security of tenure Flashcards
security of tenure definition
- any tenancy
- tenant in occupation
- for business purposes
what is a ‘tenancy’?
- fixed term tenancies of over 6 months
- periodic tenancies
what is not considered business purposes?
- agricultural tenancy
- mining
- service
implications of having security of tenure/protected tenancy
non-protected tenancy - no right to occupy beyond the contractual term. see final chapter: termination of leases
protected tenancy - right to stay in occupation (holding over), and lease can only come to an end by certain methods permitted by legislation (s25/26/27)
Once one of these notices has been served, the other party cannot…
…validly serve a different type
of notice.
which procedures need to be conducted with the competent landlord?
s25 and s26
who is the competent landlord?
first in the chain of landlords, starting with the immediate landlord to own a reversionary interest which is either freehold or a leasehold that will not come to an end in 14 months’ time.
ending a protected tenancy - landlord
- forfeit the lease if T has breached covenants and there is an express forfeiture provision;
- s25 hostile (written reasons must be provided); or
- s25 friendly (offering a renewal lease)
ending a protected tenancy - tenant
- vacate the premises
- surrender the lease and pay a reverse premium
- for periodic tenancies: serve notice to quit
- serve s26 notice: request a new tenancy
- serve s27 notice: leaving the premises
why serve a s25 friendly notice?
- Peace of mind – the landlord wants the tenant to be tied to a further term and therefore the
landlord’s rental income will be guaranteed. - In a rising market, to enable a market rent to be fixed for the renewal tenancy.
A lease may contain a rent review on the last day before the end of the contractual term. This is
designed to ensure that the tenant pays a market rent during the period of holding over. Even if
this is done, the rent will stay the same during the period of holding over, so this is only a limited
solution
why serve a s25 hostile notice? mandatory grounds
- landlord has found suitable alternative accommodation
- landlord wants to demolish/reconstruct (show firm and settled intention via planning permission or construction contract)*
- landlord wants to move back in (show firm and settled intention and have owned reversion for at least 5 years before DOT)*
*compensatory grounds:
2x rateable value if T has occupied for 14 years or more
1x rateable value if T has occupied for less than 14 years
rateable value = fixed by local authority. estimated annual rental value. can be different to market rent.
why serve a s25 hostile notice? discretionary grounds
- persistent delays in paying rent
- persistent and serious breaches of repair covenant
- other persistent and serious breaches
s25 notice requirements
- no less than 6 months and no more than 12 months before DOT
- propose terms of renewal lease (if friendly)
As the tenant is entitled to hold over, why would a tenant want to serve a s26 notice to
renew the lease?
- The tenant may want the certainty of a fixed term, particularly if it is planning to carry out
improvements to the premises, or to assign the lease as part of a business sale. - In a falling market, the tenant may be stuck on a higher than market rent while holding over
(particularly if there was a penultimate day rent review) and will want a renewal lease at a
market rent
s26 notice requirements
- lease must originally have granted a term of more than 1 year (this does not apply to s25)
- no less than 6 months and no more than 12 months before proposed commencement date
- L has 2 months from s26 notice to serve a counter-notice
- propose terms of renewal lease
