When it comes to commercial property, it’s vital to immediately ascertain whether the Landlord and Tenant Act 1954 (LTA 54) applies. The LTA 54 applies in England and Wales only. It generally applies automatically to most commercial leases, but not in the following circumstances:
- a licence (where the occupier does not have exclusive possession).
- a lease that is not for business purposes.
- a tenancy at will (where both parties have clearly agreed to an arrangement that can be terminated at will, that is to say immediately by either party).
- a lease of an agricultural holding.
- leases granted for employment purposes.
- a lease fixed for a term of 6 months or less, provided it contains no rights to renew or extend (a series of short, fixed terms become a protected lease by the Act where the tenant, including any predecessor in the same business, has been in occupation for over 12 months).
- a lease which has been “contracted-out” of the Act.
Provided certain conditions are met the tenant is protected by LTS 54 in the following ways:
- it provides a mechanism for ending a lease which must be followed to be effective.
- unless the correct method to end a lease is followed, it will continue to run automatically.
- it gives the tenant the right to apply to court for a new lease when their existing lease expires.
- if the landlord wants to object to the tenant's application for a new lease, then he must establish certain grounds, which are set out in LTA 54.
- if the tenant must leave their premises, then in certain circumstances the landlord may have to pay them compensation.
In a recent case the Court of Appeal dismissed an appeal on an opposed renewal lease application under the LTA 1954, and agreed with the original trial judge's decision that the tenant should be granted a new tenancy despite, at certain points in time, failing to comply with its repairing obligations, failing to pay rent promptly and being in breach of certain other covenants.
The court decided that the relevant date for showing that the facts relied upon by the landlord in opposing the renewal are shown is neither just the date on which the notice is served nor the date of the hearing, but instead, the court must look at all the facts to see if a ground has been proved. This includes looking at things not only at the time the landlord serves notice opposing the renewal, but also at any point up to the date of the hearing.
The court had to decide whether the tenant "ought not" to be granted a renewal lease, as set out under the LTA 1954. It decided that all the material circumstances should be considered, and rather than looking at each ground separately, it should look at the tenant's overall conduct when deciding whether to grant a new lease. It could be that, in relation to each ground in isolation the tenant's conduct was not sufficiently bad to refuse a new tenancy, however the tenant's overall behaviour might be enough to be refused a renewal lease. In this case it was felt that because the tenant had taken steps to remedy its various breaches of the lease, there was no reason to interfere with the original court's decision that the tenant was entitled to a new tenancy.
There is an extensive suite of factsheets available on the Hub, outlining the law and procedure in relation to this complex area of the law.