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You are here: Home / Commercial Property / Should the Lease be ‘Inside or Outside The Act?’

Sep 1

Should the Lease be ‘Inside or Outside The Act?’

‘The Act’- the Act being referred to is The Landlord and Tenant Act 1954 which gives business tenants automatic renewal when a lease expires.

When agreeing to terms for a new lease, be aware whether the lease is inside or outside The Act or you could be in for a nasty surprise.

Inside The Act

Having your commercial lease inside the act will offer you, as a tenant, protection. It means that when your lease has expired your landlord cannot ask you to leave which, along with the inconvenience, could subsequently have a negative impact on your business. Moreover, when negotiating a commercial lease, if the landlord is adamant he will only accept a tenancy outside of the act (meaning you would have no automatic renewal rights as a tenant) you should consider whether the possibility of being forced to leave would be worth it or if you could secure a longer lease term with the landlord.

Outside The Act

The main benefit to the landlord of a lease which is outside of the act is the freedom they will have to do with the building as they please when the lease is over.  The landlord may wish to renegotiate the terms of a new lease with the existing tenant or with a new tenant or may even wish to take possession of the building for their own purposes, which would be a violation of the 1954 Landlord and Tenant Act if the lease was inside the act.

Are there any exceptions whereby my landlord could end my lease even if I am inside the act?

As with most contracts, there are exceptions. As a tenant, you may be in breach of your lease if your rent is in arrears or the premises are in a state of disrepair. The landlord may use this chance to repossess the premises for their own use or to take time to develop and improve the site. Even with these exceptions, tenants and landlords should be aware that the landlord needs to follow a set notice procedure and cannot suddenly evict the tenant if they are inside the act.

Category:Commercial Property |

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