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.
Which Act introduced security of tenure for business tenants?
The Landlord and Tenant Act 1954.
Why was security of tenure introduced?
To prevent landlords from exploiting tenants at lease expiry by demanding higher rents or terminating leases unfairly.
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.
What happens if a lease is protected under LTA 1954?
Tenant holds over and can request a new lease.
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?
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
(b) Persistent rent arrears
(c) Other lease breaches
What are the 3 mandatory grounds for refusing lease renewal?
(d) Suitable alternative premises
(f) Redevelopment
(g) Landlord’s own occupation
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 Notice?
Before the termination date specified in the notice.
What happens if parties can’t agree on lease terms?
Court decides:
* Term (up to 15 years)
* Open market rent
* Other terms based on current lease & circumstances
What is interim rent?
Rent payable during holding over, based on previous lease unless court sets new amount.
What happens after a court order for a new lease?
- Lease ends 3 months + 21 days after the order
- New lease starts next day
How is the expiry date of a notice calculated?
- Same date as service, after required months
- End-of-month notices expire on last day of same month (corresponding date rule)
Who is a ‘competent landlord’?
The first landlord in the chain whose interest won’t end within 14 months.
