1
Q
A
2
Q
Purpose of Part II LTA 1954?
A
Security of tenure for business tenancies
(i.e occupied / includes premies for business purposes)
3
Q
What is security of tenure?
A
- Usual methods of termination may not apply
- Continue after contractual expiry - tenant is ‘holding over’ the lease during this ‘continuation period’
- On termination - presumption that tenant entitled to a new protected lease (renewal leas) - similar terms, reasonable updating, market rent, max 15 years UNLESS Landlord can prove a ground in the act
- Parties cannot agree - court may intervene to determine
- Renewal lease not granted through no fault of tenant = can get compensation
4
Q
What are the common law methods of termination?
A
- effluxion of time
- notice to quit
- surreder
- merger
- (also forfeiture if in breach and contains forfeiture clause/ proviso for re-entry)
5
Q
What is effluxion of time?
What type of lease?
A
Automatically ends on expiry of contractual term in a fixed term lease - without needing to give notice
6
Q
What is notice to quit?
What type of leases?
A
Periodic tenancy can be determined (terminated) by either party giving a full period’s notice
e.g 1 month for monthly or at least 6 months if a yearly periodic tenancy
nb - periodic tenancy can arise after fixed term expires and the tenancy continues
7
Q
What is surrender?
What must be done?
A
Both parties agree for lease to end before the contractual expiry date
lease re-merges with landlord’s reversionary interest (freehold or superior leasehold)
tennat is said to ‘yield up’ the lease which is extinguished
Must be made by deed
8
Q
What is a merger?
Exception?
A
Tenant acquires their immediate landlord’s estate/ reversion (so buys landlord’s interest) OR
both lease and reversion are acquired by the same party at the same time
= reversionary interest ceases
UNLESS declaration in the deed - ‘declaration of non-merger’
9
Q
What common law rules of termination do not apply under the act?
What happens?
A
- effluxion of time (fixed-term)
- notice to quit (periodic tenancy)
Lease will continue until terminated by a method under the act
10
Q
When will the 1954 not apply?
A
Not a business tenancy (lease) and only a licence = look for exclusive possession
business tenancy - occupied for the purposes of business
11
Q
Who does occupation extend to for the purposes of the 1954 Act?
A
Can be tenant/ subtenant (bc can be whole or part of business occupied for business purposes
- agent
- manager
- company in which tenant has a controlling interest
- person with controlling interest in the company (who is the tenant)
12
Q
What do business purposes include?
A
Wide definition (trade, profession, employment and any activity carried on by body of persons whether corporate or incorporate)
inc non-commercial activities but ONLY if carried on by a body of persons = inc unincorporated associations e.g sports clubs
13
Q
Will a premises benefit from 1954 Act if use is mixed? (e.g comm & resi)
A
yes but ony if business use is not merely incidental to resi use
14
Q
When can a tenant deffo not claim under 1954 Act?
A
Lease specifially excludes use for business purposes
15
Q
What are excluded from definition of business purposes?
A
- Licences (no exclusive possession - Q of fact)
- Tenancies at will (express/ implied & terminated at any time)
- Short term fixed tenancies under 6 months UNLESS provision for renewal beyond 6 months OR tenant/ predecessors have been in occupation and carrying out the same business for over 12 months
- agricultural holdings, service tenancies (employed by LL), farm business tenancies, mining leases
- contrated out tenancies (expressly agree the 1954 act will not apply)
nb - if renew short term leases repeatedly SoT could apply !!
16
Q
What is a contracted-out tenancy?
Conditions?
A
Main exclusion from 1954 Act
Fixed-term tenancy and parties expressly agree the provisions of s22-28 will not apply
MUST:
* term of years certain (no continuation / extension in definition)
* must use prescribed forms of notice / declarations before the lease commences or tenant becomes contractually bound
17
Q
What is the old law to contract out the 1954 Act?
(year?)
