Many landlords want certainty about their future use of a property once their tenant's lease term expires. When negotiating a lease, a landlord a will often want to exclude the 'security of tenure' provisions of the Landlord and Tenant Act 1954 (LTA 1954), meaning that the tenant's statutory right to remain in the premises at the end of the contractual term (and to renew on similar terms) is taken away.
Where parties wish to exclude the operation of the security of tenure provisions of the LTA 1954, by 'contracting out', it is important to avoid the "Thomas-Van Staden Trap" set out in the 2008 Court of Appeal case of Newham London Borough Council v Thomas-Van Staden.
This case involved a Lease that was contracted out of the security of tenure provisions of the 1954 Act, however at the end of the specified term of the Lease, the Tenant remained in occupation of the Property. As such, the Landlord then served notice in accordance with the Lease, requiring the Tenant to give up occupation, which the Tenant did not.
It was held by the Court of Appeal that, although the contracting out procedure was both intended and implemented, the Tenant actually had acquired security of tenure, and as such had an automatic right to remain in occupation of the Property upon the expiry of the Lease. The reason for this decision was because the definition of the term within the Lease was not for "a term of years certain" and instead referenced a continuation of the term. Consequently, without the Lease providing certain predictability as to when the term will come to an end, the attempts to exclude security of tenure under LTA 1954 were not valid.
Accordingly, where a commercial Lease is intended to exclude the operation of the security of tenure provisions of the LTA 1954, regardless of the contracting out procedure being correctly implemented, the term of the lease must be stated so as to be granted for a term certain (and provide no ambiguity as per the wording within the case of Thomas-Van Staden).
The above trap should particularly be considered where a renewal of a commercial lease is granted. This is to ensure that the new lease does not inadvertently repeat the continuing term of the previous protected lease where the new lease is to exclude the security of tenure provisions. Landlords may not even be aware that their existing leases are drafted in this way and so special care and attention should be given as to the drafting of the 'term' of any lease moving forward.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.