Letting Factsheets Factsheet 33 - Business, Agricultural and Mixed Use Tenancies
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Business, Agricultural and Mixed Use Tenancies(Landlord & Tenant Act 1954, Agricultural Holdings Act 1986 and Agricultural Tenancies Act 1995)
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:
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. The Landlord and Tenant Act 1954 provides that a tenancy will come under the protection of the Act if the premises are occupied for the purposes of a business carried on by the tenant 'or for those and other purposes'. Where those 'other purposes' are residential, then there will be an inevitable conflict between the two statutes. The landlord may want to argue that the letting falls under the residential statutes whereas the tenant, in order to gain greater security of tenure, or simply to complicate matters for the landlord, may claim protection under a business tenancy. In law, the two sets of statutes are mutually exclusive. If a tenancy falls within the 1954 Act, then it will be excluded from being an assured or AST tenancy. Where there is mixed residential and business use, it will be important to determine which statute will apply. Under the Landlord and Tenant Act 1954, the business use of a premises must be a significant purpose of the tenant's occupation of the premises. Considering such cases is not easy, and it will be a question of fact and degree. At one end of the scale is the tenant who is perhaps employed, merely bringing work home in the evenings. At the other end is the tenant who runs his business entirely from home. There are plenty of cases of partial business use that fall between the two above examples. It is generally accepted that a residential tenant may wish to bring home papers or other work to complete after work, and this would not normally lead to an assumption of business use. However, when considering the borderline cases, it is often useful to look at the case law on the subject.
Agricultural Tenancies:Agricultural tenancies and lettings which include more than two acres of agricultural land are generally excluded from being assured tenancies under the Housing Act 1988. A tenancy of an agricultural holding used to fall under the protection of the Agricultural Holdings Act 1986 (an Act consolidating the earlier law), and conferred lifetime security of tenure to both the tenant and any successor (although this right of succession was later repealed for tenancies granted after July 11 1984). However, tenancies for a fixed term of between one and two years fall outside the protection of Act. For this reason, landlords frequently used these shorter tenancies to avoid giving statutory security to short-term tenants. The Agricultural Holdings Act 1986 has now been superseded by the Agricultural Tenancies Act 1995 (ATA) which took effect on September 1 1995, although the Agricultural Holdings Act will continue to apply to agricultural lettings which commenced before this time. ATA creates a new class of "farm business tenancy" and security of tenure no longer applies to these new tenancies. But these tenancies will endure on a year-to-year basis until terminated.
Sources for Further Information:
This summary is intended to assist landlords and letting agents to understand the effect of the legislation. It is not an authoritative interpretation - this is a matter for the courts. For more detail, you should refer to the text of the Act itself.
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