A
Before June 2004
Lanlord and tenant had to make joint application to the court agreeing exclusion of 1954 before the grant of lease
Lease needed to be annexed to draft court order
18
Q
What is the new procedure to contract out the 1954 Act?
When does it apply from?
A
Tenancies after June 2004
- Landlord serve notice on tenant in prescribed form (health warninng notice - like Nick Booth!!) advise to take legal advice
- After 14 days - tenant / auth person make a declaration in the prescribed form that they agree
- Less 14 days - tenant/ auth person makes statutory declaration in the prescribed form in the presence of an independent solicitor that they agree
- The exclusion notice, declaration and agreement must be referred to in the lease
followed = come to end on contractual expiry date & no compensation due to tenant
not followed = security of tenure will apply
19
Q
When is it best practice to contract out the 1954 Act?
A
If you know you need the property for other use at a later date
(a licence is another option but if found to have excusive possesson = security of tenure could apply)
20
Q
What methods of termination are permitted under the 1954 Act?
A
- s25 notice
- s26 notice
- 27 notice
- ceasing to be in occupation on the expiry of a fixed term lease (effluxion applies)
- service by tenant only for notice to quit for periodic tenancy if in occupation for at least a month (more protection for tenant)
- forfeiture
- surrender
21
Q
What happens after a s25/ s26 notice?
A
Tenant has right to apply to the court for a new tenancy
(landlord can oppose under s30)
no renewal granted due to non-fault ground - tenant can get compensation
22
Q
What is a s25 notice?
Best practice?
A
Termination of 1954 Act:
Landlord notice to terminate fixed-term / periodic tenancy with or without proposals for a new tenancy
use prescribed forms :)
23
Q
Difference between hostile/ non-hostile s25 notice?
What must be inc for both?
A
landlord offers new tenancy = non-hostile
no offer for new tenancy = hostile
notice must relate to the whole of the premises in the tenancy
24
Q
What should be inc for:
- a hostile notice?
- non-hostile notice?
- both?
A
hostile - relevant grounds for refusal (these cannot be chanhed after notice given)
non-hostile - landlord must state new tenancy proposals (inc rent/ property) usually LL will want higher rent 💰
both:
- date tenancy will terminate (cannot be earlier than original contract end date)
- served not less than 6 and not more than 12 calendar months BEFORE PROPOSED TERMINATION DATE
Any not met = invalid 🙅 & new notice served
25
Key requirements of new termination date in s25 notice?
Does not have to be the same as contractual end date but **cannot be earlier**
i.e can be during the time when tenant is holding over
Must be signed on or behalf of LL ✍🏼
26
When can a landlord not serve a s25 notice?
s26 or s27 has already been served
27
What must a tenant do if they have served a hostile notice?
* Make application to court for new tenancy before termination date (in the notice) or lose right to a new tenancy
Landlord can apply to court to terminate the tenancy of the tenant has not already made an application to court ^
28
What happens if landlord served a non-hostile notice?
Consequnces?
Parties negotiate terms
If lease will not be completed before termination date:
* tenant must make app to court (for new tenancy) or agree with landlord to extend deadline for application by written agreement
If application/ agreement not in time = tenany **lose right to security & tenant sol is negligent!!** 😱
nb - landlord can also apply for grant of new lease
29
What is a s26 request?
Condition?
**Tenant** request to **terminate** an exisiting fixed-term tenancy and have a new tenancy
only if **fixed-term tenancy** more than **1 year**
use prescribed forms
30
Why would a tenant serve a s26 notice?
* Falling market - lower rent terms needed
* Plans to improve and need security of a new lease
* Want to assign the lease, sell assets/ shares in company, proposed buyer would want security of new lease
* **Rising market** (landlord usually seek to terminate as early as possible - i.e full 12 months notice to expire on contratcual end date) BUT if LL delayed tenant 'can get in first' - ***give 12 months' notice** and get additional 6 months at lower rent*
**(tactical pre-emptive strike)**
nb - landlord may get interim rent
31
Effect of tenant giving full 12 months notice for s26 request?
