Factsheet 33 - Business, Agricultural and Mixed Use Tenancies

  

Business, Agricultural and Mixed Use Tenancies

Landlord & Tenant Act 1954, Agricultural Holdings Act 1986 and Agricultural Tenancies Act 1995
Regulatory Reform (Business Tenancies) (England and Wales) Order 2003
Small Business, Enterprise and Employment Act 2015 

Business Tenancies:

Over time, business tenancies have enjoyed a increasing degree of protection under the law. A business trading from a particular location will come to be known in the locality over time, building up goodwill and reputation. This goodwill together with the high costs that can be associated with fitting out commercial properties needed protection. The statute that currently applies to business letting is provided under the Landlord and Tenant Act 1954 (LTA 1954).

A person or entity will be a business tenant if:

  • Possession of the premises is held under a tenancy; and
  • The tenant occupies at least part of the premises; and
  • The premises or that part of the premises are occupied for the purposes of carrying on a business

Like the statutory codes applying to residential tenancies, there are two main effects to the Landlord and Tenant Act 1954; security of tenure and rent control. Business tenants have the general right to have their tenancies renewed. A business tenant will also be entitled to compensation for improvements.

Rent control is provided under the 1954 Act to prevent landlords forcing rent rises on tenants significantly over the market rate. Tenancies under the Landlord and Tenant Act 1954 will be continued automatically and the landlord will need to follow a procedure specified in the Act before the tenancy can be brought to an end.

These rights are similar to those available to tenants occupying under residential tenancies, yet there are important differences between the codes, and they are mutually exclusive. They provide different security of tenure and procedures for ending the tenancy. A tenant holding a business tenancy under the LTA 1954 will generally have greater security than the tenant holding an assured shorthold tenancy under the Housing Act 1988.

Mixed Use Tenancies:

With more people working or running a business from home, there are an increasing number of tenancies which classify as ‘mixed use’ tenancies (i.e. where there is a degree of both residential and business use). The distinction can be complex, and the type of tenancy that exists in each case will depend on a number of factors including the degree of business/residential use and the intents of the parties when the tenancy was created.

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