Commercial Law Update: Major Change to Landlord and Tenant Legislation
There have been important changes made recently to the legislation governing the relationship between commercial landlords and tenants in this jurisdiction. Prior to the amendments, it was not possible for the majority of tenants of commercial premises to “contract out” of their right to a new tenancy. The applicable law provided that a retail or industrial tenant had a statutory right to a renewal of its existing commercial lease after it had leased its premises for five years or more. Accordingly, many commercial landlords were only willing to grant short term leases for periods of 4 years and 9 months for example.
The recent amendments to the Landlord and Tenant Legislation make it possible for a tenant of commercial premises to “contract out” of its statutory right to a new tenancy. This means that it is now possible for the owner of commercial premises to grant a lease of his/her premises for in excess of five years, safe in the knowledge that the tenant will not have any renewal rights. The tenant must however receive independent legal advice and sign a waiver of its statutory rights in order to meet the requirements of this new legislation.
These changes are capable of having a significant effect on the commercial rental market. The ability to prevent renewal rights had previously been available to tenants of office premises only, but the amendments extend it to the market at large. Landlords will no longer feel confined to granting leases of less than five years duration and this may result in a greater liberalisation of the market as a whole. These changes must be welcomed in the context of the current downturn in the market.
For further information or advice in relation to this new development please contact the following solicitors on our Commercial Property Team:
02 October 2008