The reforms to the Landlord and Tenant Act 1954 which came into force on 1 June 2004 changed the timings for making applications to court for renewal of a business tenancy and permit landlords and tenants to agree extensions of time within which to make applications. In a recent county court case, in which we successfully acted for a landlord, the court considered what constitutes an agreement to extend time, and the consequences of not reaching agreement. We believe this may be one of the first cases to test these new provisions of the 1954 Act.
To ensure its application to the court for a renewal tenancy is valid, a tenant must have commenced proceedings by the date specified in a Section 25 Notice or the day before the date in the Section 26 Request unless the parties have agreed to extend the time for doing so.
If no agreement to extend time is reached and no application to Court is made by this date, the tenancy will come to an end. The tenant will lose its right to a new tenancy and the landlord will be entitled to possession. It is important, therefore, to ensure that the procedural requirements are complied with. A valid agreement to extend time must:
- be reached after the giving of the notice but before the termination date specified in the notice;
- be for a specified period – it cannot be a general extension of time; and
- be in writing.
If no agreement is reached and no application is made, the court will not have any jurisdiction to deal with the renewal tenancy and can strike the claim out.
In our case the tenant sought to argue that a general extension of time had been agreed and that the landlord had waived compliance with the statutory procedures by a general representation in its letter serving a section 25 notice that the landlord would not oppose any application to renew. The court found there could be no general extension of time and that the 1954 Act provided a procedure for extending time that cannot be waived.
The loss by tenants of the right to renew the tenancy will, for landlords, improve their negotiating position, and for tenants result in damage to its business. It is essential, therefore, to diarise the dates and ensure that either an application is made or an agreement entered into.
For more information on this or other 1954 Act queries please contact Danielle Drummond-Brassington on [email protected] or 020 7367 2768 or Caroline DeLaney on [email protected] or on 020 7367 2329.