Business leases – what you should know.
Leon Young, Commercial Property Expert at Fodens Solicitors
Commercial property plays the biggest role in making business dreams come true, but the process can be complicated for both landlords and tenants alike. Here’s a little guidance to help you on your way.
When entering a commercial property lease agreement, it’s important that both landlords and tenants fully understand the implications of the Landlord and Tenant Act 1954. If you’re looking to lease or rent a commercial property, then here’s what you need to know.
What is the Landlord and Tenant Act 1954?
After the Second World War, commercial property was at a premium. This meant that when leases expired, landlords were evicting tenants and offering their properties to their preferred choice of new tenants. The Landlord and Tenant Act 1954 was introduced to protect reliable tenants from being evicted unless the landlord has solid grounds to do so.
What are the benefits for tenants?
Also known as a protected tenancy, the main benefit of the act is that it provides ‘security of tenure’.
This gives you the right to stay at the premises when the term of your existing lease ends, as well as the right to demand a new lease at the current market rent. This gives you peace of mind and more stable conditions to grow your business.
What are the drawbacks for landlords?
A landlord can only terminate a protected lease or refuse a renewal request if they have the statutory grounds to do so. One of the most common reasons to oppose a lease renewal is that the landlord intends to redevelop the property. In this case, the landlord must prove their intent by providing evidence such as plans, drawings and building contracts.
Other statutory grounds for opposition include tenant fault, including property neglect, late payments and breaches of the current lease. Landlords can also oppose if they have owned the property for more than five years and intend to occupy the premises themselves.
If the landlord is unable to justify ending the lease under these strict statutory grounds, then the tenant has the legal right to stay on at the property.
Can landlords avoid security of tenure?
If the tenant consents, then a lease can be ‘contracted out’ of the provisions of the Act. This follows a strict procedure, and deciding whether the lease is ‘inside’ or ‘outside’ the Act is an important part of pre-contract negotiations. Both parties should carefully consider what the Act means when negotiating their terms.
Do you need advice?
If you’re looking to renew or terminate your current commercial property lease, feel free to reach out to Fodens’ trusted team of legal professionals. Guiding you through your options and the implications for your business or property, we can help you make confident choices for your future.
For more information, contact Leon and the Fodens team on 01952 726111 or email hello@fodens.co.uk.
