| Understanding
Business Tenancies by
Dr David Smith of Pain Smith Solicitors* PainSmith
Solicitors Legal Advisor 22nd
June 2007 Many
agents and landlords fail to understand the key differences between a commercial
or business tenancy and a residential tenancy. This matter is becoming increasingly
important as individuals work-life balance changes and more flexible working practices
a e adopted. Frustratingly, the law has failed to keep pace with such changes
in lifestyle and finds itself lagging behind society in this area. Tenancies
can either be commercial tenancies or residential tenancies; there is no half-way
house. Concepts such as live-work, while they exist as planning categories, do
not apply to landlord and tenant law. The test for whether a tenancy is commercial
or residential in nature is based entirely on the tenant's authorised use of the
property. If
a tenant is using a premises overwhelmingly for residential use then the Courts
will construe it as a residential tenancy. Therefore a businessperson who works
from home in the evenings or a doctor who occasionally sees patients at home will
both be residential tenants. By contrast, a property with any significant commercial
use will be seen as a commercial tenancy even if it also has a residential component.
Therefore a tenant who runs a business from home, or who works primarily from
home and sees clients there regularly will normally be viewed as a commercial
tenant. Particular care should be taken in regard to self-employed persons in
this context. Any self-employed individual should have a business address and
workplace entirely separate from the rental property address otherwise the risk
of inadvertently creating a business tenancy will be high. It should also be remembered
a tenant who rents residential premises for the purpose of running a business
providing accommodation will also be a commercial tenant. This is increasingly
common at the moment, particularly in London. However
, this only applies to authorised usage. A tenant who uses premises for commercial
reasons without permission will not be a commercial tenant. However, the fact
that the tenancy agreement excludes business use will not necessarily be sufficient
to protect the landlord. A landlord or agent who authorises a tenant to use the
premises for business purposes will be consenting to that use and c eating a business
tenancy, notwithstanding any provision to the contrary in the actual written agreement.
If
a tenancy is a business or commercial tenancy it is held under the terms of the
Landlord & Tenant Act 1954 ("the '54 Act"). This is a very different piece of
legislation to the legislation that covers residential tenancies, such as the
Housing Act 1988. One of the key provisions of the '54 Act is that it provides
indefinite security of tenure to most tenants. This means that at the end of their
tenancy a commercial tenant can seek a new tenancy on similar terms to the previous
one and, if the landlord rejects this, can apply to the Court for a new tenancy.
While there are ways of avoiding this they are complex and must be done before
the start of the tenancy. Landlords and agents would be very unwise to enter into
any form of commercial tenancy without taking legal advice and clearly understanding
their rights and obligations. Commercial
tenancies escape much of the legislation that will normally apply to residential
tenancies. So, for example, the obligation of the landlord to keep the property
in repair as required by section 11 of the Landlord & Tenant Act 1985 will not
apply and the landlord and tenant are free to come to whatever arrangement they
see fit regarding repairs to the property. In fact, it is currently common for
commercial tenants to take responsibility for all repairs and decoration in the
premises they rent. However, while the Protection From Eviction Act 1977 will
not apply to a purely commercial tenancy it will apply where the tenancy has a
mixed commercial and residential component. So, where the tenant is legitimately
residing in the Premises a landlord will still need to go to Court to regain possession
even if the property has been let on a commercial tenancy. This
information has been supplied by*
PainSmith Solicitors who are a niche practice specialising in Landlord and Tenant
Law. Based in Medstead in Hampshire, they are ideally situated to provide an efficient
service to clients nationwide as well as those based in Central London and the
Home Counties. ________________________________ *Safety
Glass and Defective Premises Act - The Information on a Court of Appeal decision
(7th February 2007) regarding the Defective Premises Act 1972 For full article
Click
Here ________________________________ *See
also Implementation of the Regulatory Reform (Fire Safety) England & wales)
Order 2005 Click
Here ________________________________ *See
also Commercial
Rent Arrears Recovery - April 2008
Click Here ________________________________ *See
also Duty of Landlords To Mitigate Loss Click
Here ________________________________ *See
also Going Smoke Free - England July 2007 Click
Here ________________________________ *See
also Energy Performance Certificates in Let Property
- 29
January 2008 Click
Here ________________________________ Back
to Property Information ________________________________
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are members of the National
Landlords Association (NLA) in the UK
and Riviera
Business Club (RBC) in the Côte d'Azur France
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