UK: Contracting out of Security of Tenure under the 1954 Act: the New Regime

Last Updated: 18 March 2004
Article by Stephanie Thomas

Originally published February 2004

The Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 was made on 1st December 2003 and will come into force on 1st June 2004. Its provisions will operate to amend certain elements of the Landlord and Tenant Act 1954 and one of the most significant areas of change relates to "contracting out" or excluding security of tenure and the provisions of Sections 24-28 of the 1954 Act.

During the consultation process on the proposed changes to the 1954 Act, the Office of the Deputy Prime Minister commissioned a survey of the way in which County Courts have dealt with "contracting out" applications. The results showed that only a small percentage of applications for contracting out orders were rejected and that the grounds for their being turned down were procedural rather than substantive. Indeed, the Courts do not have discretion or jurisdiction to intervene in the terms agreed between the parties or to impose additional terms where agreement has been reached.

The current procedure involves the expense of making the applications and delay as the applications are processed by the Court. Current estimates indicate that at least 50,000 "contracting out" applications are made each year and that this figure is on the increase. The need for interim arrangements for tenants to be able to occupy premises pending the making of a Court Order, such as short fixed-term tenancies or tenancies at will entails further expense and risk which militates in favour of streamlining the issue of giving up security of tenure and putting it firmly in the hands of the parties concerned.

A summary of the changes:

  • There will be no need for a Court Order. The parties may exclude Sections 24-28 by agreement.
  • The landlord will serve a "health warning" Notice on the tenant at least 14 days before entering into the agreement, although it will still be possible to contract out if Notice is not given 14 days in advance.
  • The tenant will sign a declaration that he understands the implications. In circumstances where contracting out of security of tenure is to take place less than 14 days before the commencement of the agreement, the tenant will be required to make a statutory declaration.
    Similar provisions will apply for agreements to surrender.

The Form of the Tenant’s "Health Warning" Notice for Contracting Out :-


You are being offered a Lease without security of tenure. Do not commit yourself to the Lease unless you have read this message carefully and have discussed it with a professional adviser.

Business tenants normally have security of tenure – the right to stay in their business premises when the Lease ends.

If you commit yourself to the Lease you will be giving up these important legal rights.

  • You will have no right to stay in the premises when the Lease ends.
  • Unless the landlord chooses to offer you another Lease, you will need to leave the premises.
  • You will be unable to claim compensation for the loss of your business premises, unless the Lease specifically gives you this right.
  • If the landlord offers you another Lease, you will have no right to ask the Court to fix the rent.

It is therefore important to get professional advice – from a qualified surveyor, lawyer or accountant – before agreeing to give up these rights.

If you receive this Notice at least 14 days before committing yourself to the Lease, you will need to sign a simple declaration that you have received this Notice and have accepted its consequences, before signing the Lease.

But if you do not receive at least 14 days’ notice, you will need to sign a "Statutory" Declaration. To do so, you will need to visit an independent solicitor (or someone else empowered to administer oaths).

Unless there is a special reason for committing yourself to the Lease sooner, you may want to ask your landlord to let you have 14 days to consider whether you wish to give up your statutory rights. If you then decide to go ahead with the agreement to exclude the protection of the Landlord and Tenant Act 1954, you would only need to make a simple declaration, and so would not need to make a separate visit to an independent solicitor.

The requirements to be met in relation to the Tenant’s "Health Warning" Notice are that it must be served on the tenant no less than 14 days before the tenant enters into the tenancy to which it applies or (if earlier) becomes contractually bound to do so. If this requirement is met, the tenant or a person duly authorised by him must make a simple declaration that he has read the Notice and accepts the consequences of entering into the agreement. If the Notice is not served at least 14 days before entering into the agreement, the tenant, or a person duly authorised by him, must make a Statutory Declaration confirming that he has read the Notice and accepts the consequences of entering into the agreement. Reference to the Notice and to the simple declaration or the Statutory Declaration, must be entered in or endorsed on the tenancy. The "contracting out" agreement must also be contained in or endorsed on the tenancy.

Agreements to Surrender

The safeguard remains in relation to agreements for a future surrender, which remove a tenant’s right to renew his tenancy. These provisions are parallel to those relating to the contracting out provisions relating to the grant of a new tenancy and they will apply where the parties have not already entered into an agreement to exclude Sections 24-28 in relation to the surrender of a tenancy.

Transitional Provisions

  • Where an agreement for surrender is made before 1st June 2004 or authorised by the Court before that date, the 2003 Order will have no effect.
  • Any provision in a tenancy requiring an exclusion order to be obtained in respect of a sub-tenancy shall, after 1 June 2004, be construed as requiring the "health warning" procedure to be followed.
  • An agreement for Lease entered into before 1 June 2004 which contains provisions for an exclusion Order shall survive the amendments bought in by the 2003 Order and the Court may deal with the application.

© RadcliffesLeBrasseur

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.