When is an Outside The Act Lease "Inside The Act"?
The 1954 Landlord and Tenant Act gave the right for Tenants whose Leases Expire, the ability to renew at market rental terms, unless the Landlord wants the premises for redevelopment or substantial reconstruction, owner occupation, or three other more minor reasons.
However, many Outside The Act Leases, today have been negotiated, from a position where the Tenant was previously inside The Landlord and Tenant Act, and for a Lease to be outside The Act the lease granted, has to be for a "Term Certain", namely, commencing on one day and expiring on another.
Many of the old Leases from which these new Leases were derived, included such words as to hold the premises for a term expiring December 2024, and any period of holding over or extension of it whether by Statute, Common Law, or by Agreement.
A Lease with those terms would invalidate the "Contracting Out" provisions, and the Tenant is therefore entitled to a renewal of the Lease under The Act. Even if the Landlord terminates for a good reason, the Tenant is entitled to Statutory Compensation, once the rateable value, if he has occupied for under 14 years, and twice if over.
He also has the right to fight his corner on renewal and can delay the Landlord's timing by so doing, in most cases for almost a year after expiry, often compromised by the Landlord offering Statutory Compensation plus an inducement to vacate on time.
The moral of the story is that the devil is in the detail, and Landlords and Tenants are advised to check their Leases, before assuming that because the parties contracted to be Outside The Act , that those provisions apply.
The Professional Department of The Lorenz Consultancy, who specialise in Lease renewals for Landlords and Tenants, have only seen a few of these, but checking for such wording is high on our checklist, before entering into any such negotiations.