U7. Termination of Leases

Question 1

How are leases terminated?

Answer 1

Leases are terminated by any of the 5 common law methods unless there is a security of tenure.

Where there is a security of tenure, different rules apply regarding the termination of the lease

Question 2

What act governs the termination of leases and security of tenure?

Answer 2

Part II of the LandLord and Tenant Act 1954

Question 3

When does Security of Tenure apply?

Answer 3

Security of tenure automatically applies for OCCUPIED Business tenancies, unless it is a ‘contracted out tenancy’

This comes from Part II of the LTA 1954

Question 4

What 2 rules does security of tenure provide?

Answer 4

1. The Common Law Methods of Termination of Effluxion of time and notice to quit do not apply, instead Leases, may become a ‘continuation tenancy’ unless it is terminated by one of the prescribed methods.
2. Presumption of renewal lease - On termination, there is a presumption the tenant is entitled to a new protected lease on similar terms subject to reasonable updating, at market rent, for a maximum of 15 years unless landlord provides a ground of opposition

-If parties do not agree on terms, court can intervene.

• If a renewal lease is not granted due to ground of opposition not relating to the default of the tenant (And so a no fault ground), tenant may be entitled to compensation

Question 5

What are the common law methods of termination?

Answer 5

1. Effluxtion of time (Fixed term tenancys)
2. Notice to Quit (Periodic Tenancys)
3. Surrender and Merger
4. Forefiute - (If breach, and express clause in lease allowing)

NB:Effluxtion of Time and Notice to quit do not apply where there is a security of tenure and will continue until terminated in accordance with the act.

Question 6

What 2 common law methods of terminating a lease do not apply where there is a security of tenure?

Answer 6

1. Effluxion of Time - (Fixed Term Tenancies) - WHEN TENANT IN OCUPATION
2. Notice to Quit - (Periodic Tenancies) - LANDLORD CANNOT SEVE NOTICE

Question 7

What is Effluxion of time?

Answer 7

Effulxion of time provides fixed term leases out automatically terminated on the expiry of the term.

Applies only to fixed term tenancies and does not apply where there is security of tenure

Question 8

What is Notice to Quit?

Answer 8

Provides either party can terminate the lease by giving one full periods notice expiring at the end of the relevant period.

Thus, if the period is weekly, 1 week notice is required.

Monthly, one month notice

But if yearly, only 6 months notice

Question 9

What happens when there is security of tenure and the common law method of effluxion of time and notice to quit does not apply?

Answer 9

Instead, even after the contractual expiry date, a lease may continue ‘continuation tenancy’ unless and until it is terminated under one of the prescribed methods.

The tenant is said to be ‘holding over’ under the lease during the continuation period.

Question 10

What is not within the definition of a business tenancy and so cannot have security of tenure?

Answer 10

1. Licences instead of tenancies
2. Tenancies at will (Expressly or implied tenancies that can be determined (Terminated) at any time by either party

3/ Short Term Tenancies, Fixed Term Tenancies under 6 months unless:
-The tenancy contains a provision for renewal , or

            -The tenant or its predecessors have been in occupation and 
             carrying on the same business for over 12 months 

4. Leases of:
   □ Agricultural holdings,
   □ Service tenancies,
   □ Farm business tenancies and
   □ Mining leases:
5. Contracted Out Tenancies

Question 11

What types of tenancies can never be a business tenancy for the purposes of security of tenure?

Answer 11

Tenancies at will (Expressly or implied tenancies that can be determined (Terminated) at any time by either party

Question 12

What 4 types of leases can never be a business tenancy for the purposes of security of tenure?

Answer 12

Leases of:
□ Agricultural holdings,
□ Service tenancies,
□ Farm business tenancies and
□ Mining leases:

Question 13

What is a contracted out tennacy for the purposes of security of Tenure?

What are the only types of leases that can be contracted out off?

Answer 13

1. Where the parties expressly agree using the prescribed process that the provisions of s24-28 (security of tenure provisions) will not apply.
2. Only Fixed Term Tenancies of years certain (meaning the term does not include any period of continuation, extension, or holding over - ie the exact term is set)

Question 14

What is the process to contract out of security of tenure provisions for old leases?

