Security of tenure

Question 1

What are the TWO layers of protection afforded a tenant under the LTA 1954?

Answer 1

This applies to PROTECTED TENANCIES remember!

Per s.24(1) LTA 1954, tenancies do not automatically end at the Contractual Expiry Date, unless terminated by one of the permitted ways outlined in the act.

Furthermore protected business tenants have the right to request a new tenancy.

Question 2

What does the phrase ‘holding over’ mean?

Answer 2

The term ‘holding over’ means that the tenant’s lease is still ongoing and being enjoyed as such beyond the CED by virtue of the protection of the 1954 act. Which will go on indefinitely until one of the permitted methods of termination is used.

Question 3

Discuss the three substantive components of s.23(1).

Answer 3

s. 23(1) sets out WHO is protected by security of tenure.
- There must be a ‘tenancy’

Can be oral or written
Periodic or fixed

BUT NOT

licences or tenancies at will

AND s.43 excludes various other types

• The tenant must be in ‘occupation’

SO if the T has an UT, it is the UT that would benefit from 1954 act as long as satisfies the other two criteria

• In order to carry on a ‘business’

Widely interpreted, ‘trade, profession or employment’, and operation of these must be SIGNIFICANT PURPOSE of the occupation

Question 4

What must you remember in the case of fixed term tenancies not exceeding 6 months?

Answer 4

Although fixed term tenancies of no more than 6 months are excluded from security of tenure, in the case of SUCCESSIVE renewal of 6 month fixed term tenancies, protected occupation can arise - thus a LL cannot use the 6 month tenancy exclusion to evade the 1954 act.

Question 5

What tenancies are excluded from protection?

‘This part of this act does not apply’ e.g. Part II of 1954 act which affords protection of security of tenure.

Answer 5

s. 43(1)(a) - Agricultural, (b) - mining
(2) - given as part of a job
(3) - 6 months or less tenancy UNLESS provision in term of lease OR same business has been in occupation for more than 12 months.

Question 6

What is the standard procedure for ‘contracting out’ of the protections of the act?

Answer 6

An agreement must be made between LL and T. This can only be lawfully done by the LL serving upon the T

• A warning notice (good practice to attach draft lease to notice)
• In the prescribed form BY THE COMPETENT LL
• and per sch 2 to RRO 2003 served not less than 14 days before the T enters into the lease
• The lease must contain per para 5 sch 2 - ref to the agreement - i.e. wording that the parties have agreed to exclude and reference to both the warning notice and T’s declaration.

The T must sign a simple declaration.

Question 7

If you do not have 14 days before becoming bound by the lease what procedure is followed and who would use this?

Answer 7

In the case of most commercial clients there will not be 14 days avail.

The tenant will make a statutory declaration in front of an independent solicitor.

This will be reflected in the lease as per the longer procedure.

Question 8

If parties agree to exclude security of tenure per s.38A, what must be included in the lease?

Answer 8

There must be wording in the lease that the parties have agreed to exclude, as well as reference to the L’s warning notice and the T’s declaration.

Question 9

What are the three things that need to be acknowledged in a clause relating to 38A in a lease?

Answer 9

• That the parties agreed to contract out of the act.

- That notice was served by the LL and the T has made a declaration in response.

Question 10

What are the three ways a protected tenancy can be brought to an end?

Answer 10

LL’s s.25 notice TERMINATING

T’s s.26 REQUESTING renewal

T’s s.27 notice to terminate

Question 11

What are the two types of s.25 notice?

Answer 11

• Hostile notice

- Friendly - willing to grant new lease

Question 12

What must a LL ensure is included in a hostile s.25 notice?

In a friendly?

What else must be satisfied?

Answer 12

Per s.25(7) - grounds for termination and STD.

Terms of new lease.

The notice must be in the ‘prescribed form’ and served by the ‘competent ll’.

Question 13

What are the TWO rules you must apply when figuring out an STD?

Answer 13

• s.25(2) - cannot specify a date that is less than 6 months from the service of the notice, nor more than 12 months. i.e. you have to give at LEAST 6 months notice for the STD.
• 25(4) - the STD cannot be a date before the CED

Question 14

How can a tenant preserve it’s right to apply for a new lease once a LL has served a s.25 notice?

What else should you do if acting for the tenant?

What is the effect of extending the deadline for court app (made in writing between the parties)?

Answer 14

The tenant MUST submit it’s request for a new tenancy to the COURT BEFORE the STD in the hostile s.25 notice. The LL will need to challenge.

Alternatively the LL will apply to court and T will need to challenge.

You should also lodge a unilateral notice of app to court - in order to bind any purchaser of LL’s land - against the LL’s title if reg’d or pending land action if unreg’d.

Extending the deadline to apply to court also extends the STD.

Question 15

Why should a T still make a s.26 COURT application once served friendly s.25 notice?

Answer 15

The tenant will lose their right to request a new lease altogether if they do not apply to court even in case of friendly notice by LL. It is thus advisable to apply in any case to ensure can negotiate.

Question 16

When making a s.26 request, what does a tenant need to provide? What are the rules with this?

Answer 16

Proposed Commencement Date

The PCD has to be at least 6mths from the date of the service of the request and no more than 12mths from that date.

Question 17

What is distinct about the s.26 procedure vs the s.25?

Answer 17

The LL has 2 MONTHS in which to serve a notice either granting the request or a counter-notice objecting with grounds.

