#3746 - Leases Business Tenancies - GDL Land Law

Protection for Business Tenants – Landlord and Tenant Act 1954 Part II

• (as amended by The Regulatory Reform (Business Tenancies) (England and Wales) Order 2003: statutory instrument, came into force 1 June 2004).

- LTA 1954 Part II: allows business tenants to stay on at end of lease + apply for new tenancy.

• unless s30: grounds of opposition – if present, landlord can refuse new tenancy.

Application: Who is Protected by the Act?

- s23(1): Act protects tenants who occupy premises for the purpose of a business.

• s23(2): business – inc. trade, profession, employment, any activity carried on by body of persons (corporate or not).

• s23(3): holding – lease property exc. any part not occupied by t. or person employed by t. for purposes of business.

  • t. can only apply for new tenancy of ‘holding’: i.e. part of premises t. occupies.

• s23(4): not t. carrying on business in breach of lease (unless l. consents/acquiesces).

• app. to all tenancies: legal + equitable – but: not licence.

- Occupation: question of fact – dep. on presence + control – esp. relevant where t. sub-lets:

• Graysim Holdings Ltd v P&O Property Holdings Ltd [1996]: t. of market hall had sub-let hall to 35 stall-holders; t. employed superintendant who occupied office HoL: t. NOT in occupation – insufficient presence + control.

  • [Ld Nicholls]: if interest of 3^rd party in nature of tenancy, 3^rd party is normally occupier.

• Trans-Britannia Properties Ltd v Darby Properties Ltd [1986]: t. had sub-let lock-up garages; t. did not maintain accommodation on premises, employ guard, make regular visits CoA: t. not in occupation.

• residential: if t. retains substantial control + presence t. in occupation for business of sub-letting.

  • Lee-Verhulst (Investments) Ltd v Harwood Trust [1973]: t. (letting co.) let out bed-sits, but retained physical presence + high control (office in basement, maids, telephone box, meals) occupation.

  • Linden v Dept. Health + Social Security [1986]: t. (district HA) managed + let flats to NHS employees; provided cutlery etc., retained keys + visited + maintained premises occupation.

  • Groveside Properties v Westminster Medical School [1983]: t. (medical school) rented flat + granted 4 students licence to occupy; school secretary regularly visited + supervised occupation.

  • Bagettes v GP Estates Ltd [1956]: t. (letting co.) sub-let flats within building; only retained control + management of common part CoA: not in occupation – common parts merely ancillary to flats.

  • Smith v Titanate [2005]: t. managed + let block of self-contained serviced flats in Mayfair; provided amenities + some services; t. had right of access with adequate notice not occupation – flats occupied under agreements amounting to tenancies.

• permanent/actual occupation not always necessary – intention sufficient:

  • Flairline Properties Ltd v Hasan [1999]: t. (restaurant owner) had ceased to use premises because of fire; intended to retain + claim right of occupancy occupation.

  • Pointon York Group v Poulton [2007]: sub-t vacated offices few days before lease ended; t. made preparations to take over occupation but had not yet started trading (had previously been using parking spaces) CoA: in occupation.

• t. separate from t’s company – Christina v Seear [1985]: premises occupied by company wholly owned by t. t. NOT in occupation – co. has separate identity.

• N.B. t. can only apply for new tenancy of ‘holding’: part of premises t. was occupying.

- Business: wide interpretation.

• s23(2): inc. trade, profession, employment, any activity carried on by body of persons (corporate or unincorporate).

• can inc. non-profit making activity – Town Investments Ltd v Dept Environment [1978]: offices used by civil servants occupation for the purposes of a business.

• but: NOT casual non-commercial activity.

  • Lewis v Weldcrest Ltd [1987]: t. took lodgers into house at cheap rents not business.

  • Abernethie v AM&J Kleiman Ltd [1970]: t. ran free Sunday school in house not business.

- Mixed business/residential use: if business use significant business tenancy; if only incidental residential tenancy.

• determines protection:

  • business use: protected by LTA 1954.

  • residential use: protected by Housing Act 1988 / Rent Act 1977.

• Cheryl Investments v Saldanha [1978]: t. substantially ran import business from flat business tenancy.

• Royal Life Saving Soc. v Page [1978]: t. (doctor) occasionally used flat to see patients residential.

