The Landlord and Tenant Act 1954 (the 1954 Act) governs the relationship between landlords and tenants of most business premises. The rights and obligations contained in the 1954 Act supplement those contained in the terms and conditions of any lease.

The 1954 Act

For the 1954 Act to apply, there must be a tenancy (as opposed to a licence) and the tenant must be in occupation of the premises for the purpose of their business. The tenancy must also not be specifically excluded from the 1954 Act.

If you are a landlord and you wrongly terminated a lease protected by the 1954 Act, you would be likely to face a court injunction and a claim for damages. From the tenant perspective, if you were to quit business premises without an application to court for 1954 Act protection then you may lose valuable compensation.

There are situations in which the 1954 Act does not apply. One example is where the term granted by the lease is for six months or less (unless the lease provides for an extension of the term) and the tenant’s total period of occupation does not exceed 12 months.

Protection under The 1954 Act for a tenant

If you are a tenant, you have the right to a new tenancy of the business premises following the expiry of the old lease. Once the old lease has expired, a landlord can only terminate your 1954 Act protected tenancy by serving a statutory notice (section 25 notice) providing a termination date not less than six months nor more than 12 months ahead. Once the notice has been served, a landlord can only resist granting you a new business tenancy, if they can prove a statutory ground for possession.

Terminating a business lease protected by the 1954 Act

In order for a landlord to terminate a business lease, you must first serve a section 25 notice on your tenant.

If you oppose your tenant having a new tenancy you will need to prove a statutory ground for possession; the most common examples are

  • a landlord’s intention to demolish, reconstruct or carry out substantial works of construction to the premises, or
  • the landlord’s desire to occupy the premises, either for their own business or as a residence.

If you do not oppose the grant of a new business tenancy, this gives you an opportunity to be paid the current market rent for the premises under the terms and conditions of the new lease.

In recessionary times, landlords will be less keen to terminate leases of business premises, if that will lead to a new lease and a new lower rent. The opposite is true for a tenant, who is likely to be keen to take advantage of any fall in the market rent.