Business Leases - A Summary of Recent Changes - Summer 2004

01 July 2004

Significant reforms to the law affecting business leases came into force on 1 June 2004. The following is a summary of the changes which all landlords and tenants should be aware of.

OUT goes the court application to exclude security of tenure, the court fee of £130 and waiting for the court order.

IN comes an Advance Notice procedure; once the draft lease has been agreed:

• The landlord gives a "health warning" to the proposed tenant stating there will be no right to renew the lease and the tenant should take professional advice before proceeding
• If there is at least 14 days between notice and completion, the tenant signs a declaration confirming that it has received and read the landlord's notice and accepts the consequences of entering the lease
• If the matter is urgent and less than 14 days between receipt of the notice and completion, the tenant must make a statutory declaration before another solicitor confirming the same information

IN come NEW termination notices and different procedures for both landlord and tenant.

• The landlord must use different notices depending upon whether it objects to renewal of the lease or not. If it does not object, the landlord must set out in the notice proposals regarding the premises to be comprised in the new lease, the new rent and any other changes to the existing lease. Landlords must therefore consult with their surveyors much earlier; before they serve the section 25 notice.

OUT go the tenant's counter notice and confusing time limits; the tenant must now apply to the court by the termination date specified in the landlord's notice. This will give more time for negotiation and preparation of the new lease so applications to the court may not be necessary, thus saving legal costs for tenant and landlord.

IN comes the right for the landlord to apply to the court immediately after service of the section 25 notice; very useful if the landlord is objecting to renewal on grounds of redevelopment and has planning permission and funding sorted out.

• The court can now grant a maximum term of 15 years, up from previous 14 years
• Tenants can still serve a request for a new lease but there is a NEW form to use. If the landlord opposes renewal, the landlord can apply to court as soon as it has given counter notice (note the landlord’s counter notice is preserved)
• Tenants' notices to terminate a lease which is continuing after the expiry of the fixed term no longer have to expire on a quarter day but only 3 months from service

Whilst these changes do simplify the procedures there is likely to be some confusion with the new provisions until the business community becomes familiar with the new regime.

‹ Back

• © Furley Page LLP 2009
• | LLP
• | Terms and Conditions
• | Privacy Policy
• | Site Map
• | Accessibility