Varying leases on renewal under the 1954 Act

The Landlord and Tenant Act 1954 gives tenants of commercial premises rights to apply to court for a new lease unless the landlord can establish a ground of objection.

When considering the terms of the renewal lease, the Court’s starting point is the terms of the existing lease, but the court won’t “petrify in stone obsolete or redundant terms”.

If you’re a tenant looking to apply for a new lease, here a few things to bear in mind:

  • The lease can be modernised at the Judge’s discretion.
  • The party seeking any change has to justify it.
  • It shouldn’t prejudice the other party greatly.
  • The term of the renewal lease will take into account the length of the existing lease and the tenant’s preferred length.
  • The court can introduce break clauses if there’s the possibility of redevelopment.
  • The court can require the tenant to provide guarantors.
  • There’s no reported case where the courts have ordered a rent free period for the renewal lease.
  • It’s rare for cases to get to trial. Generally, there’s a “horse trade” during the negotiation of the new lease terms.
  • The parties can agree that the rent or any other term be decided by arbitration under the PACT scheme, to avoid a court hearing.
  • The costs of preparing the new lease are generally shared between the parties.
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