Business tenants normally have security of tenure the right to stay in their business premises when the lease ends. Under the Landlord and Tenant act 1954 (‘the Act’), s 38(4) allows the parties to agree that security of tenure under the Act should not apply to a given tenancy. When taking on a lease, if you are asked to sign a statutory declaration it means that you are signing away your automatic rights to security of tenure under the Act.
If you sign the declaration you are giving away the following legal rights
- Â You will have no right to stay in the premises when the lease comes to an end unless the landlord chooses to offer you another lease.
- Â You will be unable to claim compensation for the loss of your business premises, unless it is otherwise stated in your lease.
- Â In the event the landlord offers you another lease, you will have no right to ask the court to fix the rent.
The landlord is required to give the tenant notice in a prescribed form which contains a ‘health warning’, warning the tenant of the fact that he is agreeing to a lease without security of tenure and advising him to obtain professional advice.
The tenant must then make a declaration that he has received the notice and agrees that the lease should be contracted out. The tenant must make his declaration in the form of a statutory declaration before an independent solicitor.
If the tenant does not sign the statutory declaration and the landlord opposes to grant a new lease, he will be required to specify his grounds in court. The landlord’s grounds for opposition are set out under Section 30 of the Act as follows
- Tenant’s failure to repair.
- Persistent delay in paying rent.
- Substantial breaches of other obligations.
- Alternative accommodation.
- Sub-letting of part where higher rent can be obtained by single letting of whole building.
- The landlord intends to demolish or reconstruct and could not reasonably do so without obtaining possession.
- Landlord’s intention to occupy the holding for his own business or a residence.
Prior to 1 June 2004, you had to get approval of the courts to contract out of security of tenure however, now there are procedures in place which no longer require the approval of the courts.