and Tenant Act 1954 as including any ‘trade,
profession or employment’. Case law has refined this definition further: These have been held to be business purposes:
a charity shop
a tennis club for members only
residential use that furthers the tenant’s business (eg, accommodation for medical school
students or a lease of a shop, part of which could be used for residential purposes)

Question 20

These have been held not to be business purposes:

Answer 20

Sunday school sessions provided free of charge by an individual
A tenant of a house taking a small number of lodgers without profit

Question 21

2.4 Excluded tenancies

Answer 21

Section 43 of the Landlord and Tenant Act 1954 specifically excludes some types of tenancies
from security of tenure:
* Agricultural tenancies (as they have their own statutory regime)
* Mining leases
* Service tenancies (a lease granted as part of a tenant’s employment, eg, a security guard’s
flat)
* Fixed term tenancies of six months or less (but can become protected if the tenant has been in
occupation for twelve months or more, whether through successive tenancies or if the tenancy
is renewable beyond six months)

Question 22

Example

Answer 22

A shopping centre employs a maintenance person and lets to them a room to store tools and materials for as long as they need it for their employment. This tenancy would not have security of tenure.

Question 23

2.5 Contracted out tenancies

Answer 23

S38A of the Landlord and Tenant Act 1954 allows the parties to agree to exclude a fixed term lease from the security of tenure provisions. This is known as contracting out.

Question 24

Assessment focus point

Answer 24

Note that only fixed term leases can be contracted out. A periodic tenancy that qualifies for security of tenure cannot be contracted out.

Question 25

Why/why not contract out?

Answer 25

It might be thought that if a landlord can contract out every tenancy, they would want to. In practice, offering protected tenancies may encourage long term tenants, and not doing so may limit the premises’ appeal.
The following tenancies are commonly contracted out:
* short term leases (5 years or less)
* underleases (usually required by the tenant’s lease)

Question 26

2.6 Procedure for contracting out 2.6 Procedure for contracting out

Answer 26

The Landlord and Tenant Act 1954 used to require a court order be obtained to any contracted
out tenancy. From June 2004, a much simpler two-stage procedure has been in place, not requiring a court order. However, it must be strictly observed.

Question 27

2.6.1 Stage 1

Answer 27

The landlord must serve a warning notice on the tenant in a prescribed form. This details the
consequences of contracting out the security of tenure provisions. It must be served before the parties complete the lease.

Question 28

2.6.2 Stage 2
Provide a declaration

Answer 28

The tenant must provide a declaration in prescribed form to the landlord before completing the lease.

Question 29

2.6.2 Stage 2
Signed declaration

Answer 29

If lease completion is at least 14 days from the date of the warning notice, then this can be a simple signed declaration.

Question 30

Statutory declaration

Answer 30

If lease completion is less than 14 days away, then the tenant must provide a statutory declaration (declared before an independent solicitor).

Question 31

Reference to both notice and declaration

Answer 31

The lease must contain reference to both the notice and declaration (or statutory declaration) of
contracting out.

Question 32

Consequences of not carrying out the proceedure

Answer 32

If the procedure is not correctly carried out, or not correctly referred to in the lease, the likelihood is that the lease will enjoy security of tenure.

Question 33

Example

Answer 33

A landlord instructs its solicitor on a two year contracted-out tenancy. The solicitor miscalculates
the dates, so that the tenant provides a simple signed declaration only a week before lease completion. The lease is not validly contracted-out, and the tenant will be able to claim the protection of security of tenure. The landlord would likely have just cause for a claim of professional negligence.

Question 34

2.7 Summary

Answer 34

• To have security of tenure, there must be a tenancy occupied by the tenant for the purposes of
  a business
• A tenancy includes a fixed term lease or a periodic lease, but does not include a tenancy at will
  or a licence to occupy
• Certain types of tenancy, such as agricultural and service tenancies, are excluded

Question 35

2.7 Summary

Answer 35

• The parties can agree to contract out fixed term tenancies, but not periodic tenancies
• The requirements of contracting out are a warning notice, a declaration or statutory declaration (depending on whether 14 days’ notice has been given) and that the procedure is referred to in the lease to be contracted out

Question 36

3 Implications of security of tenure
3.1 What happens at the end of the contractual term?
For non-protected tenancy

Answer 36

For a non-protected tenancy, the tenant has no right to occupy beyond the contractual term. If the landlord has notified the tenant that it requires possession at the end of the contractual term,
then if the tenant continues to occupy, the landlord may treat them as a trespasser and recover
possession.

