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17th February 2012

How to convert a contracted out business lease into a protected one without really trying

Consider this scenario:

As Landlord of premises let to a business occupier under a contracted out lease you face increasing tardiness in your tenant in paying rent, due quarterly in advance of £80kpa. When your tenant was 21 days in arrear you forfeited the lease as you were entitled to do. The tenant pays up and you allow him back in, agreeing informally to reinstate the lease.

You have created a new lease with the full protection of Landlord and Tenant Act 1954.

Only a court can order reinstatement of a lease. The parties are simply not able to do so themselves, even by deed.

This principle was recently affirmed in the Lambeth County Court in the case of Zestcrest Ltd –v- County Hall Green Ventures Ltd. (02.08.11). A tenant complained that he should be required to issue proceedings and pay the costs of the proceedings for relief from forfeiture when his landlord agreed to reinstate the lease after arrears had been paid. The tenant could not complain, said the court; it had been reasonable of the landlord to require the tenant to issue the proceedings. Without a court order made under County Courts Act 1984 s138 (application for relief from forfeiture) the original lease could not be reinstated.

If the landlord wishes to avoid granting a new protected tenancy he must require the tenant to make that application, with the tenant paying both sides’ costs.

For further information please contact Anna Gora by email on annagora@hewitsons.com.

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