Security of Tenure

security of tenure

Understanding the intricacies of legal terminology can be tricky. If you are seeking a lease for your business premises you may have come across the term “security of tenure”. What’s more, you could be asked to “contract out” of your lease. In this blog our commercial team explain what exactly this means for you.

What is Security of Tenure?

Security of Tenure is a statutory right granted to tenants of commercial leases providing the tenant with an automatic legal right to remain in occupation of their business premises and renew their lease when the contractual term comes to an end.

This right is what is known as a statutory right and is derived from Part II of the Landlord and Tenant Act 1954.

Security of Tenure or ‘Contracting out’

Security of tenure is an automatic right, and it applies in most circumstances. Unless you have “contracted out” of it in your lease, you will most likely have security of tenure if you occupy premises under a lease for business purposes.

When negotiating a lease, the landlord may want certainty for the use of their property and thereby want to exclude the provisions of the Landlord and Tenant Act 1954 for security of tenure by contracting out.

By doing so, the Tenant has no legal rights to remain in the property past the end of the contractual term and must vacate the property.

If the lease is to be contracted out, the landlord must follow the correct procedure. The landlord must serve a prescribed form notice on the tenant formally stating that the lease will not have security of tenure. The tenant upon acknowledging the provisions of security of tenure are excluded, will make a declaration. The declaration will be included within the lease.

Why have Security of Tenure?

Landlords opt for security of tenure to be excluded to obtain strict control over their property. This provides the landlord discretion whether to offer the existing tenant a new lease.
For tenants’, security of tenure will be preferable if they intend to invest in the property and remain there long term. The benefits for the tenant to remain in the property in the long run can facilitate their business to grow and gain valuable goodwill.

Security of tenure together with the ins-and-outs of commercial leases is a complex and technical area of law. The process for contracting out has strict rules and specific forms of wording. If you need any advice on this subject, our commercial team would be happy to help, and can be contacted on 01332 364436.

Disclaimer

‘This blog reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice which should be sought as appropriate in relation to a particular matter ’

Deepa Jamal

February 2024

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