The law governing business tenancies differs significantly from that governing residential tenancies. If you need help with renewals, evictions or breach of tenancy, our expert business tenancy lawyers are ready to help you.
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Business tenancies are governed by Part II of the Landlord and Tenant Act 1954. This will apply wherever the premises let (or part of them) are being used for the purposes of a business, unless that business is purely incidental to residential use. However, where the tenancy agreement prohibits business use, the tenancy will not be a business tenancy unless the landlord consents or acquiesces to the change in use. Similarly, if a business tenant ceases trading from the premises and starts to live in them, that will not usually convert them to a residential tenancy.
Where premises are of mixed use, partly business and partly residential (e.g. where a shop is let with a flat above it), care must be taken to follow the correct statute. In general, mixed lets will be treated as business lets, unless the business use is purely incidental to residential occupation (for example, if a doctor occasionally sees patients at his home).
The tenancy will not come to an end automatically at the end of the contractual period. In order to obtain possession, the landlord should serve a notice under section 25 of the 1954 Act, stating whether he would be willing to grant a new lease. He can only decline to grant a new lease on one of the seven grounds set out in section 30 of the Act, and the ground relied on must be stated in the notice. In certain cases, the tenant will be entitled to compensation if a renewal of the lease is refused, and the tenant may also be entitled to compensation for his improvements. The tenancy will not come to an end until 3 months after the final disposal of the court proceedings.
Since 1st June 2004 it has been possible to contract out of the leasehold renewal provisions contained in sections 24-28 of the 1954 Act. In order to achieve this, the landlord must serve on the tenant a notice in the prescribed form warning the tenant that the lease will not be subject to these provisions. The tenant should then sign a declaration (if at least 14 days notice is given) or swear a statutory declaration.
If the tenant breaches the terms of the lease (including breaching the term to pay rent) and the landlord wishes to evict the tenant, then the landlord needs to forfeit the lease, which is only possible if the lease provides for re-entry in the circumstances of the breach which occurred. Section 146 of the Law of Property Act 1925 also applies and (except for non-payment of rent) requires the landlord to give the tenant notice of the breach and an opportunity to remedy it (if this is possible). If intending to forfeit the lease, the landlord must avoid doing anything which might amount to a waiver of the right to forfeit.
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