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The tenant’s ‘holding’, for the purposes of ss 23(3) and 32 of the Landlord and Tenant Act 1954 (LTA 1954), includes all the property comprised in the tenancy but excluding any part not occupied by the tenant or an employee for business purposes. The tenant has no right to a new lease for any part that doesn’t fall within this.
Given that the first floor is sublet, is the holding then limited to the ground floor only? If so, then the landlord need only offer a new lease of the ground floor and no compensation would be payable for the first floor.
If, however, the holding does include the first floor, then the landlord’s notice will likely be invalid for failing to offer a new tenancy of the whole. The landlord should instead h
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