Even if contractual end date is before tenant can benefit from the full 12 months
subject to landlord **not serving** s25 notice
32
What must be in a s26 request?
* Tenant's prposals for new tenancy (inc rent/ property)
* Proposed start date (cannot be earlier than original contract end date)
* Served **not less than 6 but not more than 12 months** BEFORE PROPOSED COMMENCEMENT DATE
* Must be signed by/ on behalf of tenant
**not met = invalid**
*nb - commencement date can be after contract end date i.e period when tenant is holding over*
33
When can a tenant not service a 26 request?
s25 notice or s27 notice already served
34
What happens if a landlord opposes the new tenancy in s 26 request?
* Landlord must serve **counter- notice** within 2 months and state grounds for oppositon - **grounds cannot be changed !!**
⚠️ notice not served = landlord loses right to opppose new tenancy
* **Tenant should make application** for new tenancy after 2 month period for counter notice ^ has expired BUT before commencement date OR ⚠️ will lose right to new tenancy
* Landlord can apply to terminate the proposed lease on the grounds but **only** if **tenant has not submitted an application** for a new tenancy
35
What happens if a landlord does not oppose the new tenancy in s 26 request?
Parties negiotate terms
If lease will not be completed before termination date:
tenant must make app to court (for new tenancy) or agree with landlord to extend deadline for application by written agreement
If application/ agreement not in time = tenany lose right to security & tenant sol is negligent!! 😱
(landlord can also apply)
36
What is a competent landlord?
When is it relevant?
last part is important‼️
Only serve 26 request a competent landlord and a competent landlord can only serve at s25 notice
means - landlord owns freehold OR has tenancy that will not come to end by **effluxion of time in 14 months**
‼️ nb - a business tenancy will not automatically expire under the Act!! = continuation tenancy... But landlord tenant must be occupation **(so only applies if a landlord with their own lease (not freehold) sublets PART of premises)**
37
Not question just imp
* landlords who are tenants
* business tenancies
* 14 months left
a business tenancy will not automatically expire under the Act!! = continuation tenancy...
But a landlord tenant must be occupation **(so only applies if a landlord sublets part of premises)** = competent landlord must be in occupation
obvs if s25 notice terminate is served to bring to an end within 14 months will not apply
38
What is a s40 notice?
*Used when tenant is not sure if their landlord is the freehold owner...*
can be served on tenant or landlord/their mortgaee in possession requesting information about subtenancies or landlord's interest AND any s25 notices / s26 requests
recipient has 1 month to reply
39
Best practice to serve notices?
When deemed served?
Registered post/ recorded delivery
**deemed serve on date of postage** 📩
40
What is a s27 notice?
Tenant's notice to terminate a fixed-term tenancy on or after contractual expiry date
must have been in occupation for at least a month
41
What are the option available to a tenant who wishes to terminate their fixed-tenancy?
* s27(1) notice (not less than 3 months notice to terminate **on** contractual expiry date)
* Vacate premises on / by contractual end date - lease will expire by effluxion of time
* s27(2) notice (not less than 3 months notice to terminate **after** contractual expiry date - i.e during continuation tenancy)
no prescribed form :(
nb - best practice to serve notice
42
When is it not possible to serve s27?
s25/ s26 already served
43
What is interim rent?
When will tenany apply?
Rent for the period of the continuation tenancy until proceedings are concluded
usually decided on basis of yearly tenancy (with regard to terms of lease)
nb - tenant usually aplies where the *market rent would be less* in current climate
44
When must an interim payment application be made?
s25 - no later than 6 months after prosposd termination date or
s26 - no later than 6 months after commencement date
either party
45
When is interim date payable from?
Effect?