The T MUST apply to court to protect itself, but cannot do so until the 2 month deadline has passed IF the LL has failed to serve a counter-notice, OR once the LL has served a notice.

Furthermore the DEADLINE for application to court is 1 DAY before the PCD in the s.26 request.

If the LL has not served a counter notice it can ONLY apply to court for a new lease. If the LL did serve a counter-notice it can apply to court for new lease OR an order that no new lease be granted. The deadline for this is also 1 day before the PCD.

Question 18

In terms of applying to the court following the opposing party’s primary application, what must be remembered?

Answer 18

If the application is not made within the time limit as defined by statute, then the right to apply to court is lost altogether and the other party is able to state its terms without a full hearing of the other party’s wishes.

Question 19

What is the deadline for a T’s application to court following LL’s counter-notice or lack thereof?

Answer 19

The T must apply to court to protect it’s right to request a new lease not before 2mths after service of its s.26 request, or the LL’s counter notice….and at the latest 1 DAY before the PCD in the s.26 request.

Question 20

What are the reasons that a T would use a s.26 when they could just take advantage of the holding over option?

Answer 20

• the property might be ‘over-rented’ i.e.
• ‘pre-emptive’ strike against a LL serving a s.25 - can make PCD 12 months hence if feel current lease terms are favourable and want to cont.
• if made improvements to prop towards end of lease term, will want to prolong occupation so that recoup expenditure
• in case of wishing to assign property - e.g. say a restaurant business wishes to sell its business and assign its lease…will want security of occupation to take benefit of good will built up….buyer would want certainty that will be staying in the premises!

Question 21

What is the pitfall of a T issuing a ‘pre-emptive’ s.26 request with a PCD of 12months in a sharply rising rental market?

Answer 21

A PCD of 12 months may result in the new lease being issued with a STARTING RENT that is much higher than it might be in 6 months time due to the LL not wanting to lose out on market rent.

Question 22

What is crucial to remember regarding the serving of notices? Who dictates the situation?

Answer 22

Once a notice has been served it is the procedure for that notice that is then what dictates proceedings.

So if a s.25 is served, a T cannot then serve a s.26 but instead can only object to the grounds given by the LL and request the court make an order for a new lease.

Conversely if T serves a s.26, the LL can serve a counter notice but they cannot serve a s.25.

Question 23

Where is the competent landlord defined?

Answer 23

Merely note the notice must be served by or on the ‘competent’ LL as defined by s.44 LTA 1954.

Question 24

What section of the 1954 act gives power for LL or T to request information and receive it regarding who is actually the correct party to serve notice on?

Answer 24

s.44 of the 1954 act provides that T and LL have the right to receive information regarding who is the correct party for the serving of notices.

Question 25

If a lease contains the words ‘from and including/ commencing’ what date is the CED?

Answer 25

The date of contractual expiry will be one day before the corresponding day as set out in the commencement date. for eg

If a lease is ‘from and including’ or ‘commencing on’ 28th March 2018 for a term of 10 years its CED will be 27th March 2028.

Question 26

If a lease states it is ‘from’ a date when is its expiry?

Answer 26

It will expire on the corresponding day and month however many years hence the lease lasts for.

e.g. If a lease is ‘from 25th July 2018 for a term of ten years’ it will expire on the 25th July 2028.

Question 27

In order for a LL to rely on ground 30(1)(d) - alternative accommodation, what must they show?

Answer 27

That the alternative accommodation proposed is reasonable with regards to the T’s business needs. e.g. if T is in city centre, offering something out of town is not reasonable.

Question 28

What must be established for the LL to rely on ground 30(1)(f) - intention to demolish and reconstruct? ‘Redevelopment ground’.

Answer 28

• Must be a FIRM and SETTLED INTENTION to redevelop - evidenced by obtaining planning permission or entering into construction contracts.
• Cannot just be minor, MUST BE SUBSTANTIAL so that the right of re-entry under the lease terms would not be sufficient to carry out the works i.e.
• that OBTAINING POSSESSION is necessary in order to do the works.

Question 29

What must you remember regarding ground 30(1)(g)? LL wants to occupy itself.

What is this restriction intended to prevent?

Answer 29

The five year rule! s.30(2)

The LL CANNOT rely on ground G if LL bought the reversionary interest WITHIN 5 YEARS of the STD in the s.25 notice or PCD in s.26 request.

The 5 year restriction is intended to prevent a LL from buying up a lease purely to then expel the protected tenancy.

Question 30

Do the parties actually end up going to court?

Answer 30

• If both parties want a renewal lease will negotiate, h/e in background T has court application if needed.
• If hostile notice T will need to go to court, or if s.26 rejected will need to argue against esp if discretionary grounds have been submitted as can go in T’s favour.

Question 31

How is compensation calculated if no renewal lease is granted due to successful argument of ground f or g? s.37

Answer 31

1 x rateable value if same business less than 14 years

1 x double the rateable value if 14 years plus

Question 32

Explain in brief a s.27 notice.

Answer 32

Is served by a tenant if it does not want a renewal lease.

If a T is going to leave by CED no need to serve, but might want to for clarity.

• Is served on the IMMEDIATE LL not the competent LL.

If wants to hold over, say a month, must serve s.27 notice. At least 3 mths before it intends to leave. Obligations under the lease will persist til actual departure.