Lease termination and security of tenure under a business lease

Question 1

Termination of leases at common law - Effluxion of time

Answer 1

With a fixed-term lease when the contractual terms ends the lease automatically determines by what is known as effluxion of time

Question 2

Termination of leases at common law - Notice to quit

Answer 2

Periodic tenancies are determine by the appropriate period’s notice to quit given by the landlord or tenant. A yearly tenancy is determine by at least a half year’s notice. Other periodic tenancies are determined by one full period’s notice e.g one moth

Question 3

Termination of leases at common law - Surrender

Answer 3

Occurs where the tenant yields up the lease to the landlord who accepts the surrender. It can only be achieved if both the landlord and tenant agree to it. On surrender the lease is said to merge in the landlord’s reversion and is extinguished

Question 4

Termination of leases at common law - Merger

Answer 4

Occurs where the tenant acquires the immediate reversion to the lease.

Question 5

Forfeiture

Answer 5

For non-payment of rent and breach of other covenants

Question 6

1954 act - Purpose

Answer 6

Basically allows the tenant to stay in the property

Question 7

1954 act - Requirements

Answer 7

Must be a business tenancy

Question 8

1954 act - Which business tenancies are not protected by the act (in favour of landlord)

Answer 8

1) Tenancies at will
2) Fixed term tenancies not exceeding 6 months
3) Tenancies of agricultural holdings, farm business tenancies and mining leases
4) Fixed term tenancies that are contracted out of the act - these can include a break right

Question 9

1954 act - If the lease falls under, how do you terminate?

Answer 9

1) By service of a landlord’s notice under S. 25
2) By service of a tenant’s request for a new tenancy under S. 26
3) Forfeiture
4) Surrender
5) Regarding periodic tenancies - by giving the landlord a notice to quit
6) Regarding fixed term leases - by serving 3 months’ written notice on the landlord
7) Regarding fixed term leases - the tenant ceasing to be in occupation for business purposes at end of lease
If there are no grounds for forfeiture and the tenant will not agree to surrender the only way a landlord can terminate a business tenancy protected by the act is under S. 25

Question 10

1954 act - Termination by the landlord - S. 25 notice

Answer 10

The landlord must serve a S. 25 notice on the tenant which makes clear whether the landlord opposes the grant of a new tenancy or not and why (S.30 grounds). Must state the date upon which the landlord wants the tenancy to end which cannot be earlier than the date the tenancy could have been terminated under the common law. Must be served no less than 6 months and no more than 12 months before the termination date specified in the notice.

Question 11

1954 act - Termination by the landlord - S. 25 notice - if they oppose the new lease

Answer 11

If the landlord opposes the renewal of the tenancy the S. 25 notice must state the S. 30 grounds.

Question 12

1954 act - Termination by the landlord - S. 25 notice - If the landlord does not oppose the new lease

Answer 12

The landlord is ending the current lease so that a new tenancy can be granted on different terms usually a higher rent - the landlord must indicate its proposals as to the terms of the new lease in s. 25 notice

Question 13

1954 act - Termination by the landlord - S. 25 notice - Application to the court following service of a S. 25 notice - If the landlord objects

Answer 13

If the landlord indicates that they will oppose the grant of a new tenancy the tenant must apply to the court before the expiry of the S. 25 notice or they will lose their rights under the act. The landlord can pre-empt the tenant’s application to court by applying for an order to terminate the lease on the grounds stated in its S. 25 notice

Question 14

1954 act - Termination by the landlord - S. 25 notice - Application to the court following service of a S. 25 notice - If the landlord doesn’t object

Answer 14

If the landlord indicates that it will not oppose the grant of a new tenancy the parties will enter into negotiations for the grant of a new lease but the tenants should still apply to court within the time limit to safeguard their position.

Question 15

1954 act - Termination by the landlord - Landlord grounds of opposition S. 30

Answer 15

1) Tenant’s failure to repair - discretionary
2) Tenant’s persistent delay in paying rent - discretionary
3) Tenants’t substantial breach of other obligations - discretionary
4) Landlord has offered alternative accommodation - mandatory
5) Tenancy is an underletting of part - discretionary
6) Landlord intends to demolish or reconstruct and could not reasonably do so without obtaining possession (need to pay the tenant compensation) - mandatory
7) Landlord intends to occupy the holding for its own business or as a residence cannot be used unless they have owned their interest for at least 5 years - mandatory

Question 16

1954 act - Renewal lease by the tenant - S. 26 request

Answer 16

If the tenant wishes to remain in the property after the contractual expiry date they could take the initiative and serve a S. 26 request. This serves to bring the current tenancy to an end and constitutes a request for a new tenancy. Must state the date on which the tenant wants the new tenancy to begin and the request must contain the tenant’s proposals for the new tenancy. Time limits are the same for s. 25 - must give the landlord between 6-12 months notice

Question 17

1954 act - Renewal lease by the tenant - S. 26 request - Application to the court following service

Answer 17

If the landlord wishes to oppose the grant of a new tenancy it must serve a counter-notice on the tenant within two months of the service of the tenant’s S. 26 notice stating he S. 30 grounds of opposition. The tenant must ensure they apply to court for a new lease prior to the commencement date of the new tenancy stated in s. 26. The landlord can pre-empt the tenant’s application to court by applying for an order to terminate the lease on the grounds stated in its counter notice

Question 18

The ending of a periodic tenancy

Answer 18

Can be brought to an end by either party serving notice to quit. General rule is that one full period’s notice is required

Question 19

Rent review - Market rent

Answer 19

It is reasonable to disregard any improvements that the tenant has voluntarily paid for. Goodwill should also be disregarded

Question 20

Options if they want to make sure the lease doesn’t fall within the act

Answer 20

1) Licence
2) Tenancy at will
3) Short six month lease
4) Contracted out tenancy for 12 months

Question 21

Options if they want to make sure the lease doesn’t fall within the act - Licence

Answer 21

Under case law the tenant’s occupation of the whole ground floor is likely to amount to a tenancy/lease NOT a licence if the tenant has exclusive possession of the property which would then give them protection

Question 22

Options if they want to make sure the lease doesn’t fall within the act - Tenancy at will

Answer 22

Gives maximum flexibility as the LL can end tenants occupancy at short notice whenever they like. However it is unlikely that the tenant would be happy without any certainty of duration and would be unlikely to agree. Also tenant could choose to end at any time and LL could lose rental income

Question 23

Options if they want to make sure the lease doesn’t fall within the act - Short 6 month lease

Answer 23

1) The lease cannot contain a term allowing for its renewal or extension beyond this
2) The tenant has not been in occupation for more than 12 months when the lease comes to be granted
This could be used to grant an initial 6 months which could be renewed for a further 6 months if the parties wanted.
-ve cannot force tenant to get a new lease and costs in negotiating

Question 24

Options if they want to make sure the lease doesn’t fall within the act - Contracted out 12 month lease

Answer 24

Guarantees income for whole 12 months. A notice containing a ‘health warning’ informing the tenant of the consequences of contracting out must be given to the tenant who must then respond that it agrees to contracting out.