Business Tenants: The right to a long lease or compensation.

A commercial tenant who has been in occupation of a business premises for a period of five years is entitled to a new tenancy at the expiry of the short term tenancy under the Landlord and Tenant Act 1980.

A new tenancy may be restricted on a variety of grounds set out in Section 17(2)(a) of the Act of 1980. A tenant is not entitled to a new tenancy where the landlord intends or has agreed to reconstruct the buildings or any part of the buildings and has planning permission for the work. Alternatively, the landlord may require vacant possession for the purpose of carrying out a scheme of development of property which includes the tenement and for which he has planning permission. A further restriction on the right to a new tenancy is where for any reason the creation of a new tenancy would not be consistent with good estate management, for instance, to get the right mix of tenants in a shopping centre.

If the Court is satisfied that the tenant is not entitled to a new tenancy on any of the preceding grounds, the tenant will be entitled to compensation for disturbance. The measure of compensation is loss, damage or expense which the tenant sustains or incurs or will sustain or incur by reason of quitting his tenement and which is the direct consequence of that quitting. Landlords can avoid the effects of the Act by having the tenant sign a renunciation at the time it enters into the lease. For tenants who have not signed a renunciation, they can be confident they can continue to occupy their business premises and enjoy the good will they have built up in that premises as long as they pay their rent.

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