Earliest date at **common law** for termination or commencement of new tenancy (so usually day after contract end date)
makes tenant pre-emptive strike less effective (still pay interim rent anyways)
46
Alternative to landlord making application for interim rent?
provision for **rent review** at end of term of lease (penultimate or last day rent review)
47
What happens if the court accepts/ does not accept landlord's grounds of opposition? (hostile s25 or hostile response to s26)
accepts - no new tenancy and tenant may get compensation
not accept - new tenancy ordered and court will settle terms
48
What happens if landlord can demonstrate that grounds **d, e or f** could have been satisfied if termination date was up to *1 year later?*
Tenant's application must be refused
however tenant can ask for the later date (when the landlord says they will satisfy the grounds) to be the date of vacation - instead of original date = more time
49
Which grounds are discretionary?
What does this mean?
If the ground is established - court *may* refuse to grant a new tenancy
a - tenant's failure to repair 'the holding'
b - persistent delay in paying rent
c - substantial breach of other obligations
e - under letting of a part
50
Which grounds are *mandatory?*
What does this mean?
The court *must* refuse to grant a new tenancy if ground is established
d - suitable alternative accomodation
f - demolition/ reconstruction
g - intention to occupy
51
What are the non-fault grounds?
e - underletting of part
f - demolition/ reconstruction
g - intention to occupy
means no fault of the tenant
52
What is ground **a** - tenant's failure to repair *the holding*
(property in under tenancy exc any part not occupied by tenant/ occupied by TP)
**Requirements:** tenant is under repairing obligations and has breached
**Considerations/ limitations:**
* extent/ seriousness of breach
* granting a new lease unfair to landlord?
* any undertaking from tenant to remedy the breach?
**Discretionary**
**Fault ground**
53
What is ground **b** - persistent delay in paying rent?
**Requirements:** persistent delay in paying rent under the lease (can inc service charge/ insurance sums)
**Considerations/ limitations:**
* persistency (more than one and more than occasional)
* extent of breaches & history of payment - arrears do not need to have been substantial or long outstanding
* future arrears likely?
* granting a new lease unfair to landlord?
* proposals to gurantee payment of rent in new lease
**Discretionary**
**Fault ground**
54
What is ground **c** - substantial breach of other obligations?
**Requirements:** breaches of any other obligations or any other reasons connected with tenant's use or management of the property
**Considerations/ limitations:**
* are breaches so substantial that granted a new lease would prejudice landlords interest?
* proposals for remedying breach
**Discretionary**
**Fault ground**
55
What is ground **d** - suitable alternative accomodation?
**Requirements:** landlord is able to offer, provide or secure suitable alternative accomodation for the tenant
**Considerations/ limitations:**
* suitability for needs of tenants inc need to preserve goodwill
* reasonableness of proposed terms (regard to current tenancy and relevant circ at date of hearing)
* nature/ size of business and size of location premises (e.g well established? may argue detrimental to business)
**Mandatory**
**Technically no fault ground but no right to compensation**
56
What is ground **e** - underletting of part?
**Requirements:** Lease created by underletting of part and superior landlord requires whole of property for letting or sale
**Considerations/ limitations:**
* aggregate of rents for separate lettings would be substantially less than rent for the letting of the whole = uneconomic to grant renewal lease of part
**Discretionary**
**no fault ground**
57
What is ground **f** - demolition/ reconstruction?
**Requirements:** landlord prosals to demolish, reconstruct or carry out substantial construction works to whole/ substantially whole of premises
**Considerations/ limitations:**
* **intention** to carry out the work -evidence (plans, drawings, quotations, specifications, finance & TP approvals at date of hearing) = reasonable prospect of success in implementing proposals 🔖
* **nature / extent** - demolition/ rebuilding or new building effecting whole / substantially whole (not minor refurb/ improvements) 🚧
* **need legal possession** - works cannot reasonably be carried out without possession of whole of property - landlord must prove he needs to terminate and obtain legal possession - *rights of entry are insufficient* 🗝️
**Mandatory**
**No fault ground**
58
When can the tenant have a defence to ground **f** - demolition/ reconstruction?
