Commercial Tenants Right to Renew

The Landlord & Tenant Act 1954 (LTA 1954) provides certain safeguards for commercial Tenants one of these being the ‘security of tenure’ when a lease comes to an end. The statutory position allows a commercial Tenant to renew their lease at the end of the initial term. The advantage of this is it allows the Tenant to make an informed decision at the end of the term as to whether a continuation of the tenancy is practical for their particular business.

However, both the Landlord and Tenant can agree to ‘contract out’ of the statutory provision so that the automatic right to renewal does not apply. In agreeing to this the Tenant in particular should give careful consideration to the possible consequences for them and their business in the event the Landlord decides not to renew at the end of the term.

A tough lesson can be learnt from the recent ruling involving The Fragrance Store (TFS) who had six leases for retail outlets with different Landlords all of which had been contracted out of the security of tenure provisions. When the leases came to an end the Landlords decided they did not want to renew and TFS tried to argue against the same, but the court ruled as all six leases had been correctly contracted out there was nothing TFS could do. To make matters worse the Landlords had in fact decided to let all six retail outlets to TFS’s competitor The Perfume Shop!

Whether you are a Tenant or Landlord it is imperative you understand the full consequences of the agreement you enter into. As such, if you have any questions or queries and would like to discuss these further then please contact our dedicated Commercial Property team on 01484 821500 or by email at info@ramsdens.co.uk.