Legal help with commercial Lease disputes for Landlords and Tenants
Commercial business leases are for the purposes of security of tenure governed by the Landlord & Tenant Act 1954 (“the Act”). The lease must be for a fixed term of over six months or where the tenant has been in occupation over twelve months. The tenant occupying the premises must be doing so for the purpose of a business.
The Lease does not necessarily need to be in writing for it to qualify under the Act and there are some exclusions - including tenants-at-will or contracting out tenancies.
What is the purpose of a Lease?
The Security of tenure of commercial leases provides a certain amount of protection to the tenant to prevent him being evicted at the end of the fixed term (if over six months) or if he has been in occupation for over twelve months.
In order to regain possession of the premises, a Landlord must serve notice under the Act specifying one or more grounds as to why he opposes the renewal of the Lease.
What are reasons for opposing the renewal of a commercial Lease?
The usual reasons include the following:
- The Tenant has a poor history in observing the covenants under his Lease
- The Landlord has shown a firm and fixed intention to redevelop the property
- The Landlord has owned the property for more than five years and now wishes to use it for his own use and occupation
Can a Tenant claim compensation if they have a protected tenancy?
If the Lease is a protected tenancy then a tenant will be entitled to a sum equal to the ratable value of the premises. If they and their predecessors in title have occupied the premises for more than fourteen years then they will be entitled to twice the ratable value.
Compensation does not apply if the Lease was excluded from Part II of the Act. There is also the applicability of compensation for any improvements which may have been carried out at the property during the term of the Lease if these were permitted to be carried out.
Why might you need a commercial property lawyer?
Disputes most often arise when the Lease has ended and the Landlord serves a Schedule of Dilapidations upon the outgoing tenant. Often the issue is that the Landlord failed to serve a Terminal Schedule before the Lease ended.
The difficulty is that, after the Lease has ended, the tenant is not in a position to go back and do the works and the Landlord is therefore looking for compensation for him to carry out the works instead.
The tenant will then argue lack of fairness because he may have been able to conduct repairs at a cheaper price than the landlord doing it himself.
If the Landlord and tenant are disputing the terms of a new Lease and the tenant does not want to spend the money that he would otherwise not have to do if he was to continue to occupy the premises, the tenant may decide not to renew the Lease. In such cases, the tenant will still have to give the Landlord a “Quarter’s” notice to enable him to carry out the repairs before the end of the Lease.
Disputes over break clauses in a commercial Lease
Rights under the law depend first of all on whether the Lease falls within Part II of the Act or is not for the purposes of security of tenure.
If the break clause is a Landlord’s break and the Lease is within the Act, the Landlord must serve notice to terminate the Lease in accordance with the provisions of the break notice and show grounds upon which he can then end the security of tenure as identified above.
A tenant, on the other hand, needs only to serve the notice to end his lease and, providing that he satisfies the conditions of the break notice (e.g. that he is not in breach of any of the covenants of the Lease at the time the notice was served or expired depending on how it is worded) then the Lease will end automatically.
If the Lease is not protected by the Act then the Landlord needs only to serve the notice to end the Lease in accordance with the terms of the break clause.