18 Oct 18 by Paul Matthews

One of the key roles of the 1954 Landlord & Tenant Act was the introduction of Security of Tenure. This means that the Tenant has the right to remain in occupation of the property if the lease has expired and is inside the provisions of the 1954 Act. This is referred to as ‘holding over’.

It is now commonplace for most leases to be inside the 1954 Act and for some occupiers a key requirement. But what are the benefits of having a lease inside or outside the Landlord & Tenant Act?
A benefit for a Landlord to having a tenant occupying the property on a lease within the 1954 Act shows leniency within their investment and can attract a lower yield. For a Tenant, a lease inside the Act gives security that they will not be forced to relocate their business at short notice.

On the other hand, there reasons for having a lease outside the Act where maybe a new tenant starting up a business or if the Landlord has an intention to redevelop the property. This is because it gives a more flexible timescale whereby the Landlord can commence works for the redevelopment but also if the Tenant does default or becomes troublesome, there is no right for the Tenant to renew the lease thereby the Landlord can market the property for a new Tenant at the end of the lease.

So, what are the downsides of having a lease inside or outside the Landlord and Tenant Act?

The main disadvantage of a lease being inside the Act is that if the Landlord and Tenant relationship does become strained, it is very difficult for the Landlord to remove the Tenant and care must be taken to get vacant possession and the Landlord may be liable to pay statutory compensation to the Tenant in order to do this.

It is always important to seek legal and professional advice when taking on a lease for premises to ensure that both parties are suitably aware of the benefits and disadvantages of inside or outside the Act 1954 lease. Should you wish to discuss in further detail then please contact a member of the team.