Answer 14

The Landlord and tenant make a joint application to the court agreeging to the proposed exclusion before the grant of the lease.

The lease would also have to be substantially the same as the draft annexed to the order

Question 15

What is the process to contract out of security of tenure for new leases?

Answer 15

1. Landlord serves notice on the tenant warning them of the proposed exclusion and advising them to take independent advice

i) If 14 days have passed since service of notice, the tenant or person authorised by them must make a DECLERATION in the prescribed form that they agree to the exclusion

ii) If less than 14 days have passed since the service of notice, the tenant or authorised person must make a STATUOTRY DECLARATION in the presence of an independent solicitor that they agree to the exclusion

2.The Exclusion (notice, declaration, and agreement to contract out), must be referred to in the lease itself.

Question 16

After serving notice to contract out of the security of tenure for new leases, what is the difference if the tenant wishes to respond after 14 days or before 14 days have passed?

Answer 16

After 14 days have passed, the tenant or his agent must make a DECLERATION that they agree to the exclusion

If 14 days have not passed, STATUTORY DECLERATION in the presence of an independent solicitor that they agree to the exclusion is required.

Question 17

What are the 7 methods of terminating tenancies when there is a security of tenure?

Answer 17

1. Section 25 Notice (Landlord)
2. Section 26 Notice (Tenant Request)
3. Section 27 Notice (Tenant Notice)
4. Not in Occupation on the expiry of a fixed term lease - Effluxion of time (FIXED TERM LEASES)
5. Tenant Service of Notice to Quit (Not landlords) if they have been in occupation for at least a month (PERODIC TENANCYS)
6. Forfeiture
7. Surrender

Question 18

What are the section 25-27 notices ? (Methods of ending leases where there is security of tenure)

Answer 18

1. Section 25 Notice - Landlords NOTICE to end tenancy (with or without a new tenancy)
2. Section 26 Notice - Tenants REQUEST for a new Tenancy
3. Section 27 Notice - Tenants NOTICE to end tenancy (without new tenancy)

Question 19

What are the 2 types of notice a landlord can give when terminating a tenancy with security of tenure under a S.25 Notice?

Answer 19

1. A Non-Hostile Notice (Where a new tenancy is proposed)
2. A Hostile Notice (Where a new Tenancy is refused)

Question 20

When can a section 25 notice not be served?

Answer 20

if a section 25 or 26 has already been served.

Question 21

What 5 things must a section 25 notice must have?

Answer 21

The Notice Must:

1. Relate to the whole of the premises comprised in the tenancy
   2. State the date on which the tenancy will terminate (Which cant be earlier than the contractual end date)
2. Be Signed by the Landlord or on his behalf
3. Be Served not less than 6 months nor more than twelve calendar months before the proposed termination date (PERIOD IS 1 YEAR BEFORE AND 6 MONTHS AFTER - IE 30TH JUNE 2024 WOULD BE 30TH JUNE 2023 - DECEMBER 2024)
4. If Non Hostile, key terms of new tenancy. If hostile, the grounds for refusing a new tenancy.

Question 22

What is the earliest date a section 25 notice can seek to terminate a tenancy?

Answer 22

It cannot be earlier than the fixed term of the lease, so the last day of the lease is the earliest.

Question 23

What period of time can a section 25 notice be served?

Answer 23

Be Served not less than 6 months after nor more than twelve calendar months before the proposed termination date (PERIOD IS 1 YEAR BEFORE AND 6 MONTHS AFTER - IE 30TH JUNE 2024 WOULD BE 30TH JUNE 2023 - DECEMBER 2024)

Question 24

What must the section 25 notice include if it is non hostile?

Answer 24

It must include what ‘ground of opposition’ the landlord is using for terminating the lease without renewing it.

Once the options are chosen, they cannot be changed

Question 25

What is the procedure after a Hostile Section 25 notice has been served?

