Summary Commercial Security of Tenure

Commercial Security of Tenure-

Landlord and Tenant Act 1954 Part II as amended



History of the act-

Introduced to strike a fair balance between landlord and tenant in business lettings

 Now a tenant that wants to remain at the end of a lease can, if, the lease qualifies and specified
procedures are complied with

Tenants who remain beyond the contractual expiry date (CED) of their lease are said to be - ‘holding
over’

 Landlords can only end commercial leases if they can prove that one or more
of the grounds specified by the 1954 Act exist. Some of these relate to the
‘fault’ of the tenant, whereas others envisage the landlord recovering the
premises for its own occupation or redevelopment.

Protection of the act -

S24(1) - two layers of protection

 Tenancy will continue after CED until terminated in one of the ways specified by the act
 Tenant will have the right to apply for a new tenancy on termination of the current

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Which tenancies are protected by the act?-

S23(1)-

Subject to the provisions of this Act, this Part of this Act applies to any tenancy
where the property comprised in the tenancy is or includes premises which are
occupied by the tenant and are so occupied for the purposes of a business carried on
by him or for those and other purposes


‘Tenancy’-
Must meet the requirements of (Street v Mountford)-
 Exclusive possession and term absolute
 However, it includes periodic & fixed term tenancies and oral & written
tenancies.
o It excludes licences and tenancies at will (which are terminable at any
time by either party).
 Some tenancies are specifically excluded from the protection of the 1954 Act
by s.43 of the 1954 Act

, ‘Occupation’-
Tenant must be the occupier of at least part of the premises
 Courts will consider the measure of control the tenant exercises over anyone
else using the premises.
o So underletting of all the premises means they lose protection under
the act


‘Business’-
S23(2) - ‘trade profession or employment’
 Case law has refined this e.g. a members’ tennis club and a charity are
businesses for the purposes of the 1954 Act but not a Sunday school.
Incidental residential use is acceptable, so long as operating a business is a
significant purpose of the occupation.
-
Excluded tenancies: s43-
Those excluded are:
 s43(1)Tenancies of agricultural holdings
 s43(1)Mining leases
 s43(2)Services tenancies
 s43(3)Fixed term tenancies, not exceeding 6 months
-
‘Contracted out’ tenancies: s38A-
The landlord & tenant can exclude the lease from protection prior to grant of the
lease
 Normally for short term leases
The agreement to contract out must be carried out in accordance with the following
procedure as set out in the Regulatory Reform (Business Tenancies) (England and
Wales) Order 2003 (the ‘Reform Order’):
 Landlord must serve warning notice at least 14 days before the tenant
becomes bound to enter a new lease
o good practice to attach a copy of the agreed draft lease to the notice;
 Tenant must sign a simple declaration stating that it has received & accepted
the consequences of this notice
 Lease must contain
o Wording that the parties have agreed to exclude security of tenure
o Reference to both the warning notice & the declaration