Landlord & Tenant Act 1954 - June 2004 Changes

The Regulatory Reform (Business Tenancies) ( England and Wales ) Order 2003 will bring a number of changes to the Landlord & Tenant Act 1954 on 1 June 2004.  In summary, these are:

• the Landlord’s Section 25 Notice must include the Landlord’s proposals as to the new rent and other terms;

• there will no longer be a requirement for the Tenant to serve a counter-notice;

• the Landlord and Tenant may agree extensions of time but the current rent will remain the same unless an application has been made for interim rent;

• the contracting-out procedure under Section 38(1) will be abolished;

• both the tenant and landlord will be able to apply for interim rent.

Landlord’s Section 25 Notice

The Landlord must now include their own proposals in the Section 25 Notice.  A new form has been proposed under Schedule 2 of The Landlord and Tenant Act 1954, Part 2 (Notices) Regulations 2004.  The recent case of Mount Cook v Rosen [2003] 1 EGLR 75 ruled that the proposals should be realistic proposals.  If they are not then this will potentially invalidate the Section 25 Notice.  The notice must also contain a “health warning” suggesting that the Tenant seeks independent legal advice.

Applications to the Court for a New Tenancy

Under the new regime, the Tenant or Landlord can apply to the Court for a new tenancy.  The Landlord is also able to apply for an Order terminating the current lease without renewal.  This application does need to be made before the expiry of the Section 25 Notice or the date specified on the Section 26 request.  Further extensions of time can be agreed between the parties.

Interim Rent

Both Landlords and Tenants can now apply to the Court for interim rent during the continuation of the tenancy.  The method of valuation will change where the renewal is unopposed by the Landlord and this should reflect the open market rental value.

Applications to the Court to Exclude the LTA 1954

It will no longer be necessary to apply to the court to dis-apply the security of tenure provisions under the Landlord & Tenant Act 1954.  The Landlord should serve on the potential Tenant a notice in the prescribed form which contains a “health warning” suggesting that the Tenant seeks independent legal advice.  This should be served on the Tenant at least 14 days before the commencement of the Lease.  If this is done, then the Tenant need only sign a simple declaration confirming receipt of the notice.  Should there be less than 14 days before the commencement of the Lease, then the Tenant will have to swear a Statutory Declaration in the form as prescribed in Schedule 1 of The Regulatory Reform (Business Tenancies) (England and Wales) Order 2003.

Vacation of Premises by Tenant

The reforms give statutory effect to the case of Esselte AB v Pearl Assurance plc [1997] 1 WLR 891 which states that where a tenant ceases to occupy the property for business purposes then security of tenure will cease.  The tenant can then simply vacate without the service of a Section 27 Notice.

Article First Published: 1 May 2004

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