From 1 June 2004 procedures changed for excluding the security offered to business
tenancies by sections 24 to 28 of the Landlord and Tenant Act 1954. It is no longer
necessary to apply to the Court to obtain a Order authorising the agreement reached by
the landlord and tenant to exclude the security of tenure provisions. Instead, the new
procedure to follow involves compliance with the three steps as set out below. Failure
to follow this procedure could see the tenant acquiring the security of tenure provided
by the LTA 1954.
Step 1 – Notice
The landlord must serve on the proposed tenant a notice in a prescribed form
containing a “health warning”. The “health warning” explains to the proposed tenant the
effect of entering into a contracted-out tenancy, the most important point being that the
tenant will have no right to stay in the premises once the lease ends. The notice must
be served before the new tenancy is entered into or the tenant becomes contractually
bound to enter into it. However, the landlord should only serve the notice on the tenant
once the terms of the new lease have been agreed (or the lease is substantially in its final
form) so as to avoid the risk of the notice subsequently being held to be invalid. Whilst
not specifically required, it is good practice to attach a copy of the draft lease to the notice
itself.
Step 2 – Declaration
Once the notice has been served, the proposed tenant must either sign a declaration or
swear a statutory declaration.
• Notice served at least 14 days before the tenancy is granted/tenant becomes
contractually bound:- tenant signs declaration.
• Notice served less than 14 days before the tenancy is granted/tenant becomes
contractually bound:- tenant swears statutory declaration before a solicitor.
Both the declaration and the statutory declaration must be in the prescribed form. Both
declarations confirm that the tenant has received the landlord’s notice containing the
“health warning”, that the tenant has read that notice, and that the tenant accepts the
consequences of entering into a contracted-out tenancy.
Step 3 – Note in lease
The new lease must refer to:
• the service of the landlord’s notice;
• the declaration or statutory declaration made by the tenant; and
• the parties’ agreement to exclude the provisions of sections 24 to 28 of the Act.
It is good practice to store copies of the landlord’s notice and the tenant’s
declaration/statutory declaration with the lease.
More information
RPS Ltd, www.rpsltd.co
This information has been prepared by
RPS Ltd as a general
guide only and does not constitute
advice on any specific matter. RPS Ltd
recommend that you seek professional
advice before taking action. No liability
can be accepted by us for any action
taken or not taken as a result of this
information.