Documents for Business
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Landlord’s notice to exclude security of tenure
In a business lease it’s possible for the landlord and tenant to agreed that there should be no security of tenure. This is permitted under the Landlord and Tenant Act 1954 provided formal steps have been taken. This is sometimes known as “contracting out” and what it basically means is that once the lease comes to an end, the tenant can’t automatically stay put and demand a new lease. They have to either vacate the property or renegotiate a lease with the landlord.
How to contract out
Before the grant of the lease, or exchange of agreements for lease:
- the landlord must serve a formal notice on the tenant in a prescribed form
- the tenant must respond by making a declaration, also in a prescribed form, that they understand the effect of the lease being excluded from the protection of the Act.
What’s the effect of excluding security of tenure?
A lease which has been excluded from the protection of the Act will expire on the term expiry date stated in the lease (or earlier if any break right is exercised). Accordingly:
- the tenant will have no right to carry on its business from the premises or to remain there
- the landlord has complete discretion whether to grant a new lease to the tenant and does not have to give any reason for refusing to grant a lease
- if the landlord is willing to grant a new lease, there is no presumption that this will follow the terms of the previous lease.
If, against the wishes of the landlord, the tenant remains in occupation of the premises, then they would be a trespasser and liable to the landlord for damages. The landlord would also be entitled to obtain a court order requiring the tenant to vacate.
