The Law Commission has been reviewing the Landlord and Tenant Act 1954 and the right of business tenants to renew the leases of their premises at the end of the lease terms. Unless one of the statutory grounds applies to oppose the grant of a renewal lease, business tenants have a right to renew their leases on similar terms to their existing leases but at a market rent. However, the right of lease renewal can be excluded but in order to exclude the right of renewal under the 1954 Act the landlord must first serve a notice on the tenant in a prescribed form. The Tenant must acknowledge receipt of the notice either by making a declaration or a statutory declaration before the lease starts. The lease should also expressly state that the lease has excluded the right of the tenant to claim a new lease at the end of the lease term.
Excluding the Right to Lease Renewal Under the Landlord and Tenant Act 1954
The existing system of excluding the right of lease renewal has been criticised for being too outdated and too complex. However, the Law Commission has provisionally concluded in favour of retaining the existing “contracting out” model and by which the automatic right to claim a lease renewal is excluded. However, the threshold for tenancies that are automatically excluded from the protection of the Act is proposed to be raised from six months to two years.
Proposed Reforms and Ongoing Law Commission Consultation
There is now to be a second consultation paper from the Law Commission, which should focus on the technical details of how the 1954 Act might be reformed. The final recommendations for reform will then be set out in a report from the Law Commission.
Legal Advice on Commercial Lease Renewals and Property Matters
Want to know more about Lease renewal under the 1954 Act and to stay updated?
For professional guidance on the above or lease extensions, freehold purchases, and leasehold enfranchisement, contact Richard Palfreyman rpaltfreyman@fionabruce.co.uk and Luke Hodgkinson lhodgkinson@fionabruce.co.uk in our Commercial Property team today.
The contents of this post do not constitute legal advice and are provided for general information purposes only ■
