On 1 January 2018 the Central London County Court (“CLCC”) commenced a pilot scheme to deal with unopposed business lease renewals pursuant to the Landlord and Tenant Act 1954 (“1954 Act”). Landlords and tenants of Central London properties need to be aware of this.
If a tenant occupies premises for the purpose of its business and the lease has not been contracted out of the 1954 Act, the tenant has the right to:
If the landlord is not opposed to granting the tenant a new lease, the parties can commence negotiations for the terms. The starting position is that, other than the rent which is to be the open market rent, the terms are to be similar to the existing lease subject to reasonable updating. If either party wants to change the existing terms then they need to show good reason for doing so. If agreement cannot be reached either party can make an application to the court to determine the terms of the new lease.
In the majority of cases, even where proceedings are issued, a court determination is rare because the parties eventually reach agreement. Where agreement is not reached, it can take a long time to get before a judge and incur significant cost. Even then, the judge may not be a property specialist.
In order to address the above and because the court considers such applications should be able to be dealt with quickly, any unopposed lease renewal application now issued in the CLCC will automatically be transferred to the First Tier Tribunal (Property Chamber) (“FTT”) to be dealt with. The FTT will issue standard directions and aim to deal with each application within 20 weeks of the date of issue. The tribunal judge will determine the application alongside a valuer (but London valuers are excluded due to potential conflicts).
The standard directions will include the following:
If overall, the scheme is a success, it may be rolled out to the regional courts and all unopposed lease renewal applications. Parties will therefore need to focus on unopposed lease renewals at an early stage and be aware that, once issued, proceedings will move quickly.
Karen Mitchell, Associate, Fladgate LLP (email@example.com)