Introduction to security of tenure

Question 1

Prior to the Landlord and Tenant Act 1954 what was the issue?

Answer 1

If a tenant wanted to stay beyond their contractual term, the landlord was in a significantly stronger negotiating position than the tenant.

This is because the tenant has settled their business in the premises. 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 2

What did the Landlord and Tenant Act 1954 provide?

Answer 2

In response to the above the Landlord and Tenant Act 1954 was introduced to provide qualifying business tenants with security of tenure.

Question 3

What is security of tenure?

Answer 3

A tenant 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 is limited.

Question 4

What are the benefits of security of tenure for the tenant?

Answer 4

• 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 5

What are the benefits of security of tenure for landlords?

Answer 5

• 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.
• It may be beneficial to the landlord at rent review, as the market rent may be higher for a lease enjoying security of tenure.

Question 6

What are the disadvantages for landlords in relation to security of tenure?

Answer 6

Security of tenure by its nature limits the landlord’s freedom over their own property. Complying with its requirements can also be quite complicated.