Answer 25

1. To attempt to keep the lease, the tenant must make an application to the court for a new tenancy
2. Or, if the tenant does not make an application to the court for a new tenancy, the landlord applies to the court to terminate the tennacy

Question 26

What is the procedure after a Non Hostile Section 25 notice has been served?

Answer 26

The parties will usually seek to negotiate the terms of the lease.

If not agreeable before the termination date the tenant must either make an application to the court or agree with the landlord to extend the deadline for the application by written agreement.

If no agreement nor extension is made by the termination date, the tenant will lose his security of tenure and the tenants solicitor would be found negligent.

The landlord can also apply to the court for the grant of a new lease

Question 27

What types of tenancys do s.25, 26, and 27 notices apply to?

Answer 27

S.25 - Landlord can terminate, with or without new lease, FIXED TERM OR PERIODIC TENANCYS

s.26 - Tenants can request to terminate exsisting FIXED TERM TENNACY OVER A YEAR for a new one

s.27 - Tenanys Notice to end FIXED TERM LEASE without a new one

Question 28

What is a Section 26 Notice ?

What must the existing tenancy be?

Answer 28

Section 26 Notice allows the Tenant to Request the termination of the existing tenancy for a new tenancy where there is security of tenure

The existing tenancy must be fixed term, of longer than 1 year.

Question 29

What must the Notice include to be valid?

Answer 29

1. The tenants proposal for a new tenancy (key terms such as rent and property)
2. State the date on which the tenancy will begin (which cannot be earlier than the contractual end date of existing lease)
3. Be Served not less than 6 months after nor more than 12 Calander months before the proposed commencement date (ie one year before and 6 months after the commencement)
4. Be signed by the tenant or on behalf of the tenan

Question 30

What is the procedure if after being served a section 26 notice, the landlord opposes the new tenancy?

Answer 30

1. Must Serve a counternotice on the tenant within 2 months and state the grounds of opposition. (Grounds cannot be changed)
2. Tenant must make an application to the court for a new tenancy after the period of service for the counter notice has expired, but before the commencement date specified in the request, otherwise loses the right to a new tenancy
3. Landlord may apply to the court to terminate the lease on the specified grounds of opposition, but not if the tenant has already made an application for a new tenancy

Question 31

What is the procedure if after a section 26 notice, the landlord does not oppose the new tenancy?

Answer 31

1. The parties must agree new terms before the end of the existing lease, or apply for an extension before expiry or the right will be lost
2. Or, The Landlord can apply to the Court to grant the new lease

Question 32

What type of landlord must a section 26 notice be served on?

Answer 32

A Competent Landlord

Question 33

What type of landlord must serve a section 25 notice?

Answer 33

A Competent Landlord

Question 34

What is a competent landlord and when is it required?

Answer 34

1. A competent landlord is one that owns the freehold or has a tenancy that will not come to an end by effluxion of time within the next 14 months. (so a tenant can be the competent landlord where there is a sublease if their lease does not end within the next 14 months)
2. It is required for s.25 and s.26 notice to terminate a lease with security of tenure

If there is any doubt, the tenant can serve a section 40 notice to their imeditate landlord to confirm this, and the landlord has 1 month to reply.

Question 35

What sections of notice for terminating a lease with security of tenure have prescribed forms?

Answer 35

S.25 & S.26 - Prescribed Forms

s.27 - no prescribed formes

Question 36

What is a section 27 notice?

Answer 36

Section 27 Notice allows a tenant to terminate a fixed term tenancy on or after the contractual expiry date, provided they have been in occupation for at least a month.

Question 37

What are the tenants 3 options to terminate the tenancy following a Section 27 notice?

Answer 37

1. 2. Simply vacate the premises on/by the contractual expiry date, in which the lease will expire by the effluxion of time
2. Serve Notice giving not less than three months notice to terminate ON the Contractual expiry date
3. Serve notice giving not less than three monhts notice to terminate AFTER the contractual expiry date (ie to expire during the continuation of tenancy)

Question 38

What is the best way to serve s.25-s.27 notice of termination of lease where there is a security of tenure

Answer 38

Best practice to serve by registered post or recorded delivery as then are deemed served on the date of postage.

Question 39

What are the 4 types of landlords grounds of opposition for not renewing a lease with security of tenure?

