PP 11 - Business Tenancies Flashcards
What is security of tenure in business leases?
A tenant’s right to remain in occupation and request a new tenancy when the lease ends.
Name 2 benefits of security of tenure for tenants.
- Encourages long-term investment in premises
- Protects goodwill and customer base
Name 2 drawbacks of security of tenure for landlords.
- Loss of control over property
- Restrictions on possession and redevelopment
What are the 3 conditions for security of tenure under the LTA 1954?
- A tenancy (not a licence)
- Occupied by the tenant
- Used for business purposes
Does a licence to occupy give security of tenure?
No – only tenancies do.
Does a service tenancy (e.g. caretaker’s flat) qualify for security of tenure?
No – excluded under s43 LTA 1954.
What happens if a tenant underlets part of the premises?
They lose security of tenure for that part.
Name 3 examples of business use under LTA 1954.
- Charity shop
- Tennis club
- Mixed residential/business use
Can a lease be contracted out of the LTA 1954?
Yes – fixed-term leases can be, but not periodic tenancies.
What are the 3 steps to contract out of the LTA 1954?
- Serve warning notice on tenant
- Tenant signs declaration
- Lease refers to the notice and declaration
What’s the difference between a simple and statutory declaration?
- Simple: Signed 14+ days before completion
- Statutory: Signed if <14 days before completion
What happens if the wrong declaration is used?
Contracting out fails – tenant retains security of tenure.
What happens if a tenant has a non-protected lease at expiry?
Must vacate or become a trespasser.
How can a landlord end a protected tenancy?
- Forfeiture (if tenant breaches lease)
- Section 25 Notice (friendly or hostile)
How can a tenant end a protected tenancy?
- Vacate
- Surrender
- Serve Section 26 Notice (request new lease)
- Serve Section 27 Notice (vacate notice)
What is a Section 25 Notice (friendly and hostile)?
A landlord’s notice to end or renew a protected tenancy. Must give 6–12 months’ notice.
What is a Section 26 Notice?
A tenant’s notice requesting a new lease.
What are the two types of Section 25 Notices?
- Friendly: Proposes new lease
- Hostile: Opposes renewal
What are the 3 discretionary grounds for refusing lease renewal?
(a) Breach of repair covenant - eg persistent non-repair
(b) Persistent rent arrears
(c) Other lease breaches - eg unapproved alterations
What are the 3 mandatory grounds for refusing lease renewal?
(d) Landlord offers similar premises
(f) Redevelopment - planning permission granted
(g) Landlord’s own occupation - must prove genuine intent
What compensation is payable under grounds (f) and (g)?
- <14 years’ occupation: 1× rateable value
- 14+ years: 2× rateable value
When must a party apply to court after a Section 25/26 Notice?
- You do not always need to apply to court. You only apply if the parties can’t agree on:
1. Whether the lease should be renewed, or
2. The terms of the new lease.
Deadline for applying to court: s25 Notice
Following a s25 notice (landlord-initiated):
* Application to court must be made by the termination date stated in the notice.
* Can be made any time after the notice is served, even before the termination date.
Deadline for applying to court: s26 Notice
Following a s26 request (tenant-initiated):
* Landlord must serve a counter-notice within 2 months if opposing renewal.
* Either party may apply to court:
1. After the landlord has served a counter-notice, or
2. After 2 months have passed since the s26 request, if no counter-notice was served.
* Application must be made before the proposed commencement date (PCD) of the new lease stated in the s26 notice unless the parties agree in writing to extend.
