time for a change?
Landlord and tenant update
Malcolm John Dowden
Gwentian Consulting Limited, Reading, UK
Purpose –This legal update examines recent decisions on the security of tenure given by Landlord
and Tenant Act 1954
to business tenants, and asks whether it is time to revisit or remove a piece
of legislation that was drafted to deal with the consequences of war damage and short supply of
commercial premises during the 1950s. It highlights the narrow, technical rules and distinctions that
make little sense to commercial parties. The paper aims to discuss these issues.
Design/methodology/approach –The paper considers recent court rulings in the light of the
1969-reflect changes in market conditions since the immediate post-Second World War period.
Findings –Narrow, technical rules and exceptions carry considerable risks for commercial landlords
and may not be appropriate or necessary in current market conditions.
Research limitations/implications –The paper examines only a recent selection of court rulings, but
highlightsthe potentially harsh impact on commercial landlords of legislation designed to protect tenant
interests in market conditions radically different from those prevailing some 60 years after its enactment.
Practical implications –With no immediate prospect of reform, the paper highlights the need for
landlords to adhere closely to the precise technical requirements of the Act.
Originality/value –The paper is based on the author’s reading and analysis of recent Court of
Keywords Business, Exclusion, Security, Contracting out, Landlord, Tenant
Paper type Technical paper
coupled with a chronic shortage of commercial property due to war damage. It replaced
earlier, temporary, legislation designed to protect business tenants from predatory
landlords using the end of a lease term either to demand a significant rent increase in
return for a new tenancy, or to step in an reap the benefits of the goodwill built up by
the tenant. Extensive bomb damage coupled with a shortage of development funding
meant that there was no early prospect of rebalancing the supply of commercial
property in tenants’favour. One result was that, as originally enacted, the Act did not
allow for “contracting out”–the consensual process through which the tenant’s
security of tenure is excluded.
“Contracting out”was introduced in 1969, at the end of decade that saw a significant
pick-up in the rate of commercial property development, coupled with a marked
increase in housing supply. The procedure for contracting out required the parties,
before entering into a landlord and tenant relationship, to apply to the court for an
order excluding sections 24-28 of the Act. If satisfied that the tenancy would be for a
term certain (as opposed to a periodic tenancy) and that the tenant had freely agreed to
forego statutory protection, the court would authorise the creation of a tenancy without
security of tenure. Crucially, contracting out was introduced as a narrow exception to
Journal of Property Investment &
Vol. 33 No. 1, 2015
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