Landlord and Tenant

Question 1

What is the contracting out procedure?

Answer 1

STEP 1: Landlord serves a warning notice on the tenant at least 14 days before the tenant becomes bound to enter into the lease (i.e. before it signs the lease or any agreement for lease);

STEP 2: Tenant signs a simple declaration confirming it has received the notice and accepted the consequences. Where time is short, the 14 day requirement can be waived by the tenant swearing a statutory declaration in front of an independent solicitor;

STEP 3: Lease contains wording that the parties have agreed to exclude security of tenure and reference to the landlord’s warning notice and the tenant’s declaration.

Question 2

What are the different ways of terminating a lease?

Answer 2

Landlord’s section 25 notice: Hostile, Friendly

Tenant’s section 26 request: This is a notice to the landlord terminating the current tenancy and requesting a new one

Tenant’s section 27 notice: This is a notice served by the tenant terminating the existing lease and specifying it does not want to renew its lease.

Question 3

What is a s.26 request?

Answer 3

Served by the tenant on the landlord, bringing current lease to an end and requesting a new one to commence on the date specified in the notice.

The notice can be served before or after the contractual expiry date of the lease provided:

• It is served no less than 6 months and no more than 12 months before the date specified in the notice as the date on which the new lease is to start;
• The date specified in the notice as being the date on which the new lease is to start must not precede the contractual expiry date.

Question 4

How can a Landlord oppose a s.26 notice?

Answer 4

If L is opposing the grant of a new lease, it should serve a counter-notice within 2 months.

The counter-notice should include the statutory grounds of opposition on which the landlord intends to rely.

If the landlord fails to serve the counter-notice, it loses its right to oppose the grant of a new tenancy (although can still contest its terms).

Question 5

On what grounds can a Landlord oppose a tenants right to renewal?

Answer 5

If the landlord serves a hostile s.25 notice or makes a counter-notice in response to a s.26 request, it needs to oppose the grant of a new lease on one or more of the statutory grounds set out in s.30 of the 1954 Act. The key grounds for your purposes are:

• Breach by the tenant of a repairing covenant (s.30(1)(a));
• Persistent delay in paying rent (s.30(1)(b));
• Other substantial breaches by the tenant (s.30(1)(c)).
• Availability of suitable alternative accommodation (s.30(1)(d)); the landlord must have made an offer of suitable alternative accommodation.
• Ground (e) is rarely relied upon, as it requires the property to have been sublet and for the landlord to be able to show that if it were able to let the property as a whole that would be more beneficial than the current subletting scenario.
• L intends to demolish/reconstruct the property or carry out substantial works of construction and cannot reasonably do so without gaining occupation of “the holding” (s.30(1)(f)).
• The landlord intends to occupy the holding itself (s.30(1)(g)). The landlord will be unable to rely on this ground if it acquired the reversion within the 5 year period preceding the date specified in the s.25 notice as terminating the lease or the date specified in the s.26 notice as the new lease commencing.

Question 6

What are the s30 no fault grounds?

Answer 6

Grounds (e), (f), & (g)
If the same business has occupied the premises for less than 14 years, the multiplier is 1. If the period is more than 14 years, it is twice the rateable value

Question 7

What is interim rent?

Answer 7

Until the new lease is granted, the tenant will continue to pay rent at the old rate payable under the lease.

Negotiations can take time however. Therefore, it is possible for either party to apply for interim rent pending completion of the new lease.

Where the landlord is willing to grant a new lease interim rent will be set at market level. Where the landlord is opposing the grant of a new lease interim rent will be set at 10-15% below market level. In either case it is payable from the earliest termination/commencement date which could have been specified in the s.25/26 notice, calculated from the actual date of service of the notice.