Security of Tenure

Introduction

**Security of tenure** refers to the legal rights and protections afforded to tenants, particularly in the context of **lease renewals and terminations**. For business tenants, the central statute is **Part II of the Landlord and Tenant Act 1954** ('the 1954 Act'), which can keep a business lease alive beyond its contractual expiry and give the tenant a right to a new tenancy. This chapter covers **when the 1954 Act applies (s. 23)**, the **seven methods of termination**, the impact of the **Landlord and Tenant (Covenants) Act 1995** on privity and assignment, **contracting out**, the **s. 25 / s. 26 / s. 27 notices**, the landlord's **grounds of opposition**, **compensation and interim rent**, the **terms of the new lease**, **SDLT** on holding over, and the **Economic Crime (Transparency and Enforcement) Act 2022** register of overseas owners.

Assessment focus

Security of tenure is a **high-yield SQE1 FLK2 topic** within Property Practice. You must be able to determine, on a client scenario, **whether a business tenancy is protected by the 1954 Act**, identify the **correct method and timing of termination**, and advise on the **landlord's grounds of opposition** and the tenant's entitlement to **compensation** and a **new lease**. The SBAQs are highly fact-sensitive: candidates are routinely tested on the **six-to-twelve-month window** for a s. 25 notice or s. 26 request, the **fault v no-fault grounds** distinction (compensation only for no-fault grounds), the **double-compensation** threshold (occupation of 14 years or more), and the rule that an **exclusion of the right to compensation is void** where the tenant and predecessors have occupied for **five years or more**. This is a closed-book assessment — recall the section numbers, time limits and grounds from memory.

Study tips

1) Memorise the **s. 23 test**: the premises must be **occupied by the tenant for the purposes of a business**. 2) Learn the **seven methods of termination** and which require a statutory notice. 3) For the **s. 25 notice and s. 26 request**, remember the **not less than 6 nor more than 12 calendar months** window, and that **calendar months** matter (there is no 31 February). 4) Distinguish **fault grounds (a)–(d)** — no compensation — from **no-fault grounds (notably s. 30(1)(g), landlord's own occupation)** — compensation due. 5) **Compensation**: rateable value (Valuation Office Agency); **double** if occupied for **14 years or more**; an exclusion is **void** if the tenant and predecessors occupied for **5 years or more**. 6) **New lease**: court may grant on **such terms as it determines**, at **open market rent**, term **not exceeding 15 years**, and **may** include a rent-review clause even if the old lease had none. 7) Note the **1995 Act** abolition of privity of contract for leases from **1 January 1996**, the **AGA**, and the **reasonableness** requirement for consent to assign.