67 years old and still going strong!
— 21 Apr 2021 13:34:58 by Philip Manning
The Landlord & Tenant Act 1954 (the Act) was a landmark Act and is key to commercial property transactions today. Section 24 of the Act, unless excluded from the lease by agreement between the parties, provides business tenants, as defined in the Act, with security of tenure, i.e. the right, by law, to a new lease at the termination of a current lease, and this can only be opposed by the landlord, on a few grounds specified in Section 30 of the Act.
Section 25 of the Act deals with the termination by the landlord, of a tenancy to which Section 24 of the Act applies. It requires the landlord to serve a Notice on the tenant, in the prescribed form, not less than 6 months, or more than 12 months, prior to the termination date specified in the Notice and the termination date specified cannot be earlier than the expiry date of the contractual lease term.
Apart from the termination date, the Notice must state whether or not the landlord opposes the grant of a new tenancy to the tenant and if the landlord does oppose a new tenancy, the grounds specified in Section 30 (i) of the Act on which the landlord’s opposition is based. These grounds include, for example, a tenant’s breach of the terms of the lease, the landlord requiring the premises for their own occupation or the proposed redevelopment of the premises.
In the majority of cases, the landlord does not oppose the tenant’s right to the grant of a new tenancy and in these cases the landlord is required to set out their proposed new lease terms, which must include the property to be comprised in the new tenancy, the rent payable and the other main terms.
Service of the Section 25 Notice, as it is commonly called, if it does not oppose the grant of a new tenancy, will usually trigger the start of negotiations between the landlord and tenant and hopefully agreement to new lease terms commencing on the termination date in the Notice. Often, however, the agreement of new lease terms and completion of the lease itself, are unable to be concluded prior to the termination date in which case either, one of the parties must apply to the Court for the grant of a new lease or the parties must agree in writing to an extension of time to allow for negotiations and the new lease to be completed. Failure to do one or other of these will result in the tenant losing their statutory right to apply to the Court for a new lease. This effectively strengthens the landlord’s negotiating position considerably by enabling the landlord to regain possession, if desired.
If an extension of time is agreed between the parties, then the same rules apply at expiry date of the extension as at the termination date in the Section 25 Notice, and this procedure can be repeated as often as necessary. The landlord can, however, refuse a request for an extension of time, in which case the tenant will need to apply to the Court for the grant of a new tenancy but this will, of course, involve both parties in significant costs. It is, therefore, usually avoided, provided both parties are engaging in meaningful negotiations.
A landlord does not need to serve a Section 25 Notice if they are happy with the existing lease terms, as, under the Landlord & Tenant Act 1954, the lease will continue on the same terms until the landlord serves a Section 25 Notice, or the tenant takes the initiative and serves a Notice under Section 26 effectively requesting a new tenancy commencing on a specified date. Again, this date cannot be more than 12, nor less than 6, months after service of the Notice on the landlord and must be in the prescribed form and include the tenant’s proposed new lease terms.
Statutory Notices such as Section 25 and Section 26 Notices under the Landlord & Tenant Act 1954 should be served by the parties’ solicitors but, inevitably, the new lease terms incorporated in the Notices and the negotiations which follow often involve our professional team at Graves Son & Pilcher, who are happy to advise and act for both landlords and tenants in this regard.
For further advice, contact Philip Manning.