Landlords urged to protect themselves against protected leases
Commercial property landlords across the Midlands have been warned of the difficulties they can face when trying to take back possession from a tenant, and urged to seek legal advice to avoid having an unwanted protected lease.
The warning comes as The Landlord and Tenant Act 1954 marks its 70th anniversary, with a recent high-profile court case revealing that the balance of power continues to swing in the favour of tenants.
The Act was introduced after the Second World War to govern the relationship between landlords and tenants in commercial premises. However, Phil Hunt, Senior Associate in the Commercial Property team at Birmingham law firm mfg Solicitors, said there have been calls to review this ageing piece of legislation.
He said: “The Act was considered a way to support tenants in a market weighted heavily towards landlords’ interests at the time. The general rule is that a commercial tenant operating a business from its premises has the right to remain in the property after the end date of its lease, unless the landlord can rely on specific exceptions.”
He urged landlords to know their legal rights, including their position if they intend to redevelop their premises, as they will need to consider whether they can rely on the “Ground F” exception.
Phil added: “Ground F is where the landlord has an intention to redevelop the property and the works cannot be carried out while the tenant remains in situ. At first glance this seems relatively straightforward, but the courts have made it difficult for landlords to rely on it. Landlords need to first prove a “firm and settled” intention to redevelop their property, including applying for planning permission.
A recent high-profile case involving a supermarket and a property it rented out in London has thrown the issue of landlord/tenant rights into the spotlight. Here, the company failed in its bid to use Ground F to remove its tenant.
Phil said: “Landlords who intend to redevelop or regain possession of their property at the end of a lease term should take legal advice as early as possible. Discussing your next step before you serve a notice can assist in understanding the options available.
“Equally, landlords looking to let a commercial property should consider the consequences of whether or not a lease excludes the right to security of tenure. This is often a key negotiation point in heads of terms and discussing future plans with a solicitor before finalising your heads of terms could mean avoiding potential issues later on.”
