Posted: Monday, 4 August 2014 @ 15:30
It is useful for both landlords and tenants to remember the possibility of applying for an interim rent at the end of the business lease, to take effect during the period from the end of the current lease until a new lease is either agreed or ordered by the court. This is because in the meantime the lease will continue on the same terms, and therefore the same rent, and it may be some time before the new terms have either been agreed or determined by the court.
The ability to apply for an interim rent arises where the business lease has the protection of the Landlord and Tenant Act 1954, is continuing automatically under the provisions of the Act, and either the landlord has served a notice under section 25, or the tenant under section 26, bringing the contractual term to an end.
In that scenario either the landlord or tenant can apply to the court for an interim rent as soon as the notice under section 25 or section 26 has been served. Indeed, either the landlord or tenant can make such an application until six months after the date specified in the notice, or any agreed extension, or if an application is made to the court, until 3 months and 3 weeks after the new lease has been determined by a court or the tenant abandons it’s application.
It will certainly be to the landlord’s advantage to make such an application where the new market rent is likely to be significantly higher than the existing rent. The tenant will only be interested in such an application in a depressed market where the new rent is likely to be lower.
When the new rent is determined by the court, it will apply from the earliest date that could have been specified in the section 25 or 26 notice. That means from the earliest date for the determination of the existing tenancy in a section 25 notice, or commencement of a new tenancy in a section 26 notice.
If a new rent has in fact been agreed for the new lease, the interim rent is most likely to be the same. Otherwise the court will award a “reasonable” rent, and will adjust the rent payable if new terms in the lease substantially affect the market rent.
Nigel Musgrove
Business and Litigation Solicitor
Tel: 0845 003 5639
For free advice on this topic please call us on 0845 003 5639.
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