Property Law

Landlord and Tenant Act 1954

Understanding specific clauses such as break clauses and dilapidation points

The Landlord and Tenant Act 1954 provides a specific framework and bespoke rules regarding the protection of and the automatic right to renew a business tenancy at the end of the term known as ‘security of tenure’.

It is a technical and tricky area to navigate as there are specific rules regarding the rights of each party, timings and processes including the types of notices to be served. Errors can be pivotal and mean that the tenant loses its right to security of tenure if the process is not undertaken properly. It is therefore important to seek expert advice and assistance with the procedures.

Our services include advice relating to and assistance with:

  • Unopposed lease renewals
  • Opposed lease renewals
  • Contracting out of the 1954 Act

Legal Considerations

Does the tenant wish to renew its protected tenancy?

No – the tenant is at liberty to choose not to renew and should focus on exit matters including deciding whether to serve a ‘section 27 notice’ and considering dilapidations.

Yes – see below.

How long is left on the existing tenancy?

Has either party served a notice to formally kickstart the renewal (whether opposed or unopposed) with a “section 25” notice by a landlord or a “section 26” by a tenant.

If yes, has it been served within the correct timeframe, provided requisite notice and been served on the correct party?

Is the tenancy renewal opposed or unopposed?

If unopposed consider if the parties have agreed or are they likely to agree terms for the new lease or are there terms which are disputed. Consider strategic and legal factors to inform next steps and follow the correct legal procedures and Court protocol.

If opposed, consider the ground(s) on which the landlord is relying on to oppose renewal. Are they fault or non-fault grounds? Consider the strength of the landlord’s opposition together with strategic and legal factors to inform next steps and follow the correct legal procedures and Court protocol.

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Other factors to Consider

There may be within the contract a dispute resolution process which you need to follow. This could include a party sending a notice setting out the breaches and requiring the other party to remedy the breaches within a certain period.
If the breaches are not remedied there may be an arbitration clause which applies to the dispute and that process would need to be followed.
A claimant will have a duty to mitigate their loss.
If you are faced with an insolvent debtor, can you rely on a retention of title clause? This operates so as to ensure title to the goods doesn’t pass until full payment has been received so can give you priority over secured and unsecured creditors.
Has liability been successfully excluded or limited?
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Dilapidation claims: why tenants should care about dilapidations

When you enter into your commercial lease, you will be signing up to various obligations for repair, maintenance, and decorations during the term. Some of these can be extremely onerous and many tenants will overlook these obligations during the term and only start to think about them once the lease is coming to an end or if they are thinking of leaving at a break point. By this time the liabilities could have grown and leave you having to deal with a large, unexpected amount to pay at the end of your lease.

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15th November 2022

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