Definition of contractual term in a lease
and its impact on security of tenure under
the Landlord and Tenant Act 1954
FEBRUARY 2009
A recent decision of the Court of Appeal highlights the importance of
property defining the contractual term in a lease, when a landlord if
seeking to exclude security of tenure provisions.
Facts of The London Borough of Newham v Thomas [2008]
This case concerned two claims for possession by the London Borough of
Newham (the
Landlord) against the tenant. The landlord originally granted the tenant a
lease of business premises, prior to which the parties obtained a court order
to exclude the security of tenure provisions of the Landlord and Tenant Act
1954 (LTA 1954). Following the contractual term expiry date, the tenant
had remained in occupation following the contractual term expiry date.
The lease term was defined to include “any period of holding over or
extension” (known as the continuation wording).
The Court’s decision
The Court of Appeal held that the continuation wording meant that the
lease had not been granted for “a term of years certain” and therefore
could not be contracted out. The landlord was not entitled to an order for
possession, as the tenant had security of tenure under the LTA 1954.
Impact of the decision
It seems that for a lease to be validly contracted out, it is crucial to delete
the continuation wording. If this wording is not omitted, the lease will be
deemed not to be granted for a “term of years certain” and the tenant will
be protected by the LTA 1954 provisions.
In order for the lease to be successfully excluded from the LTA 1954, it must
be “for a term of years certain.” It will meet this requirement if it is for a
fixed term, or if it is for a fixed term with a break clause. However, the
lease will not be validly contracted out if granted for a fixed term and then
from year to year or for a fixed term, together with “any continuation,
extension or holding over.”
When a contracted out lease is due to expire, a landlord should make
arrangements with the tenant for the handover of the premises. If the
tenant does not vacate on the expiry of the term, the landlord should take
possession action as soon as possible.
If you would like further information on the content of this newsletter please
contact James Daglish on 0207 404 0606 or jdaglish@gdlaw.co.uk.
This is a guide for general information and interest and should not be relied upon as providing specific legal advice. |
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