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Commercial Property: Court of Appeal penalises poor lease drafting

The provisions of the Landlord and Tenant Act 1954 (“the Act”) provide protection for tenants.

The landlord cannot bring a lease with the protection of the Act to an end solely due to the lapse of the lease term, the provisions of the Act provide the tenancy will continue on similar terms to the lease unless the landlord can prove one or more of five restrictive grounds also set out in the Act.  

Whether a lease is excluded from the protective provisions of the Act depends upon whether the relevant procedure has been followed.

The current procedure requires a landlord to serve notice in a prescribed form upon the proposed tenant at least 10 working days before the lease or agreement for lease is formally entered into. Alternatively, if time is of the essence and the landlord requires the lease to be excluded from the provisions of the Act, the proposed tenant must swear a statutory declaration confirming they are agreeable to enter into the lease on the basis that the same will be excluded from the protection provided by the Act.

The recent case of The London Borough of Newham v Thomas-Van Staden [2008] EWCA Civ 1414 considered whether the tenant had the protection of the provisions of the Act.

Despite having followed the necessary procedure before entering into the lease, the Court of Appeal concluded that the tenant had security of tenure as the lease had not been excluded from the provisions of the Act due to the simple fact that the wording of the lease included provision for “term continuation”, the definition of the lease term included reference to “any period of holding over or extension.”

This recent decision serves as a warning to solicitors and landlords alike of the importance of ensuring a lease is appropriately drafted and specific to the heads of terms negotiated in each case. If it is intended that the lease is to be excluded from the provisions of the Act there must be no reference to any period of “holding over” or “continuation of term” throughout the lease otherwise despite following the necessary procedure the tenant will have security of tenure under the provisions of the Act.

Landlords must take care in the event that the tenant remains in occupation following the expiry of the lease.

Contact Us.

If you have any queries or questions about your business tenancy or any other property-related issue, please do not hesitate to contact Michael Pitt within our commercial property team on 0161 785 3500 or email: michael.pitt@pearson-hinchliffe.co.uk.

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