Question 37

For protected tenancy

Answer 37

By contrast, for a protected tenancy, the tenant has the right to stay in occupation. This is known
as holding over. The landlord cannot evict the tenant, and the tenant’s occupation can only be brought to an end by certain methods allowed by the Landlord and Tenant Act 1954.

Question 38

3.2 Ending a protected tenancy - landlord

Answer 38

The landlord has limited options to bring the tenancy to an end.
The landlord’s options are to:
* forfeit the lease if there has been a breach of the tenant’s covenants and the lease allows this
* serve a section 25 notice, which may indicate an intention to recover the premises or offer a
renewal lease

Question 39

3.2 Ending a protected tenancy - landlord

Answer 39

Note that the security of tenure provisions do not prevent the landlord from forfeiting the lease if,
for example, the tenant is in arrears with rent, and the lease allows for it. This is covered in the
chapter on termination of leases. Section 25 notices are covered in the section on landlord’s notices.

Question 40

3.3 Ending a protected tenancy - tenant

Answer 40

As the security of tenure provisions are for the protection of the tenant, the tenant has more
options for bringing the lease to an end.
The tenant’s options are:
* simply to vacate the premises at the end of the contractual term
* to surrender the lease with the landlord’s agreement
* for a periodic tenancy, serve notice to quit to bring the tenancy to an end

Question 41

3.3 Ending a protected tenancy - tenant

Answer 41

• serve a section 26 notice to request a new tenancy
• serve a section 27 notice to leave the premises
  As surrender and notice to quit also apply to non-protected tenancies, they are covered in the
  chapter on termination of leases. Section 26 and section 27 notices will be examined in the section on tenant’s notices.

Question 42

3.4 Summary

Answer 42

• The tenant of a protected tenancy is entitled to remain in occupation (hold over) at the end of
  the contractual term.
• The tenant of a non-protected tenancy is not entitled to remain in occupation after the end of
  the contractual term, and if the tenant stays in the premises after the landlord has asked them
  to leave, they may be treated as a trespasser.

Question 43

3.4 Summary

Answer 43

• The tenant of a protected fixed term lease may leave at the end of the contractual term.
• The landlord may serve a section 25 notice which will indicate whether the landlord intends to
  offer a renewal lease or oppose the renewal.
• The tenant may serve a section 26 notice which requests a renewal lease, or a section 27 notice which indicates the intention to leave the premises

Question 44

Landlord’s notice
4.1 Section 25 notice

Answer 44

The landlord’s section 25 notice states when the current tenancy will end (the date of termination). The date of termination must be on or after the date on which the contractual term ends. A section 25 notice must be served no less than 6 months and no more than 12 months before the date of termination. The section 25 notice must be in the form prescribed by statute.

Question 45

4.1.1 Friendly section 25 notice

Answer 45

A ‘friendly’ section 25 notice indicates that the landlord is willing to renew the lease to start the
day after the date of termination. It will propose the rent to be paid and principal terms of the new tenancy.

Question 46

4.1.2 Hostile section 25 notice

Answer 46

A ‘hostile’ section 25 notice indicates that the landlord intends to oppose renewal of the lease. The landlord can only do this on certain statutory grounds, and must specify on which ground or grounds the landlord intends to rely.

Question 47

4.2 The friendly section 25 notice

Answer 47

Why would a landlord want to serve a friendly section 25 notice?
* Peace of mind – the landlord wants the tenant to be tied to a further term and therefore the
landlord’s rental income will be guaranteed.
* In a rising market, to enable a market rent to be fixed for the renewal tenancy

Question 48

4.2 The friendly section 25 notice

Answer 48

A lease may contain a rent review on the last day before the end of the contractual term. This is
designed to ensure that the tenant pays a market rent during the period of holding over. Even if
this is done, the rent will stay the same during the period of holding over, so this is only a limited
solution

Question 49

Example

Answer 49

A protected tenant is paying £20,000 per year. The contractual term expires on 20 March. On 19
March, the rent was reviewed to £22,000. The tenant will pay £22,000 for as long as they hold over. However, until the lease is renewed, there will be no further rent increases.