What are their letters?

Answer 39

The grounds are s.30, E-G

1. Near Misses - D,E, F - MUST BE REFUSED
2. Discretionary - A,B,C,E -
3. Mandatory grounds, and - D, F, G - MUST BE REFUSED
4. Tenants Non Fault Grounds - E,F,G

Question 40

What is a tenants no fault ground ?

Answer 40

If the tenants reason

Question 41

What grounds of opposition require the court to refuse the new tenancy?

Answer 41

D, - Suitable Alternative Accomidation (No compensation)
F, - Demolition or Reconstruction (Compensation)
G Intention to Occupy (Compensation)

Question 42

What are the grounds of Opposition?

Answer 42

A - Repair Covenant Breach - Discretionary - No Comp

B - Peristent delay in paying rent sums - Discretionary - No Comp

C- Substantial Breach of other obligation - Discretionary - No Comp

D - Suitable Alternative Accomidation - Mandatory - Yes Comp

E - Underletting of a part - Discretionary - Yes Comp

F- Demolition, Reconstruction, Substantive Construction - Mandatory - Compensation

G - Intention to Occupt - Mandatory - Yes Compensation

Question 43

What will the tenant get if his application for a new tenancy is successful?

Answer 43

they will be entitled to a new lease of THE HOLDING of the property comprised within the current tenancy (Exclusing any part not occupied by the tenant or occupied by a third party).

Question 44

When the tenant is granted a renewal for a security of tenure, what must the term be and when will it begin?

Answer 44

Must be for a reasonable term, not exceeding 15 years.

Will commence three months after proceedings are finally disposed of (ie after the 4 week window for appeals after the order has passed)

Question 45

When the court is deciding the rent rate for a grant of renewal tenancy, how will the rent be determined?

Answer 45

Rent is based on the open market rent, but will disregard the following to avoid the rent being artificially inflated:

		1. Occupation by the tenant and its predecessors 
		2. Any tenants good will attached to the premises
		3.The effect of voluntary improvements carried out during the tenancy (not owing to a covenant to do so) 4. The value of any applicable licence held by the tenant

Question 46

Can tenacys renewed following secuirty of tenure have Rent Review clauses?

Answer 46

Rent review clauses can be included whether or not the previous lease had one. But, it must be upwards-downards rent review.

Question 47

For all terms other than rent review, can the court add new terms into a renewal tenancy if they were not in the existing tenancy?

Answer 47

New clauses or types of clause may only be added if they are fair and reasonable in all circumstances. The burden of proving this will be on the person seeking to impose the new clause.

Question 48

If a old lease is being renewed to a new lease, can the courts keep the privity of contract and estate rules?

Answer 48

Where an old lease is being renewed to a new lease, the courts may insist on an authorised guarantee agreement but cannot make the old privity of contract rules apply. They loss of privity of contract and estate rules may be compensated in determine the rent

Question 49

What can the tenant do if they applied for a new lease, but are not happy with the courts terms?

Answer 49

If the tenant makes an application for a new tenancy, but is unhappy with the proposed terms, they can apply for the court order to be revoked within 14 days.

Question 50

When is compensation payable to a tenant in relation to termination of a lease with security of tenure?

Answer 50

Compensation is payable where:

1. The tenants application for a new tenancy is successfully opposed by the grounds that do not involve the default of the tenant (no fault grounds e,f,g.
2. Tenant did not apply to the court for a new tenancy when they could have
3. Tenants withdrew their application for a renewal of the lease

Question 51

Can Tenants compensation be excluded?

Answer 51

There can be a clause in the lease to exclude the tenants right to compensation, but this will be void if the tenant or their predecessors in business have been in occupation for five years or more.

Question 52

What is the compensation rate for tenants whos leases were terminated without renewal with security of tenure?

Answer 52

Compensation is the rateable value of the property (ie the value used by the local authority to calculate business rates for the property if used for a non-domestic purpose) at the date of the relevant notice or request under the act.

It increases to twice the rateable value if the tenant of their predecessor in the same business have been in occupation for at least 14 years.