Exclusion of security of tenure – contracting out of the Act
There may be circumstances where the landlord and tenant agree to exclude the security of tenure provisions of the Act. This can happen where:
- the landlord has plans to redevelop the premises;
- the lease is for a short term; or
- the agreement relates to an underletting of a part of a larger holding.
If the landlord and tenant have agreed to exclude the security of tenure provisions, the following process must be followed prior to granting the lease:
- the landlord must serve a formal notice on the tenant in a prescribed form;
- the tenant must make a declaration (either a simple declaration or a statutory declaration) also in a prescribed form, confirming that they understand the effect of the lease being excluded from the protection of the Act.
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 clause is exercised) and will not benefit from the security of tenure provisions set out in the Act.
This means that:
- the tenant will have no right to carry on its business from the premises or to remain there;
- unlike a lease with security of tenure, the landlord has complete discretion as to whether he grants a new lease to the tenant and does not have to give any reason for refusing to grant a new lease or explain why he wants the premises back; and
- if the landlord is willing to grant a new lease, there is no obligation for him to do so in the same terms of the previous lease.
If the tenant remains in occupation of the premises after expiry of the term they are deemed to be trespassing and are liable to the landlord for damages.
To find out how a business tenant can get security of tenure under the Act or how a landlord can regain possession, see our article here.
To find out how to terminate a business tenancy covered by the Act, see our article here.
The Landlord and Tenant Act 1954 is highly technical, imposing strict deadlines that if not met can have very serious consequences for one or both parties. Nothing in this article should be taken to constitute legal advice but should therefore be treated as a guide only. Legal advice should always be sought before entering into or terminating a business tenancy agreement, or for any other legal matter.