Potential reforms to the Landlord and Tenant Act 1954 – how will these affect retailers?

The Law Commission made a total of 28 main recommendations for reform. If implemented these will have a number of consequences (mainly beneficial) for retail tenants.

The potential reforms include: ·

• Once a landlord has served a notice to terminate a tenancy the tenant should no longer be required to serve a counter notice. This will considerably simplify the procedure for retail tenants. ·
• Retail tenants will be able to make interim rent applications following the expiry of the contractual term of the old lease. At the moment whilst the terms of the new lease are being negotiated the tenant continues to pay the old rent unless the landlord has made an interim rent application. Retail tenants do not have the ability to make such an application which is extremely unfair where rents have fallen since the last rent review under the old lease. ·
• Abolishing the need for a court order to exclude the tenancy from the 1954 Act. This has advantages for both landlords and their tenants because it will simplify and speed up the procedure for granting a lease. ·
• The statutory right of renewal only exists in favour of the tenant who is in occupation. This will be extended to allow occupation by group companies to be taken into account. ·
• Retail tenants who do not want to remain in occupation at the end of the contractual term of their old lease (or who wish to bring to an end the statutory period of holding over) need to serve at least three months notice expiring on a normal quarter day. The requirement for the notice to expire on a quarter day means that many tenants have been caught out and have found themselves paying an extra quarter's rent because they have been too slow in serving a notice. The proposed reforms would allow a three month notice to be served expiring on any date. ·
• The 1992 proposals predated the Woolf reforms. The Act requires retail tenants to apply to the Court simply to preserve their statutory rights. In many cases landlords and retail tenants successfully negotiate the terms of a renewal lease and rarely is the court required to deal with the issue. The Woolf reforms have only made matters worse with the drive to ensuring that court decision are made quickly. Another of the proposed reforms is that landlords and tenants should be able to agree to extend the current statutory time limit for making an application to the court. This avoids court proceedings being started unnecessarily in the first place. ·
• At the moment a court can only grant a lease for a maximum term of 14 years. This would be extended to 15 years with a more modern practice. ·
• If a landlord serves a notice to terminate the tenancy where the landlord is not opposed to the grant of a new tenancy the landlord should also set out its proposed terms for a new lease in that notice.

These are simply some of the proposed reforms. The end result of implementing the 1992 recommendations will modernise the procedural requirements of the Act which will be of benefit to tenants in particular.

For further information please contact Mark Heighton at [email protected] or on +44 (0)20 7367 2177.

This article first appeared in Retail Week on 12 January 2001.