Exemption from the 1954 Landlord and Tenant Act: A Comprehensive Guide

What Does Exemption from the Act Mean?

Exempting a lease from the 1954 Act means that the tenant does not have the automatic right to renew the lease at the end of its term. This provides landlords with greater flexibility and control over their properties.

Key Consequences:

• No Automatic Renewal: Tenants do not have an automatic right to remain in the property once the lease expires.
• Flexibility for Landlords: Landlords can decide whether to offer a new lease or reclaim possession without needing to justify the decision.
• Potential Uncertainty for Tenants: Tenants may face uncertainty about their business location and might need to relocate at the end of the lease term.

How to Ensure a Lease is Outside the Act

To ensure a lease is exempt from the 1954 Act, specific steps must be followed:

1. Agreement to Exclude: Both parties must agree to exclude the lease from the Act before it is granted.

2. Serve Formal Notice: The landlord must serve a formal notice (Section 38A Notice) on the tenant, informing them that the lease will be excluded from the Act.

3. Tenant Declaration: The tenant must sign a declaration confirming receipt and understanding of the notice, agreeing to the exclusion.

4. Include in Lease Agreement: The lease document must explicitly state that the parties have agreed to exclude the lease from the Act.

Special Consideration: Tenant Moving in Sooner than 14 Days

If the tenant is moving into the property sooner than 14 days after receiving the Section 38A notice, a more formal process is required:

Steps for Exclusion When Moving in Sooner than 14 Days:

1. Serve Section 38A Notice Promptly: Serve the notice as soon as possible before the lease is granted.

2. Statutory Declaration: The tenant must make a statutory declaration in the presence of an independent solicitor or commissioner for oaths, confirming receipt and understanding of the notice and agreeing to the exclusion.

Example of Statutory Declaration Wording:

I, [Tenant’s Name], of [Tenant’s Address], do solemnly and sincerely declare as follows:

1. I have received a notice in the form prescribed by the regulations made under section 38A(3) of the Landlord and Tenant Act 1954 (‘the Act’) notifying me that sections 24 to 28 of the Act are to be excluded in relation to the tenancy to be created by a lease of the premises known as [Property Address].

2. I have read and understood the notice referred to above, and I accept that the lease to be granted to me will not have the protection of the provisions contained in sections 24 to 28 of the Act.

3. This declaration is made for the purpose of satisfying the requirements of paragraph 4(3) of Schedule 2 to the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003.

Declared by [Tenant’s Name] at [Place], this [Day] day of [Month], [Year].

Signed: __________________________

Declared before me, [Name of Solicitor or Commissioner for Oaths], this [Day] day of [Month], [Year].

Signed: __________________________ [Name and Title of Solicitor or Commissioner for Oaths]

Steps to Ensure Compliance

1. Inform the Tenant: Ensure the tenant fully understands the exclusion and its implications.

2. Serve Notice and Arrange Declaration: Serve the Section 38A notice and help the tenant arrange for the statutory declaration if necessary.

3. Document Everything: Keep copies of the notice, the statutory declaration, and any related correspondence.

4. Lease Agreement: Clearly state in the lease agreement that the lease is excluded from the 1954 Act provisions.

By following these steps, you can ensure that the lease is legally exempt from the 1954 Landlord and Tenant Act, providing greater flexibility and control over your property.

When Tenants Are Not Excluded from the Act: Understanding Rent for New Leases

When a tenant is not excluded from the Landlord and Tenant Act 1954 and wishes to renew their lease, the process for determining the rent for the new lease is governed by the provisions of the Act.

Can the Landlord Set Any Rent?

No, the landlord cannot arbitrarily set any rent they wish. The rent for the new lease must be fair and is subject to specific guidelines set out in the Act.

How Is the Rent Determined?

The rent for the new lease is typically determined through negotiation between the landlord and tenant. However, if an agreement cannot be reached, the rent can be determined by the court.

Key Factors Considered:

1. Market Rent: The rent should reflect the market value of the property at the time the new lease is granted.
2. Property Condition: The condition of the property and any improvements made by the tenant may be considered.
3. Lease Terms: The terms and conditions of the new lease, such as length of the lease and any restrictions, will also influence the rent.

Rent Determination Process

1. Negotiation: The landlord and tenant should first try to negotiate and agree on a fair rent for the new lease.
2. Court Determination: If negotiation fails, either party can apply to the court to determine the rent. The court will consider the factors outlined above and set a rent that is fair and reasonable based on the current market conditions.

Example of Court Consideration Factors:

• The open market rent for similar properties in the area.
• The terms of the new lease compared to other leases.
• Any improvements made by the tenant which should not unfairly increase the rent.

Summary of Steps

1. Negotiation: Attempt to negotiate a fair rent based on market value.
2. Application to Court: If negotiation fails, apply to the court for rent determination.
3. Court Consideration: The court will assess all relevant factors and set a fair rent.