Business tenants surprisingly often enjoy more security than residential tenants. To take advantage however you must make yourself aware of your rights, particularly if you are in the last year of your lease.
The main protection enjoyed by business tenants is the so-called ‘security of tenure’ protection granted by the Landlord & Tenant Act 1954. This protection gives business tenants the right to take a new lease of their premises once the existing one comes to an end.
The first thing every business tenant needs to establish, however, is whether these rights have been excluded. The Landlord & Tenant Act allows a landlord (with the tenant’s consent) to agree to waive its rights if a particular procedure is followed. A quick check using Cousins Business Law’s free Business Lease Review service will establish whether or not these rights have been excluded.
If your rights have not been excluded, then it is vital that you do not give them up by failing to act if you are served with a notice by your landlord.
Under the Act, a landlord can bring a business lease to an end by serving notice on the tenant. The notice has to state whether the landlord is prepared to grant a new lease to the tenant and the terms it proposes to offer. The starting point here is that the tenant is entitled to a new lease on the same terms as the existing one (although the rent under the new lease will be the open market rent at the date of renewal).
There are specific circumstances where the landlord is entitled to oppose the grant of a new lease which a commercial property solicitor can advice on.
Even if the landlord attempts to oppose the grant of a new lease, certain tests have to be satisfied to enable it to prevent the tenant taking a new lease and the tenant may also be entitled to compensation (equal to once or twice the rateable value of the premises, depending on how long the tenant as occupied the premises).
If the landlord serves a notice and the tenant wants to preserve its right to a new lease, then it must act, and act quickly. The tenant needs to make a Court application requesting a new lease before the landlord’s notice expires (whether the landlord is opposing the grant of a new lease or not).
If no Court application is made before the notice expires, then the tenant’s rights are lost (if the landlord opposed the grant of the new lease that gives rise to compensation, the right to compensation is not lost, however).
It is possible to extend the time for making a Court application by agreement but it is essential that this agreement is properly documented, ideally by correspondence between lawyers.
If you are served with a notice by your landlord bringing your lease to an end, then it is vital you take immediate legal advice.
Cousins Business Law can give some initial advice courtesy of the Business Lease Review Service. For further details, contact Steve Petty on 01926 629 005.