Understanding your rights as a commercial tenant is essential prior to entering into a lease for your business.
What is the Landlord and Tenant Act 1954?
The Landlord and Tenant Act 1954 is a central piece of legislation that governs the rights and responsibilities of both landlords and tenants for premises occupied for business purposes.
While the Act has implications for both parties, this article focuses on its impact on tenants, particularly the protections it offers when entering the commercial property market.
Security of Tenure
One of the most significant protections the Act offers is ‘security of tenure’. This ensures that qualifying business tenancies do not automatically end when their contractual term expires. Instead, tenants have a statutory right to remain in the premises and renew their lease, providing greater stability and continuity for their business operations.
Where security of tenure applies, a landlord can only oppose lease renewal on limited grounds, as outlined in Sections 30(1)(a)–(f) of the Act. While this protection is automatic for most tenancies, landlords and tenants can agree to “contract out” of these rights by following a specific legal process, which includes a statutory or simple declaration from the tenant acknowledging they understand the rights they are waiving.
Security of tenure can be especially valuable to businesses that require substantial upfront investment in fit-outs or have developed a strong presence in a specific location, such as retail stores. The ability to plan long-term without fear of displacement is a critical factor for many businesses.
Contracting Out of Security of Tenure
If a tenant agrees to contract out of Sections 24–28 of the Landlord and Tenant Act 1954, they give up several key legal protections. Specifically, the tenant will have:
- No legal right to remain in the property after the lease term ends.
- No right to stay in occupation unless the landlord voluntarily offers a new lease.
- No right to compensation from the landlord upon vacating the premises.
- No ability to ask the court to determine the terms or rent of a new lease if offered.
Due to the legal and commercial implications of contracting out, tenants are strongly advised to seek professional advice before entering into a lease agreement. Understanding these rights and risks ensures that your business can make informed decisions and protect its future operations.
For further advice and assistance, please contact our Commercial Property team on 01604 828282 or email them at
[email protected].
Written by Jo Pusey
Associate Partner, Commercial Property at Franklins Solicitors LLP
Specialises in commercial and leasehold transactions, break notices, probate sales, lease variations, property financing, shared ownership, enfranchisement, adverse possession, and option and overage agreements.
Jo Pusey is an Associate Partner in the Bespoke and Commercial Property team at Franklins Solicitors LLP. She qualified with the firm in 2003 and specialises in a wide range of commercial and bespoke property matters, including commercial leases, acquisitions, disposals, probate sales, auctions, lease variations, shared ownership, and property financing.
Jo acts for clients ranging from large property developers to small owner-managed businesses, known for her pragmatic, efficient approach and strong commercial awareness. She prides herself on building long-term client relationships.
Outside of work, Jo enjoys travelling and is working on completing her Scratchable World Map. She is also an active member of the Northampton Musical Theatre Company.