Question 50

4.3 The hostile section 25 notice

Answer 50

There are seven grounds on which the landlord can oppose renewal of the tenant’s lease, of which
the most important are:
* persistent and serious breach by the tenant of a repairing obligation
* persistent delay by the tenant in paying rent
* serious and persistent other breaches of covenants by the tenant

Question 51

4.3 The hostile section 25 notice

Answer 51

• the landlord offers suitable alternative accommodation
• the landlord intends to demolish or reconstruct the premises or carry out substantial
  construction work which require possession
• the landlord intends to occupy the premises for itself

Question 52

Substantiate ground on which they are relying

Answer 52

• the landlord offers suitable alternative accommodation
• the landlord intends to demolish or reconstruct the premises or carry out substantial construction work which require possession
• the landlord intends to occupy the premises for itself

Question 53

Substantiate ground on which they are relying

Answer 53

There is another ground, but it is rarely used in practice and is unlikely to come up in an
assessment. The landlord must be able to substantiate the ground on which it is relying. For example, if the landlord intends to redevelop the premises, it may show that it has obtained planning permission or entered into a construction contract.

Question 54

Mandatory and Discretionary Grounds

Answer 54

The grounds can be categorised into mandatory or discretionary.
A mandatory ground means that if the landlord establishes the ground, the court must grant
possession to the landlord.
A discretionary ground means that even if the landlord shows the ground, it is down to the court’s
discretion

Question 55

Example

Answer 55

A landlord shows that the tenant has been in persistent and serious breach of the repairing
obligation. However, the court decides that the landlord’s behaviour has contributed to the
breach, and decides not to grant possession.

Question 56

The grounds can also be categorised into compensatory and non-compensatory, which
unfortunately follows a different pattern

Answer 56

Compensation is calculated:
* at 1x the rateable value if the business has occupied the premises for less than 14 years
* at 2x the rateable value if the business has occupied the premises for 14 years or more
If the ground relies on no fault of the tenant (eg, the landlord needs to carry out work), then the
tenant may be entitled to compensation. This is a compensatory ground.
Conversely, if the ground relies on the tenant’s fault (breach of covenant), then the tenant is not
entitled to compensation. This is a non-compensatory ground.

Question 57

Rateable value

Answer 57

This is a value based on estimated annual rental value of premises, and is fixed by the local authority for the purpose of the calculating business rates due for the premises. It is not necessarily the same as the market rent

Question 58

4.5 Summary

Answer 58

• The landlord may serve a section 25 notice specifying a date of termination no earlier than the
  end of the contractual term, and no less than six months and no more than 12 months from the
  date of the notice.
• The section 25 notice may be friendly, meaning that the landlord will not oppose the renewal
  of the tenant’s lease.
• The section 25 notice may be hostile, meaning that the landlord will oppose the renewal of the
  tenant’s lease

Question 59

4.5 Summary

Answer 59

• If the landlord is seeking to recover possession, then it may only do so on statutory grounds.
• The court has discretion to decide whether to grant possession with discretionary grounds, but
  with mandatory grounds they must grant possession if the landlord establishes the
  appropriate ground.
• Some grounds will require that the landlord pays the tenant compensation; others do not.

Question 60

5 Tenant’s notices

Answer 60

A tenant may decide simply to vacate the premises at the end of the contractual term, and if so, the tenancy ends on that date, regardless whether it is protected or not. However, to avoid any doubt, it would be good practice to notify the landlord of that intention. Alternatively, the tenant may be able to agree with the landlord to surrender the lease during the contractual term.

Question 61

5 Tenant’s notices

Answer 61

This section, however, is concerned with the notices where the tenant either wants to renew the lease (section 26 notice) or end the lease (section 27 notice) after a period of holding over

Question 62

Surrender

Answer 62

This is when the tenant gives up its leasehold interest to the landlord, bringing it to an end. There is more detail on this in the chapter on termination of leases.

Question 63

Different prices

Answer 63

Note that the different notices (section 25, section 26 and section 27) are mutually exclusive.
Once one of these notices has been served, the other party cannot validly serve a different type
of notice.

Question 64

5.1 The section 26 notice

Answer 64

As the tenant is entitled to hold over, why would a tenant want to serve a section 26 notice to
renew the lease?
* 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.
* In a falling market, the tenant may be stuck on a higher than market rent while holding over
(particularly if there was a penultimate day rent review) and will want a renewal lease at a market rent. Either the landlord or tenant therefore has the option to request that renewal takes place.

Question 65

Example

Answer 65

A protected tenant is holding over. There was a penultimate day rent review that fixed the rent at
£80,000. The tenant has been holding over for a year, and the market rent has dropped to £70,000. The tenant will want a renewal lease to take advantage of the lower market rent.

