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Leased Business Premises, the right to a new tenancy

28 Oct

 

The Landlord and Tenant (Amendment) Act 1980 (The 1980 Act) as amended by the Landlord and Tenant(Amendment) Act 1994(The 1994 Act) governs the relationship between landlords and tenants of commercial premises. The legislation provides for a number of statutory reliefs particularly the the right of a tenant to renew his/her lease.

The right to a new business tenancy has been further amended by Section 47 of the Civil Law(Miscellaneous Provisions) Act 2008 (The 2008 Act) which provides landlords and tenants the right to opt out of the right to renew a tenancy under statute.

Under Section 16 of the 1980 Act where part II of the Act applies  the right to renew arises subject to proving any one of the following “equities”:

Business Equity under Section 13 1 a as amended by SEction 3 of the 1994 Act -where the tenant has occupied the premises for a minimum of 5 years on a continuous basis.

Long possession equity arises under section 13 1 b when the tenant is in occupation for twenty years.

Improvements Equity unser secction 13 1 c -if the tenant is entitled to compensation for improvements and the said improvements amount to half or morte then half of the letting value of the tenementwhen the notice of intention to claim relief is served, then the tenant has an mprovements equity.

 

The 1994 Act allows for the tenant of an office premises to contract out of his/her right to a new tenancy subject to the following conditions.

 

  • The premises must be a business premises
  • The premises must be wholly and exclusively for office use.
  • The tenant must validly renounce his/her right to a new tenancy before the tenancy commences
  • The tenant must receive independent legal advice in respect of the renunciation

This relief was available only to office tenants and did not apply ot other business tenants.

 

The 2008 Act.

Section 47 of this Act provides that all business tenants who have a tencny pursuant to section 13 1 a of the 1980 Act regardless of user can contract out of the right to a new tenancy.

For this provision to apply the tenant must renounce his/her right to renew in writing and must receive independent legal advice. There is no requirement that the renunciation must be signed before the tenany commences which means that a tenant can renounce during the term of tenancy.

Assuming the landlord wants to avoid the obligation to renew then the landlord should ensure that the tenant signs the renunciation before signing the lease agreement.

 

The information in this article is of a general nature only and cannot be regarded as legal advice. It is general commentary only.You should not rely on the ocntents of this article without consulting a Solicitor in this firm. If you would like advice  regarding how the law applies to your individual circumstances please contact Michelle Gilbourne Solicitor