SPOTLIGHT ON INFORMAL LETTINGS OF COMMERCIAL PROPERTY

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Let us suppose that you are a landlord of a commercial property which is empty whilst you decide what you want to do with it. Rather than letting it stand empty, you decide to grant a short tenancy and you find a tenant. A rent is agreed but to keep things flexible no specific term of the tenancy is agreed. There is no written Tenancy Agreement but the tenant is allowed into exclusive occupation and you demand and receive rent.

A few months down the line you decide that you want to sell the property with vacant possession. You ask the tenant to leave but the tenant wants to stay. The tenant says that he has taken legal advice and been advised that he has the protection of Part II of the Landlord and Tenant Act 1954. Is this correct?

The answer is provided by Section 43(3) of the 1954 Act, which provides that the protection of the Act does not apply to a tenancy granted for a term certain not exceeding six months unless:

(a) The tenancy contained provision for renewing the term or for extending it beyond six months from its beginning; or

(b) The tenant has been in occupation for a period which, together with any period during which any predecessor in the carrying on of the business carried on by the tenant was in occupation, exceeds 12 months.

The tenancy in this hypothetical case was not granted for a term certain not exceeding six months but instead took effect as a periodic tenancy and therefore, whether or not the tenant has been in exclusive occupation for six months, he has a tenancy which is protected by the Landlord and Tenant Act 1954.

There are steps which you as landlord could have taken to avoid this, including granting a tenancy for a term certain not exceeding six months.

If you would like further advice about whether a business tenancy has the protection of Part II of the Landlord and Tenant Act 1954, or any other commercial property disputes, please contact the Dispute Resolution Partner at the Grantham office, Robert Clark.