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The lease has expired and the tenant’s won’t leave

06/05/2014 | Paula Lee

Once the term of a lease has expired the situation can become complicated where a tenant remains in occupation. The complexity will depend on whether the lease is a "protected lease" under the renewal provisions of the Landlord and Tenant Act 1954. 

What is a protected lease under the Landlord and Tenant Act 1954? 

Under the statutory provisions of the Landlord and Tenant Act 1954, a protected lease gives a tenant security of tenure - a right to remain in occupation of the property upon expiry of the lease. Obligations under the lease remain the same and a landlord is entitled to the same rent together with any monies due under the terms of the lease. 

The Landlord and Tenant Act 1954 allows a tenant to determine the lease at any time once the contractual period has expired with the only stipulation being that the tenant must give the landlord 3 months written notice. 

Should a landlord oppose the grant of a new lease it is, unfortunately, not so simple to end a protected lease. In order to terminate the lease, you will need to serve notice on the tenantandprove one of the specified grounds within Section 30(1) of the Landlord and Tenant Act 1954. However, should you be successful in opposing a new lease and prove one of the specified grounds to regain possession of the property, a tenant can claim compensation from you depending on the ground on which you oppose to a lease renewal. Compensation will be calculated on the rateable value of the property. 

What if the lease is not protected under the Landlord and Tenant Act 1954? 

If a Landlord does not wish to grant the tenant a lease with security of tenure then the new lease must be excluded from the renewal provisions of the Landlord and Tenant Act 1954. To effect this the Landlord serves a notice on the tenants before the grant of a lease stating that the lease will be excluded from the Landlord and Tenant Act 1954 and relevant provisions should be drafted into the lease. This procedure is known as "contracting out". 

It is becoming more common for landlords to grant a new lease which is contracted out of the Landlord and Tenant Act 1954 and in these circumstances a landlord should ensure that all necessary action is taken to prevent the tenant remaining in occupation without the grant of a new lease. 

Steps to take

First and foremost a landlord should try and establish the tenant's intention regarding the property upon expiry of the lease. This should be determined several months before the lease is due to expire in order to ensure that there is adequate time for negotiations to take place if a new lease is to be entered into. 

If negotiations are not entered into by a tenant before the lease expires the landlord should issue an open letter to the tenant demanding possession of the property upon expiry of the lease. Where a landlord does not oppose the grant of a new lease then a separate letter should be sent to the tenant which should state that they do not intend to issue proceedings at court until a specified time has expired. This gives the tenant a short period to enter negotiations should they wish to remain at the property. 

In the event that negotiations for a new lease takes place once the lease has expired then it is generally agreed that a tenant remains in occupation under a tenancy at will which grants the tenant a short term occupancy whilst negotiations can take place. The tenancy can be terminated if terms of a new lease cannot be agreed. 

What if negotiations do not take place and the landlord doesn't demand the premises to be returned? 

The easiest thing for landlords to do in this situation would be for them to continue demanding rent - if the tenant wants to stay then they should pay, what harm can it do? 

If a tenant remains in occupation after the expiry of a lease without security of tenure then the landlord runs the risk of the tenant occupying the property under a periodic tenancy. This will make it harder for a landlord to regain possession of the property and potentially give the tenant a right to a lease renewal under the Landlord and Tenant Act 1954. As a result, if you oppose a new lease and you want to repossess the property then you will need to serve the appropriate notice under section 30(1) of the Landlord and Tenant Act 1954. If you continue demanding rent after the expiry of the lease, and the longer the situation continues without a formal agreement in place, then the more likely it will be that the continued occupation by a tenant of an expired unprotected lease will be deemed to be a periodic tenancy.

Conclusion 

Where a lease is contracted out of the provisions of the Landlord and Tenant Act 1954, the actions of a landlord on the expiry of the lease term plays a vital role in whether security of tenure will be created. To allow a tenant to continue occupation and demanding rent from the tenant is likely to result in you granting the tenant a right to remain in occupation under the Landlord and Tenant Act 1954. Therefore, you will be required to end the lease by proving one of the specified grounds under section 30(1) of the Act and, if successful, compensation can be claimed by the tenant. 

If you are a landlord and your current lease is contracted out, it is important that it is established as early as possible what the tenant's intentions are at the expiry of the term. This will then ensure that you can make it clear to the tenant whether you are willing to negotiate a new lease or obtain vacant possession of the property on expiry of the lease.

Paula Lee
Commercial Property Chartered Legal Executive

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