Question 66

5.1.1 Requirements of section 26 notice

Answer 66

Aside from having a protected tenancy, the tenant must have a lease that originally granted a
contractual term of more than one year. For a tenancy of a year or less, the tenant cannot start
the renewal process, although the landlord can with a friendly section 25 notice

Question 67

5.1.1 Requirements of section 26 notice

Answer 67

As with the section 25 notice, there is a minimum notice period of six months, and a maximum
notice period of twelve months. However, unlike the section 25 notice, the notice is not to expire on
the date of termination, but the proposed commencement date of the renewal lease.

Question 68

5.1.1 Requirements of section 26 notice

Answer 68

A landlord has two months from the section 26 notice to serve a counter-notice (ie opposing the
grant of a renewal lease). As with a hostile section 25 notice, the landlord can only do so on one or
more of the statutory grounds.

Question 69

5.2 Use of a section 27 notice

Answer 69

A section 27 notice must give three months of the intended termination date, which must be no
earlier than the date on which the contractual term ends.

Question 70

Example

Answer 70

A tenant knows that it will want to remain in the premises two months after the end of the
contractual term. The tenant will serve a section 27 notice one month before the end of the lease.

Question 71

5.2 Use of a section 27 notice

Answer 71

A tenant who intends to leave the premises at the end of the contractual term need not serve any
notice. However, to avoid any doubt, it would be good practice to notify the landlord. The tenant may want to use a formal section 27 notice, in which case the tenant would need to serve it no less than three months before the end of the contractual term. Once a section 27 notice has been served, the tenant cannot serve a section 26 notice, nor can the landlord serve a section 25 notice.

Question 72

5.3 Summary

Answer 72

• A tenant need not serve notice if they intend to vacate premises at the end of the contractual
  term, whether a protected tenancy or not.
• A tenant who wishes to renew the lease may serve a section 26 notice. The landlord has two
  months to serve a counter-notice if the landlord opposes renewal.
• A section 26 notice must be served no less than six months and no more than twelve months
  before the proposed commencement date of the renewal lease.

Question 73

5.3 Summary

Answer 73

• A tenant who wishes to end the lease at any time after the contractual expiry date will need to
  serve a section 27 notice.
• Section 25, 26 and 27 notices are mutually exclusive, and once one has been served, the others cannot be used

Question 74

Procedure following a section 25 or section 26 notice
6.1 Application to court

Answer 74

The lease renewal process is underpinned by the possibility of either or both parties applying to
the court to renew the lease (and fix the terms of the new lease) or, in the case of the landlord, to
recover possession.

Question 75

6.1 Application to court

Answer 75

Either party may apply to the court at any time after service of a section 25 notice, the deadline
for applying being the date of termination specified in the notice.

Question 76

6.1 Application to court

Answer 76

With a section 26 notice, as the parties may only apply after either the landlord has served a
counter-notice, or if not, two months have elapsed from the s.26 notice. The deadline for applying to the court is the day before the proposed commencement date of the new lease. The deadline may be extended by the parties agreeing in writing.

Question 77

Assessment focus point

Answer 77

Remember that dates regarding a section 25 notice are concerned with the date of termination, but dates for a section 26 notice are concerned with the day before the proposed commencement date

Question 78

6.2 Negotiation of terms of new lease

Answer 78

Both a friendly section 25 notice and a section 26 notice will propose the principal terms of the
renewal lease. The landlord and tenant will usually try to agree the terms of the lease between themselves, and only if they are unable to reach agreement will they ask the court to decide.

Question 79

6.2 Negotiation of terms of new lease

Answer 79

The court can grant a term up to 15 years, the rent will be open market rent, and other terms are
determined by the court having regard to the terms of the current tenancy and relevant circumstances.

Question 80

Example

Answer 80

The tenant has served a section 26 notice proposing a 5 year term at a rent of £25,000, terms to
be the same as the existing lease, except that an underletting of part is permitted. The landlord
agrees with all the proposals except the underletting of part. The court will only make a decision
on the contentious issue, ie, the underletting of part. The tenant will need to show why the change
is reasonable.

Question 81

6.3 Interim rent

Answer 81

During the period of holding over and negotiation, the tenant will continue to pay rent as it was
last reviewed by the lease. Either party may apply during this period to the court to fix an interim rent which is based on the open market rent. Unlike a rent review, this is not upwards only, and it may be lower than the last reviewed rent in a falling market.

Question 82

6.3 Interim rent

Answer 82

The interim rent is payable from the earliest date of termination that could have been specified in
the landlord’s section 25 notice, or the earliest date that could have been specified as the proposed commencement date in the tenant’s section 26 notice.

