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Reform of Part II

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Reform of Part II

Review of the 2004 Reforms

Changes to Part II of the Landlord and Tenant Act 1954 came into effect on 1 June 2004. They were brought about by The Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (SI No. 3096).

The impact of these reforms was subsequently reviewed by the Government and recommendations for further change, to improve the system further, were published by the Government in October 2006. None of these further changes have been brought into effect. The recommendations were as follows:

Contracting out

The notice procedure to be amended so that it is made clear that it is not necessary to serve a fresh notice if the terms of the lease change, ie the notice will not be specific to the lease granted. However, the declaration (simple or statutory) will specifically refer to the actual lease granted as well as referring back to the notice served.

The notice will make it clear that a simple declaration should not be signed until 14 days have elapsed but after that it may be signed at any time before the tenant enters into the lease (or, if there is one, the agreement for a lease).

If a statutory declaration is signed but then more than 14 days elapse before the lease is granted (or agreement entered into) it will not be necessary to serve another notice and sign another declaration.

There will be no need to repeat the process if the identity of the landlord changes between an agreement for a lease and the actual grant.

The regulations will make it clear that it is possible to serve the notice on an authorised agent for the tenant. (Ditto in relation to the provisions relating to agreements to surrender).

The Act will be amended to make it clear that it is not necessary to follow the notice / declaration procedure where (under a contracted out lease) the landlord is requiring a guarantor to take a lease pursuant to a put option in the original lease. It will not be necessary to serve the notice on the guarantor either at the time of the original lease to the tenant or at the time that the landlord is requiring the guarantor to take a lease pursuant to the guarantee.

The Act will be amended so that it is not necessary to follow the notice / declaration procedure where a tenant is seeking to exercise an option to renew a contracted out lease; or to take a further lease of different premises where the original lease was contracted out.

The procedure will be amended to enable an owner-occupier to enter into a sale and leaseback contract at auction without the need for the parties to comply with the normal contracting out procedure.

Where it will no longer be necessary to usual the normal contracting out procedures (for one of the reasons referred to above) the lease or agreement for lease will have to contain a clear statement that the lease is contracted out and setting out the provision under which the normal procedure has been waived.

Ownership and control of businesses

The provisions in the Act on ownership and control will be amended so that it will be possible to renew a tenancy held by individual members of an LLP where the business occupation is by the LLP as a corporate body.

Section 40 notices

Section 40 will be amended so that a tenant occupying a part of the premises for the purpose of the business will have to state which part. Similarly a reversioner (or mortgagee in possession) of part will need to indicate which part.

Section 25 notices - s26 requests

The Act will be amended so that it is made clear that it is necessary to set out proposals for duration of the new tenancy as well as the details of the property to be comprised in the new tenancy, the rent payable and the other terms.

Landlord's application for renewal

Some landlords have been reluctant to apply for renewal because there is no provision for costs if the tenant informs the court that it does not want to take a new tenancy. Section 29(5) will be amended to enable the court, before dismissing the application, to invite the parties to apply for an award of costs. Section 64(1) will also be amended so that the tenancy will terminate three months from the date on which the tenant informed the court that he did not want a new tenancy.

Agreements to surrender

The Act will be amended to make it clear that it is possible for a tenant to enter into an agreement to surrender part, as opposed to the whole, of the premises.

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