FAQs about Commercial Property/Leases

What happens at the end of the lease term ?

If you do not have security of tenure, you will not have a right to stay in the property beyond the end of the lease term and you should allow the landlord to take possession of the property according to the terms of the lease.  The terms of which the property should be handed back with vary according to the contract, but will generally state that repairs should be carried out and any alterations should be reversed.

If you do have security of tenure, you will be entitled to renew your lease under the Landlord and Tenant Act 1954.  You are entitled to serve notice to quit the property according to section 26 of the Act or the landlord can serve notice to you under section 25.  If, for example, the landlord wishes to develop the property and has a genuine intention to do so, this can be sufficient for repossession by the landlord.

What leases have security of tenure ?

For a tenant to have security of tenure, the lease must be for a periodic or fixed term, the property must be occupied by the tenant and for the purposes of carrying out business.

Security of tenure will not apply to licenses (which are often difficult to distinguish from leases) or where the term of the lease is less than six months.

What is the difference between a license and lease ?

A license does not give the licensee the right to posses the property, only occupy it.  The distinction between occupation and possession can be difficult to make.  However, with possession, the tenant will entitled to restrict the landlord’s right to enter the property and will only generally be allowed to enter if certain conditions regarding notice and the like are fulfilled.  With occupation, the occupier’s right to restrict the landlord is generally far less powerful and almost non-existent.

You should bear in mind that despite the terms in your contract, an agreement which is called a license may in fact be a lease and vice versa.  Whilst the contract itself provides evidence of the the tenant’s and landlord’s original intentions, the actual circumstances can be different and change over time.  So, for example, if the landlord does not exercise any powers to enter the property and it is evident that he has termed the agreement a license to avoid the tenant having security of tenure, the so-called license can be termed a “sham agreement” by the courts, meaning it can be legally seen as a lease.

How can a landlord show a genuine intention to develop the property ?

Firstly, the landlord will have to show that the scale of the development is such that the tenant cannot reasonably occupy the property whilst the works are being carried out. If, for example, the development involves demolishing the whole building, then naturally the tenant will not be able to occupy the property.  In addition, the landlord will have to show evidence of his intention.  He could, for example, have obtained planning permission from the council and have evidence of financial backing to fund the development.

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