REAL ESTATE

Wake Up And Smell the Roses! 

Do you own or operate a business from premises which you lease? 

Do you rent out premises which you own to a business?

If so and your lease is coming to an end, then you may be interested to know that a tenant may enjoy rights under the Business Tenancies (NI) Order 1996 (“the Order”).

Take the example of a shop on a high street let by a local builder as landlord (lets call him Bob) and occupied by a florist (lets call her Rose) under a lease which states the end date to be 1st June 2018.

What rights might apply to Bob and Rose?

• Should Rose want one, then the starting point under the Order is that she is entitled to a new lease whether Bob likes it or not.

• Poor Bob. Unless…. Bob can establish one of a limited list of grounds of objection set out in article 12 of the Order (an “Article 12 Ground”) such as Rose has persistently delayed in paying her rent or Bob has planning permission and wishes to redevelop and that this cannot reasonably be done if Rose were to remain in occupation.

• The lease between Bob and Rose will not come to end on 1st June 2018 and Rose may remain in occupation after 1st June 2018 unless an appropriate notice has been served under the Order at the right time.

So what might an appropriate notice have been?

• Bob could have served a landlord’s notice to determine (“an Article 6 Notice”) upon Rose not less than 6 months prior to 1st June 2018 to state either:-

• he is willing to grant a new lease to Rose and his suggested terms such as the proposed rent and duration of the new lease or

• he opposes a new lease to Rose and setting out the Article 12 Ground upon which he seeks to rely.

• Rose could have served a tenant’s request for a new tenancy (“an Article 7 Notice”) upon Bob not less than 6 months prior to 1st June 2018 to request a new lease. After service of Rose’s Article 7 Notice Bob then has two months to respond either to say

• he is not willing to grant a new lease to Rose and to set out his Article 12 Ground or

• he is willing to grant a new lease either on Rose’s suggested terms or on different terms.

• If Bob has sought to rely on an Article 12 Ground then this must be capable of being established to the satisfaction of the Lands Tribunal.

• If an Article 12 Ground cannot be established or if Bob does not oppose a new lease but Bob and Rose are unable to reach agreement as to the terms of a new lease then an application can be made for the terms of the new lease to be set by the Lands Tribunal.

• Other considerations for Bob and Rose might include:-

- If no new lease is entered into does Rose have a dilapidations liability to Bob?

- If Rose wanted a new lease but Bob proves an Article 12 Ground, does Bob owe Rose compensation pursuant to article 23 of the Order?

Don’t be Bob or Rose, seek legal advice at least six months prior to the stated end date of your lease.

If you require any advice in relation to the Order or how it might affect you or your business please contact Andrew Kerr, Partner, Millar McCall Wylie LLP on 02890 200050 or another member of our Real Estate team. Please note that the Order is a complex piece of legislation and by necessity this article should not be relied upon and is not intended to be exhaustive or to constitute legal advice.