When a tenant outstays its welcome

Most commercial leases nowadays are contracted out of the Landlord and Tenant Act 1954 which means that once it expires, the tenant has no automatic right to stay and seek a lease renewal.

In many cases, the parties are happy for the tenant to stay but time is needed to negotiate a new lease or to address any unresolved issues from the old lease, such as dilapidations or rent arrears.

The basic legal position is that the tenant who has outstayed its welcome (i.e. stayed after the expiry of its contracted out lease), is technically a trespasser, unless the actions of the landlord contradict that. If the tenant stays in this way, then it could be one of the following:

A tenancy at will

This is the position if:

the parties have been negotiating a new lease and it is a temporary situation until agreement is reached
the landlord has indicated a desire to recover possession
the landlord has demanded and accepted rent by mistake or because it was automated

A tenancy at will is a precarious position to be in for a tenant because it can be ended without or with very little notice.

It would be advisable to enter into a written tenancy at will if you are negotiating a new lease in the interim so that everyone can be certain of the status of occupation.

Tenancy on sufferance

This is the position if :

The tenant stays after expiry of the lease and nothing is said at all about it.

This type of tenancy is created by operation of law so it cannot be agreed between the parties. It is a precarious position to be in for a tenant because it can be asked to leave immediately.

Periodic tenancy

This is the position if:

The tenant stays and the landlord has continued to accept rent and not indicated that it wants possession;
No negotiations have occurred about a new lease.

Whilst this is a better position for the tenant than the other options, it is still uncertain because although the terms are likely to be the same as the expired lease, there is still no actual lease in place.

For a landlord, it is best to avoid any uncertainty because if a tenant stays for a long time without any regularisation in place, the more likely a court will find that a protected lease has been created (i.e. a lease that has automatic rights of renewal).

How we can help

We act for landlord and tenants in this situation and can protect their interests depending on what they wish to achieve.

Issues about whether a tenant is entitled to stay or not can mostly be avoided with the right legal advice and guidance and at Greenwoods, we are adept at avoiding and protecting clients from expensive and time consuming disputes, aswell as resolving them if they become litigious.

This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. Greenwoods Legal LLP is a Limited Liability Partnership, registered in England, registered number OC306912. Our registered office is Queens House, 55-56 Lincoln’s Inn Fields, London, WC2A 3LJ. A list of the members’ names is available for inspection at our offices in Peterborough, Cambridge and London. Authorised and regulated by the Solicitors Regulation Authority, SRA number 401162. Details of the Solicitors’ Codes of Conduct can be found at www.sra.org.uk. All instructions accepted by Greenwoods Legal LLP are subject to our current Terms of Business. VAT Reg No: 161 9287 89.