“Commercial tenants should take care they are not giving up their right to renew at the end of the term of rental leases” warns reputable West Midlands law firm Thursfields Solicitors.
As revealed in a statement to Commercial People, the leading law firm makes its statement following the events of a recent court ruling involving ‘The Fragrance Store’ (TFS) and its landlords.
TFS’s six leases had been validly subjected to ‘contracting out’ procedures by its landlords. ‘Contracting out’ as outlined in the Landlord & Tennant Act 1954, which provides businesses with ‘security of tenure’ when a lease comes to an end. However, unless the landlord and tenant agree, the tenant will not have a statutory right to a renewal – this process is known commonly as ‘contracting out’.
Commenting on the case, Pam Virdee, a solicitor in the Commercial Property team at Thursfields’ Birmingham office, said: “TFS entered into six leases for retail outlets centres with different landlords, and on each occasion, TFS agreed to contract out of the security of tenure provisions.
“When the leases came to an end, the landlords did not want to renew, and at that stage, TFS tried to argue that the contracting out procedures had not been carried out properly.”
While TFS argued that “Its solicitors did not have authority to receive contracting out notices from the landlord.” and that “declarations had not been completed fully” – the court concluded that all six leases had in fact been validly contracted out and that the tenant was not entitled to a statutory right to renew on any of the leases.
The case of TFS Stores Limited vs BMG (Ashford) Limited and many others, came after the landlords had decided to let all six retail spaces to TFS competitor The Perfume Shop.
Ms Virdee added: “This case serves as a stark reminder to tenants to make sure they want to contract out of the protection afforded by the 1954 Act before entering into a lease, or else they could risk facing undesirable consequences.”