Company & Commercial

Where a landlord grants a lease of business premises to a tenant, that tenant will, by default, have security of tenure. What this means is that the tenancy will not come to an end at the expiration of the fixed term specified in the contract. Instead, the tenancy will automatically continue until such time as it is terminated in one of the ways specified in the 1954 Act.

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Security of tenure can be good for tenants who want the security of knowing that they will not be ejected at the end of the contractual lease term, but may not be so beneficial for Tenants who are looking for short-term accommodation since the benefit of security of tenure is also likely to bring the burden of a higher rent.

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For landlords, granting security of tenure may be more appealing where they own their interest as an investor, but will be less so where they future plans for the property.

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Termination of the Tenancy

If a tenancy has security of tenure, there are only certain grounds on which the lease can be terminated at the end of the fixed term. Some of these are grounds on which the court can exercise discretion as to whether the term should end or not (if the tenant disputes it), and the rest are grounds on which the court must decide in favour of the landlord if the facts are proved:

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Discretionary grounds:

1.  The tenant’s failure to repair

2.  Persistent delay in paying rent

3.  Substantial breaches of other obligations in the lease

4.  Alternative accommodation has been found for the tenant

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Mandatory grounds:

5.  The current tenancy created has been created by sub-letting of part only of a property in a superior tenancy

6.  Demolition or reconstruction.

7.  The landlord intends to occupy the property. 

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There are further conditions and restrictions attaching to these grounds on which we can advise.

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Compensation

A tenant may be entitled to compensation for any improvements he has made. Additionally, if the tenant is forced to leave the premises he may lose the goodwill which he has built up and he will be taxed with all the costs of relocation. The tenant will be entitled to compensation for failing to obtain a new tenancy where the landlord establishes one on the grounds of 5, 6 or 7 but not grounds 1 to 4. Compensation is not based on the tenant’s actual loss. We can advise further in respect of compensation.

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