Commercial lease - what happens with rent reviews if the lease rolls over at the end of its term?

fairy2

I wonder if there are any solicitors out there with experience of commercial leases? My friend has asked me to look at a lease for him but I am unsure of the answer to his question. It is a fixed term lease which finishes at the end of this year and contains the procedure for two rent reviews to take place on two set dates during the term. The lease contains no provisions as to what governs the lease if it just rolls over and my friend just keeps paying the rent. The landlord has not responded to any of his communications over the last few months. As far as I can see the lease doesn’t contain anything that talks about the next rent review period if the lease rolls over. Does anyone know what would then govern the rent review period going forward? Is there any implied law in this situation? What are the pitfalls he should be aware of in this regard if he does just let it roll? Please can somone point me in the right direction of anything to read on this. Thanks very much.

AdrianC

This is one for paid legal advice.

davidmcn

If the rent reviews are only on specific dates and not say "every five years" then there are no further reviews.

G_M

Can/do commercial leases roll over?

If yes, then from what you say I assume the rent would remain the same indefinately since the only specified rent review dates are already past.


My guess would be that if

* the lessee requests an extension and/or to roll over and
* the lessor does not respond and
* the lessor makes no efforts to reclaim the property (eg requesting keys) and
* the lessee continues to occupy and pay rent and
* the lessor acepts ongoing rent after the end of the contract period
then there must be implied an ongoing lease, and in absence of any agreed new terms, the terms must be as before.

da_rule

Does the lease fall within the Landlord and Tenant Act 1954 or has it been contracted out?

fairy2

AdrianC wrote: »

This is one for paid legal advice.

Yes agreed. Sadly the solicitor does not seem to know the precise position!?"

AdrianC

Then find a solicitor with commercial lease experience...?

I'd agree with the others as to the most likely outcome - that if the lease specifies hard dates, then they're the only dates that can be enforced. But there may be default periods buried in the legislation.

fairy2

da_rule wrote: »

Does the lease fall within the Landlord and Tenant Act 1954 or has it been contracted out?

I looked for this. I cannot find anything explicit about contracting out from the 1954 Act indeed I can find no reference to the 1954 Act at all so assume not. Rather confusingly I can find a few references to an earlier Landlord and Tenant Act - so that, for example, the tenant may not sublet the whole of the premises without prior landlord consent provided that the landlord shall be entitled to withhold consent for the purposes of section 19 of the Landlord and Tenant Act 1927.

Just seen this is an underlease and the headlease is over 50 years old between the landlord and its landlord. I do not have a copy of that but if the head lease was opted out of the 1954 Act do you assume this one is also?

G_M

I think you are in the wrong place. Most of us (certainly me and I suspect others) are giving best guesses.


You need a specialist. If your solicitor does not know, find one who does.

da_rule

Provided the underlease meets the criteria set out in section 23 of the 1954 Act then it will have security of tenure (even if the headlease does not). This may be one of the reasons your friends landlord is not engaging with him, as the underlease may constitute a breach of the headlease by not being contracted out).

However, as there is security of tenure your friend will be 'holding over'. They will continue to pay the same rent, without review (as the reviews took place on specific dates rather than say "every 2 years").

You say your friend has contacted the landlord, but has this contact been in the form of the prescribed notice under section 26? If so, have they made the relevant court application to protect their position? If a section 26 notice has not been served then it is too late (it must be served 6-12 months before the end of the fixed term). They can continue to hold over, and if the landlord accepts rent, then a periodic tenancy may be implied (a tenancy at will may also be implied, but this is generally only implied where a new lease is being terminated).

Tom99

Its very different from residential property, comes under L&T Act 1954 (Part 2)
Lots of useful guidance here:
https://www.gov.uk/government/publications/renewing-and-ending-business-leases-a-guide-for-tenants-and-landlords
Some type of tenancy are excluded from the Act e.g. farming, fixed term of 6mths or less and the tenancy could have been contracted out if both partied agreed.
Renewal is started by landlord serving Section 25 Notice of Tenant serving Section 26 Notice.
If no notices served by either party and tenant continues to occupy beyond fixed end date then rent has to continue to be paid (presumably at same rate as day before end date) and give 3mths notice to end obligation to pay rent.
Here is the Act:
https://www.legislation.gov.uk/ukpga/Eliz2/2-3/56/contents