Contracting out of the Landlord and Tenant Act 1954—procedures, timing and pitfalls
Contracting out of the Landlord and Tenant Act 1954—procedures, timing and pitfalls

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Contracting out of the Landlord and Tenant Act 1954—procedures, timing and pitfalls
  • Why contract out?
  • Contracting out—how it works
  • The landlord’s notice
  • The tenant’s declaration
  • Must the lease be in agreed form?
  • Term commencement date
  • Endorsing the instrument
  • Guarantors and other parties
  • Options and surrender back clauses
  • more

Why contract out?

The Landlord and Tenant Act 1954 (LTA 1954) gave tenants of business premises security of tenure—in other words, the right to stay on in their premises after the expiry of the contractual term of the lease.

A landlord who grants a tenant a lease with security of tenure can only bring the lease to an end and regain possession of the premises by following the procedures set out in the LTA 1954. Even then, the landlord must be able to establish one of the limited statutory grounds for possession laid out in LTA 1954, s 30 and successfully obtaining possession is likely to involve the payment of compensation to the tenant.

A tenant who has security of tenure under the LTA 1954 is therefore in an extremely strong negotiating position if its landlord wishes to obtain vacant possession (eg to redevelop the premises) and the presence of a protected tenant can lead to delay, and add to the cost, of any project proposed by the landlord.

Fortunately for landlords, a mechanism exists for leases to be excluded from—or ‘contracted out’ of the LTA 1954 and where a tenant has agreed to exclude its tenancy from the LTA 1954, it is essential for the landlord to ensure that the exclusion is valid.

Contracting out—how it works

LTA 1954, s