jennifer slade. security of tenure for business leases – landlord and tenant act 1954 amended by...
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Jennifer Slade
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Security of tenure for business leases – Landlord and Tenant Act 1954
Amended by 2003 Order (effective 01.06.04) Handout:
Which tenancies? (p1) Continuation (p4) Methods of termination (p5) Interim rent (p7) Grounds of opposition (p7) Tenant’s compensation (p14) Renewal lease (p15) Contracting out (p16)
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Two layers of protection for tenants (s24(1)) (p.1): Continuation Right to renew
Also compensation
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Grant ContractualExpiry Date
………………………….
“Continuation tenancy”“Holding over”
Renewal tenancy
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Which tenancies (p.1)? Section 23
▪ Tenancy▪ Occupation▪ Business
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Tenancy Not licence or tenancy at will
Occupation ss23(1A)/(1B) – occupation through a
company – good for small companies s42 – group companies (see p.3)
Business Fact and degree Examples (p.3)
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Tenancies expressly excluded from protection (p.4): s43
▪ Agricultural▪ Mining▪ Service tenancies▪ Six month leases (note provisos)
s38A▪ Contracted out leases (see later)
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Section 24 Continue on same terms until terminated in
accordance with the Act Termination
Forfeiture Surrender Notice to quit s25 notice (L) s26 notice (T) s27 notice (T)
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Section 25 notice (p.5) L. serves on T. – prescribed form(s) Rationale - hostile vs non-hostile
▪ Hostile – L’s grounds of opposition to new lease▪ Non-hostile – (non-binding) proposals for new lease
Procedure Serve
▪ Not more than 12 months▪ Not less 6 months
Before the termination date specified in the notice(use corresponding date rule)
IT IS NOT POSSIBLE TO TERMINATE PRIOR TO THE CONTRACTUAL EXPIRY DATE OF THE LEASE
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CED = 29 August 2008
1. When is the earliest that L can serve s25 notice?
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CED = 29 August 2008
1. When is the earliest that L can serve s25 notice?
12 months
Serve notice on29 August 2007
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CED = 29 August 2008
2. When is the earliest that L can terminate the lease? (today is 11 March 2008)
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CED = 29 August 2008
2. When is the earliest that L can terminate the lease? (today is 11 March 2008)
Serve on11 March 2008
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CED = 29 August 2008
2. When is the earliest that L can terminate the lease? (today is 11 March 2008)
Serve on11 March 2008
Expiry date11 September 2008
6 months
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Section 25 procedure: L or T can apply to court for a new tenancy
after service T must apply to preserve its rights of renewal
under the Act L can apply for termination if hostile s25 s29A – application to court can be made up to
the expiry date in the notice (parties can agree to extend the time limit)
No need now for T’s counternotice (2003 Order)
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Section 26 notice/request: Rationale for T to terminate and renew? see p5
Procedure: T has 12 – 6 month service window (i.e. for
date specified in notice)▪ L can agree to terms OR refuse to renew (cite grounds)
OR agree to renew but on different terms Note: if opposing renewal, L must serve
counternotice to oppose renewal within 2 months of service
Court applications – before date in notice (after 2 month period for counternotice has elapsed)
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Competent landlord (p.6): Notices served between tenant and
competent landlord – not always immediate landlord
No problem if letting of freehold For sublettings, identify next landlord in
the “chain” whose tenancy will not expire within 14 months
See manual – pp 264
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L (freeholder)
T
Sub-T
Ask – Will T’s lease come to an end within 14 months? Did T sublet the whole of the premises (so out of occupation, so not protected)?
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Section 27 notice Served by T on L in order to terminate
lease without renewal s27(1)
▪ Serve at least 3 months before contractual expiry date to determine on that date (cannot terminate before)
▪ Esselte v Pearl Assurance incorporated into Act by 2003 Order – if T vacates on/prior to expiry date, lease no longer protected by the Act so no need for s27(1) notice
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Section 27(2) 3 month notice must be served if to
terminate during the continuation tenancy
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Section 64 Continuation tenancy at old rent until 3
months after proceedings concludedSection 24A
L or T can apply for “interim rent” (p.7)Section 24B
Payable from earliest date that could have been specified in s25/s26 notice
Sections 24C/D - valuation
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Landlord’s grounds set out in s30(1)
Ground (a) – breach of repairing obligation
Ground (b) – persistent delay in paying rent
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Ground (c) – substantial breaches
Ground (d) – suitable alternative accommodation
Ground (e) – possession required for disposal of property as a whole
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Ground (f) and (g) – popular grounds Ground (f) – L’s intention to
demolish/re-construct/do substantial works Firm and settled intention
▪ Evidence Nature of works
▪ Demolish, reconstruct, substantial L needing possession
▪ s31A - T’s “defence”
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Ground (g) – L’s intention to occupy L’s intention s30(2)
▪ 5 year rule“Near miss” cases – s31(2)Discretionary vs mandatory grounds:
Discretionary – (a), (b), (c), (e) Mandatory – (d), (f), (g)
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Compensation grounds (e), (f) and (g) – “no fault”
Amount of compensation: Multiple of RV for holding Multiple = 1 … unless continuous
occupation for 14 years, then Multiple = 2
Excluding compensation – s38(2) 5 years occupation
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Usually parties agree – else court intervenes
Terms Premises Term Rent (s34 disregards)
Other terms O’May principles Wallis Fashions
▪ AGA in renewal lease?
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Old regime (pre 01.06.04/2003 Order): Court order required
New regime (3 elements): L to serve “health warning” notice on T T to make declaration confirming receipt
Note – T’s declaration: If completion 14 days after L’s notice
▪ T makes simple declaration
If completion within 14 days of L’s notice▪ T makes statutory declaration
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Also, the lease must include a clause referring to: The agreement to exclude Act for that
tenancy The notice (+ date) The declaration (+ date + whether
simple/statutory) See precedent
Keep documents together!
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Agreements for lease No longer can be conditional on
contracting out Notice/declaration procedure prior to
agreement No strict need for clause in agreement
(but should for best practice)