Wollen Michelmore Solicitors Devon

RENTING YOUR BUSINESS PREMISES? YOU MIGHT HAVE THE RIGHT TO STAY, EVEN WHEN YOUR LEASE RUNS OUT..

Many businesses don’t own their business premises. The vast majority rent on a short to mid-term basis and have agreed a fixed date for their lease to end. Many business tenants don’t realise that despite their agreed ‘end date’, they might actually have automatic rights to stay in the property, when their lease runs out.

THE NEED FOR TENANTS TO HAVE PROTECTION

In the 1950s commercial property was expensive, particularly in London and other built up areas. Business tenants were becoming increasingly frustrated. They were paying a high premium for their space, they would pay their rent on time, look after the property well and then would be asked erry-pick its tenants and would switch to bigger, more profitable businesses that would pay more rent. The Tenant was on the back-foot as they had just spent considerable time investing in their local reputation, and, had no choice but just to start over again somewhere else.

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THE PROTECTIONS

Amongst other things, tenants with a qualifying protected tenancy will have: (a) the automatic right to remain in occupation of the property at the end of their lease (despite the end date); and (b) the right to take a new lease from their landlord (on terms similar to the lease they had before).

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THE LEGAL SOLUTION

In 1954 we saw a new law – the Landlord and Tenant Act – introduced. It was designed to protect tenants and offer them security in their premises so that, should they wish to continue building up their local goodwill, they could. The ’54 Act protections still apply to business tenancies today.

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RESTORING THE BALANCE FOR LANDLORDS

Landlords can refuse to grant a new lease to a protected tenant but only in set circumstances. There’s a list of ‘opposition grounds’ which the Landlord has to satisfy in order to refuse. Some of the grounds are based on fault (for example where the tenant has allowed the property to fall into disrepair, or has persistently failed to pay its rent) and some of the grounds are non-fault based (for example where the landlord is willing to provide alternative accommodation, or the landlord has the intention to demolish or reconstruct the building).

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THE NEED FOR ADVICE

If a protected tenant decides to remain in occupation, his lease will automatically continue just as before, until it is formally ended. The law is very clear that protected tenancies have to be ended in a certain way following very strict procedures and time limits, so, it’s vital for landlords and tenants to get the process right and to seek proper advice.

It is not necessarily advisable for a protected tenant to just ‘sit tight’ and rely on their rights to remain in situ; in fact, businesses will get better security in the long term by exercising their right to take a new lease and by documenting their occupation. Landlords or Tenants can initiate the lease renewal process but again but should seek advice as there are set procedures and time limits to be followed and you really can’t afford to get it wrong.

The ’54 Act will automatically apply to all new qualifying business tenancies, but Landlords and Tenants can mutually agree that the ’54 Act won’t apply to their lease. Most Landlords will now expect the ’54 Act to be dis-applied when they grant new leases so most Tenants will now be asked to waive these protections without necessarily understanding the full nature of them. Landlords must follow a set procedure if they want to dis-apply the protections and so it is essential that Landlords and Tenants be properly advised throughout the grant of a new lease.

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Wollen Michelmore’s Commercial Property team  have a wealth of experience in  commercial property matters with offices in TorquayExeter , Newton AbbotDartmouth and Barnstaple. If you have any questions about your business lease or the tenants who are renting your business then get in touch with our team today by calling 01803 832191 or filling out our enquiry form

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