Property

Renewal of Business Tenancies

Changes came into place in June 2004 regarding renewal of business tenancies.

One of the most interesting changes is that it is no longer be necessary to apply to Court for the exclusion of the Landlord and Tenant Act i.e. removing the security for business tenancies under Part 2 of the 1954 Act.

Instead, the prospective Tenant must be given a “health warning” about the potential loss of rights. The notice must be given at least 14 days before the parties are committed to the Lease. Alternatively, the Tenant must make a Statutory Declaration before an independent Solicitor that he or she has read the “health warning” and has accepted its consequences.

Detail

The legislation alters the entire practice of renewing and ending business leases. The entire court application and court order procedure for the grant of leases, for the approval of agreements to surrender protected leases, and for the approval of agreements to surrender protected leases, is replaced by a system of notices containing health warnings and tenants’ declarations.

Step 1 - The "Health Warning"

First the landlord is obliged to serve a notice in the form set out in Schedule 1 to the Order which includes the ‘health warning’.

The health warning informs the tenants as follows:

The warning advises the tenant to obtain professional advice from a qualified surveyor, lawyer or, perhaps surprisingly, accountant. It informs him that if he receives the notice at least fourteen days before committing to the lease, he must, before signing the lease, sign a simple declaration that the notice has been received and that he accepts its consequences. At the end of this fourteen day ‘cooling off period’ the transaction will be entered into by the parties.

Stage 2 - Service of the Notice

The second requirement is therefore that the notice must be served on the tenant not less than fourteen days before he enters into the tenancy. If it is served more than 14 days ahead, then the tenant must, before the relevant cut-off time, make a declaration in the form set out in paragraph 7 to Schedule 2 of the Order. This is a simple declaration and does not need to be witnessed.

It is, however, possible for a landlord to serve the notice less than fourteen days before the tenant enters into the tenancy (as long as it is served before the tenant actually does enter into the tenancy), but if it is, then the tenant will have to make a statutory declaration in the form set out in paragraph 8 to Schedule 2. This must be witnessed by a Solicitor or Commissioner for Oaths.

Stage 3 - Endorsement of Notices etc

The final requirement under the new provisions is that the instrument containing the tenancy must contain or have endorsed on it the following:

The advantages of the new system are obviously that it is a much more straightforward process (except, perhaps, when a statutory declaration must be made), and that the timing of when and how a transaction can be entered into is be more straightforward.
 

For more details about renewal of business tenancies or any aspect of dealing with Commercial Property or Residential Property contact Felix Appelbe BSc. Estate Management. FRSA on 020 7 242 7000 or use the Contact Request Form
 

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