• Gurton v Parrott [1991]: t. used house as kennels for dog breeding residential – business only incidental.

• Wright v Mortimer [1996]: art historian used flat to conduct 30% of research CoA: residential.

  • CoA: only business purposes if significant element of occupation – i.e. reasons for occupation.

- Exceptions: tenancies without protection.

• tenancies excluded from the Act – s43:

  • agricultural tenancies.

  • mining leases.

  • tenancy granted during holding of an office, appointment or employment.

  • tenancy for term not exceeding 6 months.

• contracting out: l. + t. can contract out of Act – statutory form of notice + response, endorsed on lease.

  • in practice: v. common.

• termination without protection:

  • notice to quit by t.

  • surrender by t.

  • forfeiture.

  • 3 months notice given by fixed term t. under s27.

  • t. vacates before end of contractual term.

Continuation and Termination

- s24(1): If tenancy protected under Act automatically continues after contractual end date.

• unless:

  • s24(1)(a): l. terminates – gives 6-12 months notice under s25.

  • s24(1)(b): t. terminates – serves notice requesting new tenancy under s26.

- s25: l. can terminate by serving formal notice on t. – notice must:

• (1): be in prescribed form – specify date of termination;

• (2): be served from 6 to 12 months before specified date of termination.

• (3)-(4): date of termination must not be earlier than l’s notice to quit date/contractual end date.

• (5): require t. to notify l. in writing within 2 months of notice whether t. will give up possession.

• (6): state whether l. will oppose s30 application for new tenancy (+ on what grounds); if not: state l’s proposals for new lease.

• notice must be served by competent l.: exc. l. with <14 months of own tenancy to run – s44 + Sch 6.

- s26: t. can terminate by serving formal request on l. for new tenancy – request must:

• (2): specify commencement date for new tenancy:

  • from 6 to 12 months after request;

  • not earlier than t’s notice to quit date/contractual end date.

• (3): sets out t’s proposals as to new tenancy – property, rent, terms.

• (4): s26 request cannot be served if l. has already served s25 notice.

• reasons for terminating tenancy under s26:

  • t. wants to control time limits for termination + renewal of tenancy;

  • new tenancy more valuable than old tenancy continuing by statute;

  • t. wants to progress application for new tenancy before l. ready to oppose application.

Application for a New Tenancy

- s29: t. can apply to court for new tenancy to commence after termination of old tenancy – after s25 notice / s26 request.

• t. must apply before termination date: specified in s25 or s26 notice.

• l. can also apply for renewal of tenancy or apply for termination order.

• time limits: parties can agree to extend.

- L. can oppose grant of new tenancy – s30(1) grounds:

• (a): t’s breach of repairing obligations.

• (b): persistent delay in paying rent.

• (c): other substantial breaches of covenant by t.

• (d): l. has offered t. suitable alternative accommodation.

• (e): tenancy was sub-letting of part + l. wants to re-let whole property at substantially better rent.

• (f): l. intends to demolish or reconstruct holding.

• (g): l. intends to occupy holding wholly or partly.

  • but: not if l. has purchased reversion in 5 years preceding termination date – s30(2).

• court’s discretion:

  • (a), (b), (c), (e): court has discretion whether to grant new tenancy.

  • (d), (f), (g): court has no discretion new tenancy not granted.

- Ground F: intention to demolish or reconstruct (s30(1)(f)) – stringent requirements.

• l. must show intention at date of hearing – Betty’s Cafes Ltd v Phillips Furnishing Stores Ltd [1957].

• genuine intention + reasonable prospect of carrying out work (decision, not contemplation) – Cunliffe v Goodman [1950].

• work must constitute demolition/reconstruction/substantial construction of substantial part + l. must show cannot reasonably do work without possession.

  • Joel v Swaddle [1957]: small shop into part of large hall intended as amusement arcade within ground F.

  • Percy Cadle Ltd v Jacmarch Properties Ltd [1957]: 3 separately occupied floors into 1 unit with internal staircase not within ground F.

  • s31A: court will NOT order possession if l. could do work around occupying tenant.

• court may:

  • extend old tenancy for up to 1 year to accommodate start of building work – s31(2).

  • order short new tenancy or new tenancy with redevelopment break clause.

- L. proving...