A lease is a strictly legal contract which means its terms are enforceable by law. However, many differences lie between a commercial lease and a residential lease. Finding a competent and experienced commercial property solicitor is key to ensuring your rights are adhered to and protected.

Business leases are whereby a tenant occupies a property for the purposes of his/her business. These types of leases are defined in the Landlord and Tenant Act 1954 with a few excluded such as: agricultural/farming tenancies, mining leases and more.

Your commercial property lawyer will be able to assist you in explaining your rights explicitly related to your type of property.

Security of tenure

The main feature of a lease that falls under the 1954 Act is the right to security of tenure. Whilst commercial tenancies are usually signed for a fixed period, if the tenant hasn’t breached any of the terms, it may not necessarily come to an end.

When the lease comes to an end date, the tenant will be able to retain the right to remain in the property but will also have the obligation to pay the rent. The decision must then be made by either the tenant or the landlord whether to renew the lease or apply for termination.

The right to receive compensation

If the tenant has not breached contract, delayed in rent payment or received an offer of alternative premises and the court does not grant a renewal of the lease, the tenant will be entitled to compensation.

Landlords are well aware of commercial tenants’ rights so court proceedings should be avoided where possible but if there is any discrepancy, both parties should enlist the help of a professional commercial property solicitor.

‘Contracting Out’

All commercial tenants will have renewal rights but if a landlord wants to avoid this then they may have the option to ‘contract out’ of the Landlord and Tenant Act.

A ‘contracted out’ agreement means that when the tenancy comes to an end the tenant has no right to remain under the terms of the lease. Any further stay must involve negotiations from both sides.

In order to ‘contract out’ the landlord must give formal notice to the tenant who must reciprocate their understanding by making a declaration.

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