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Excluding security of tenure in commercial leases

30 March 2017 • Danielle Leeming

Many solicitors will ask clients whether they want a commercial lease to be excluded from the security of tenure provisions contained in the Landlord and Tenant Act 1954, but what does this mean, and how is it implemented?

Fundamentally, it means that a tenant will not have the automatic right to request a renewal lease at the end of the term of the lease, leaving the landlord free to let the property to another tenant at the end of the term.

It also means that should the tenant wish to remain in occupation they should seek to negotiate a new lease of the property within the last 6-12 months of the current lease to ensure that the new lease can be completed on or before the expiry of the current lease.

If a lease is within the security of tenure provisions the tenant can request a renewal lease based on the same or similar terms by serving a Notice on the landlord within twelve months of the end of the existing lease. The Landlord then has certain grounds within which to refuse a renewal lease, which are set out in section 30(1) of the LTA 1954. Some of these grounds are fault based and others non-fault based grounds.

How is a lease excluded from security of tenure?

In order for a lease to be excluded from the Landlord and Tenant Act 1954, a Notice and Statutory Declaration has to be formally served on the tenant of the commercial property.

The Statutory Declaration confirms that you acknowledge that you would not be entitled to remain in the property at the expiry of the lease and that you accepted that the landlord would not be obliged to grant you a renewal lease.

The Statutory Declaration can either be signed by a representative of the tenant or the tenant’s Solicitor. This has to be signed in front of a Solicitor completely independent to the transaction. Solicitors normally charge a nominal fee for signing a Statutory Declaration.

Croftons can help

If you are in the process of negotiating a new lease or looking at a renewal lease and would like some initial advice on the terms, or want more information on the grounds on which a landlord can refuse a renewal lease, please contact our Commercial Real Estate Team.

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