Question 83

Example

Answer 83

A tenant who is holding over serves a section 26 notice with a proposed commencement date in 12
months’ time. If the landlord (or the tenant) applies to fix an interim rent, the rent will be payable
six months from the date of tenant’s section 26 notice, not 12 months.

Question 84

6.4 Court orders

Answer 84

Either tenant or landlord may apply to the court for an order to grant a new lease, even if the
landlord opposed the renewal. If the tenant is not happy with the terms determined by the court, or has simply changed its mind, it has 14 days to ask the court to revoke the court order. If asked, the court must agree, and the tenant will then have no right to renew.

Question 85

Order for termination of an existing lease

Answer 85

A landlord who is opposing renewal on the statutory grounds, whether by hostile section 25 notice, or following a counter-notice to a section 26 notice, may apply to the court for an order for termination of the existing lease. This order will bring the existing lease to an end, following which the tenant has no right to remain in occupation.

Question 86

Both orders bring tenancy to an end

Answer 86

Both types of order bring the existing tenancy to an end three months and 21 days after the date
of the order. (21 days from the date of the order is the time allowed for appeal.)
If the court order is for the grant of a new lease, the new lease will start the day after the
termination of the existing lease.

Question 87

6.5 Summary

Answer 87

• Following a section 25 notice, or for a section 26 notice, the earlier of two months after the
  notice or the service of a landlord’s counter-notice, either party may apply to the court for a
  renewal lease.
• The deadline for applying the court is the termination date specified in a section 25 notice, or
  the day before the proposed commencement date specified in a section 26 notice. The deadline may be extended by the parties’ agreement in writing

Question 88

6.5 Summary

Answer 88

• The parties will try to negotiate the terms of a lease, but if they are unable to reach
  agreement, the court will determine the contentious terms.
• Either party can apply for an interim rent, which will be payable from the earliest date for
  termination or proposed commencement date that could have been specified in the relevant notice.

Question 89

6.5 Summary

Answer 89

• The court can give an order for the grant of a new lease or the termination of the existing lease, either of which take effect three months and 21 days from the date of the order.

Question 90

7.2 Date rules

Answer 90

A notice expires on the same date as the date on which it was served.
For example, a 6 month notice served on 1 January expires on 1 July.
A notice served on the last day of the month will end on the last day of the appropriate month if it
is shorter.
For example, a 6 month notice served on 31 August will end on 28 February (or 29 February in a
leap year) the next year.
(This is called the corresponding date rule.)

Question 91

Example

Answer 91

Assume today’s date is 1 January. A tenant’s protected lease was ‘from and including 15 July’ and
expires this year. What date can the tenant specify as the proposed commencement date (‘PCD’)
for the renewal lease? The contractual expiry date of the existing lease is 14 July this year (see section on term of a lease) so the PCD can be no earlier than 14 July

Question 92

Period from the notice

Answer 92

The period from the notice is no less than six months for the PCD and no more than 12 months for
the PCD. As it is 1 January, the earliest date for the PCD is 1 July, and the latest is 1 January next year. As the tenant must comply with both rules, the PCD must fall between 14 July and 1 January next
year inclusive of both dates

Question 93

7.3 Competent landlord

Answer 93

Both the section 25 and section 26 notice procedures must be conducted between the tenant and
the competent landlord. The competent landlord may not be the same person as the immediate landlord to the tenant. The competent landlord is the first in the chain of landlords, starting with the immediate landlord to own a reversionary interest which is either freehold or a leasehold that will not come to an end in 14 months’ time.

Question 94

Example

Answer 94

An undertenant has a protected underlease. The tenant’s lease expires only one day after the
undertenant’s. The tenant’s landlord, however, is a long leasehold with over 120 years left to run.
If the undertenant wants to serve a section 26 notice it must serve it on the tenant’s landlord, not
the tenant. Similarly, the tenant’s landlord, not the tenant, would be the person entitled to serve a
section 25 notice on the undertenant.

Question 95

7.4 Summary

Answer 95

• Notice periods expressed in numbers of months run from the calendar date of service to the
  same calendar date in the appropriate month.
• If notice is served at the end of a month, then if the notice expires in a shorter month, the last day of the month is used.
• In calculating a termination date or proposed commencement date for a section 25 or 26
  notice respectively, both the end of the existing contractual term and the notice periods must
  be taken into account.
• Section 25 and 26 notice procedures must be conducted between the tenant and the
  competent landlord, who may not necessarily be the immediate landlord.