Business Tenancies: Further Reform?

Landlords and tenants may benefit from proposed further reform of Part II of the Landlord and Tenant Act 1954 following a review by the Department for Communities and Local Government.

Most of the recommendations seek to clarify the current law and by so doing to simplify the means by which parties contract out of the security of tenure provisions of the Act. They include the following proposals:

1. The notice warning a tenant of the effects of excluding security of tenure should remain effective in the event of changes (even major ones) to the proposed lease terms. Only the tenant’s declaration should need to be specific to the lease eventually granted.
2. The warning notice should be effective if served on the tenant’s authorised representative as well as on the tenant itself.
3. A lease, made pursuant to an Agreement for Lease in respect of which the contracting out procedures had been followed, should not attract security of tenure even if, prior to execution of the lease, there has been a change in the identity of the landlord.
4. Where a contracted out lease provides that a guarantor may be required to enter into a new lease following default by the tenant and the guarantor is required to take a new lease, the new lease should automatically be contracted out also.

The DCLG declined however to recommend that a tenant should be required to inform a landlord if it does not wish to renew its tenancy following service of a Section 25 Notice.

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The original publication date for this article was 03/11/2006.