Agree to grant appropiate rights (right sof entry without substantial intereference with use)
OR
take a tenancy with economically separable part of the property
59
What is ground **g** - intention to occupy?
**Requirements:** Landlord intends to occupy for purpose of (or partly for purpose of) their own business or as residence
**Considerations/ limitations:**
* **intention** - must prove by taking practical steps and demonstrating reasonable prospect of achieving *(occupation includes a company in which landlord has controlling interest, landlord is a company, or person has controlling interest in the company)*
* **5 year rule** - landlord owned superior interest for 5 years **(up to date of termination)** before relying (stop landlords acquiring tenancy with aim of tactically gaining vacant possession) - does not apply if property acquired with vacant possession and subsequently let
**Mandatory**
**No fault ground**
60
When does the 5 year rule not apply for intention to occupy? (g)
If the landlord acquired the property with vacant possession and then let it, the rule does not apply
because the original acquisition was not aimed at evicting an existing tenant
nb - 5 years up to date of actual termination (so look at when notice served bc if only acquired 4 years ago but 12 month notice... takes up to 5 years)
61
What happens if a tenant's application for a new tenancy is successful?
clue: key term
Entitled to a new lease of **the holding** = property in the current tenancy exc any part not occupied by the tenant or occupied by TP
landlord may insist on taking lease of whole property rather than half
62
Who determines the terms of the renewal lease? 1954 Act
The court
63
What will the duration/ term of a renewal lease be under 1954 Act?
What will the court consider?
* Reasonable term not exceeding 15 years
* Commence 3 months after proceedings disposed of (i. after 4 week window to appeal has passed)
Court has wide discretion and considers:
* state of market
* lenth of current tenancy
* how long tenant has been holding over
* landlord's plans e/g redevelopment
* hardship to both parties the term will have
64
What will the rent be for a renewal lease be under 1954 Act?
What is disregarded/ considered?
Open market rent but disregard:
* occupation by tenant/ predeessors
* goodwill attached to premises
* voluntary improvements in tenancy (not improvements tenant was under obligation for)
* value of any licence held by the tenant (e.g licencsed premises)
(make sense or tenant would have to pay more to avoid losing these)
**Consider expert evidence on state of market in area / comparison property**
nb - can contain rent review clause whether or not was one in previous lease (usually upward only)
65
When can new clauses/ types of clauses be added to a renewal lease under 1954 Act?
BoP?
Must be fair and reasonable in all circumstances
BoP is on person seeking to impose (usually landlord)
e.g landlord could not impose onerous service charge when there was no corresponding provision in the lease
nb - may require guarantor if reasonable
66
What happens if a lease is modernised i.e the lease is an old lease (pre 1996) and being replaced with a new one?
Pre 1996 = tenant bound by privity of contract
Landlord can only insist on AGA where it is reasonable to do so
nb - loss of privity of contract may be considered in determining rent (inc bc less security for landlord) so an AGA may be considered reasonable - weaker cov strength/ higher risk
67
What can a tenant do if they are unhappy with proposed terms of renewal lease? (1954 Act)
Successful application but unhappy with terms...
apply for court order to be revoked within 14 days
(landlord cannot do this - only appeal)
68
When is a tenant able to claim compensation for disturbance?
Tenant application is successfully opposed but landlord uses a no fault ground
also entitled if they do not apply to the court or withdraw application
69
How is disturbance compensation calculated?
equivalent to rateable value of the property
(i.e value of the used by the local authority to calculate business rates if used for non-domestic purposes) = basically tax
at the date of notice / request
inc to 2x value if tenant/ predecessor in the same business have been in occupation for 14 years
70
What is common for leases to add about compensation under the 1954?
When is it void?
Exclude right to compensation for tenants
BUT void if tenants/ predecessors in same business have been in occupation 5 years or more
FLK 2 - my cards
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Decks in class (12)
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