Commercial tenancies - a short guide to recovering possession of commercial property for landlords and tenants

We’ve found that there’s a shortage locally of good and accurate advice for commercial landlords and tenants, and of assistance available to either when they’re in a dispute. This puts both in an unnecessarily difficult position. Since most of the laws on this are practically ancient, there’s no need for this gap in knowledge

As we’ve got some pedigree in this area, our expert in Commercial Landlord and Tenant Disputes, Lee Stutt, has put together this short guide to recovering possession of commercial property for landlords and tenants

What's the difference between a tenancy and a lease?

First, ‘tenancy’ and ‘lease’ are interchangeable here. You can use either, and it makes no difference. Anyone who says otherwise is wrong

How can you end a commercial lease during the fixed term?

During the term of a lease, this is how it can be ended:

●     by agreement to surrender

●     by the tenant (usually), by properly exercising a break clause

●     by the landlord, by forfeiture

Each of these, and particularly forfeiture, is situation-dependent and subject to the terms of the lease and deserving of targeted legal advice, and we’ll deal with them in later guides

There are no other ways to terminate a lease during its term. If none of those happen, the lease will run its course

How can you end a commercial lease after the fixed term has expired?

After it expires, there are extra options, depending on whether the lease is one to which Part 2 of the Landlord and Tenant Act 1954 applies

By default, and in most cases, it does. But it’s possible to agree to exclude it in advance of its commencement, and it’s important to know if you did

If it’s been excluded, then, on expiry of the term, the tenant becomes either a tenant at will or a tolerated trespasser. The difference between those doesn’t matter much, because in either case, they have no security of tenure (right to stay), and the landlord can recover possession by simple possession proceedings 

Where the Act has been disapplied, the end of a fixed term needs careful handling: it’s very easy to accidentally carry on as normal, and then you’ll have created a new tenancy, which, by default, will be one in which the Act does apply. Just as it would if a new tenant moved in and started paying rent without dealing with the formalities for excluding the Act first

If the 1954 Act applies, then the expiry of the lease doesn’t end the tenant’s right to occupation. This is because of s24. Then, the landlord has a more complicated and potentially uncertain procedure to follow if it wants to recover possession

In that case, the landlord has firstly to contend with s25. That section permits a landlord to serve notice terminating the held over lease on 6 months’ notice (so it can be served in the closing stages of the fixed term, to take effect at the end date of the lease). So far, so good

However, that’s only part of the story, because the tenant has a right to request a new tenancy, and can ask the Court to award one, and will get one unless the landlord successfully opposes that request with one of the grounds of opposition in s30(1). The 3 most common objections are, broadly:

●     That the tenant should not be entitled to a new tenancy because of breaches of lease, including rent arrears

●     That the landlord needs to do work that can’t be done with the tenant in situ

●     That the landlord intends to occupy the premises themselves

In the 2nd and 3rd of those, the tenant is entitled to compensation for leaving

In any case, it’s for the landlord to prove the ground to the satisfaction of either the tenant, or, if there is a disagreement, the Court

How can we help?

These issues become complex fast, because people’s current businesses, future business plans, and sources of income are all put at risk. Because the resolution ultimately may require a trial at the County Court, it’s important to start from a point of knowledge, and then bring on board reliable legal advisers with the necessary experience to take it forward

We have years of experience in contested claims for a new tenancy (or business tenancy renewals as they’re often called), and also uncontested renewals (where the only thing in dispute is the terms of the new lease)

We’ve advised on surrenders and break clauses many times

Our experience of contested lease forfeiture claims is even more unique, beyond s146 notices, extending to the High Court and Court of Appeal, including acting in the leading authority of Toms -v- Ruberry, a case concerning the landlord’s right to forfeit a pub lease which contained additional contractual requirements as a prerequisite of serving a s146 notice

We know speed and accuracy are important.  We can act quickly and cost effectively, always with an eye to commercial realities

If you have any queries about commercial leases or are thinking of becoming a commercial landlord or tenant please get in touch: lds@stuttassociates.co.uk / 01326 333060