UK: The Reforms To The Landlord And Tenant Act 1954

Originally published in January 2004

From 1 June 2004 certain provisions of the Landlord and Tenant Act 1954 will change. The Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 was made on 1^st December 2003. Its provisions will come into force on 1^st June 2004. In the interim period the statutory notices affected by the Order will be amended by statutory instrument and the Civil Procedure Rules will also be amended to give effect to the provisions concerning applications to the Court.

In summary, the changes are as follows:

• There will be no need for a Court Order. Instead it will be possible to 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.
• The tenant will sign a declaration that he understands the implications.
• If 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.
• There are parallel provisions for agreements to surrender.

• A Section 25 Notice which does not oppose renewal must contain the landlord’s proposal for the new tenancy.
• The tenant does not have to serve a counternotice to a Section 25 Notice stating whether or not he is willing to give up possession.

• Either a landlord or a tenant may apply for a new tenancy.
• The period for making an application to the Court for a new tenancy expires on the date specified in the landlord’s Section 25 Notice or on the day before the date specified in a tenant’s Section 26 request.
• The parties may extend the time for making an application to the Court but this extends the termination date of the tenancy to the end of the period agreed.
• The Court will make an Order for a new tenancy and for the termination of the current tenancy the day before the commencement of the new tenancy.

• A landlord may apply to the Court for an order for the termination of a tenancy if he has given a Section 25 Notice opposing the grant of a new tenancy or a counternotice opposing a tenant’s Section 26 request.

• Currently a tenant must be in occupation of the subject premises for the purpose of a business in order to enjoy the protection of the 1954 Act. However, under the changes, occupation by a company in which the tenant has a controlling interest or, if the tenant is a company, by someone with a controlling interest in the company, shall be covered by the protection of the 1954 Act.

Where a landlord successfully opposes renewal on ground 30(1)(g) of the 1954 Act, a company in which he has a controlling interest will be entitled to occupy the premises and if the landlord is a company, "landlord" will be deemed to include a person with a controlling interest in that company unless it was acquired within the last five years of the tenancy.

Compensation is payable where a landlord proves grounds (e), (f) or (g) of Sections 30(1) of the 1954 Act. There will be a separate calculation of compensation for each part of the building occupied for a different length of time. Where there are separate landlords, each reversioner would be liable for compensation relating to his part.

• Either the landlord or the tenant may apply to the Court for the determination of an interim rent.
• The application must be made within six months of the termination of the tenancy.
• Interim rent is payable from the earliest date of termination which could have been specified in the landlord’s notice or the earliest date which could have been specified in the tenant’s request.
• Where a new tenancy is granted or ordered and the landlord did not oppose the grant, the rent payable under and at the new tenancy shall be the same as the interim rent.
• Where a new tenancy is granted or ordered and the landlord was opposed to renewal the Court will have regard to the rent payable under the terms of the new tenancy and the rent payable under any sub-tenancy of part otherwise Section 34 of the 1954 Act will apply.

A tenant will not need to serve notice that he will vacate on or before the expiry of the term. This enshrines in statute the Court of Appeal’s decision in Esselte AB v. Pearl Assurance Plc in 1997.

The maximum length of a tenancy ordered by the Court is to be 15 years.

• The amendments will not be retrospective.
• Where a Section 25, Section 26 or Section 27(2) Notice was given prior to the coming into force of the Order, the Order will not have effect.

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