The Significance Of The Landlord And Tenant Act 1954 - Essay Example

The Significance Of The Landlord And Tenant Act 1954 Introduction Before a landlord and a tenant decide to renew or terminate a corporate tenancy, a section 40 notice is issued to the other party with the intention of gathering information regarding the lease. The collected information can help the individual to evaluate the condition and renew or end the contract (Bright 2007). A section 40 notification can get issued at any time despite the fact that it is common when the current lease nears its end. Besides, it should be given with enough time so that the other party can respond appropriately and enable both sides to make the correct decisions before the expiration of the lease. Both the tenant and the landlord need to respond in at most thirty days after seeing the notice. The parties to the contract should keep that information updated for an extra six months just in case it changes. The notice that updates the other party should be issued in under a month after the individual becomes conscious of it (Dowden 2015). Modern property law has its foundations in antiquity. Recent real estate legislation contains two main areas. These are the Acts of Parliament and common law. Under English law, tenancy laws involve a mixture of property laws, statutory rules and the law of contract. Renting relies on a contract agreement in which a tenant occupies and later gains some interest in the property in return for paying rent. Before the First World War, most British people rented their residences. As the 20th century progressed, the number of tenants reduced until only 7 percent of the population now rented their homes (Dowden 2015). On the other hand, business leasing remained relatively unchanged, and social legislation influenced social legislation strongly. Until a few years ago, the total tenure security for residential tenants as well as the dwindling returns discouraged people from letting residential buildings until a couple of years ago. Such a change was the outcome of rebalancing the rights that existed between the tenant and the landlord as documented in 1988 as well as 1996 Housing Acts. From this time henceforth, investment returns became economically viable once more and this encouraged property owners, investors and small landlords to penetrate the lettings market (Bright 2007). The alterations in the laws of England and Wales accompanied changes in the demographics of the populace meaning that the contemporary lifestyle started favoring renting due to its elasticity. All land in England today is the property of the state, although it remains in Freehold before going back to the state when there are no rightful heirs anymore. A freeholder refers to the lifetime owner of a property. Based on the Law of Property Act 1925, the claim to land ends when a person dies without leaving behind any legitimate heirs. The focus of the Law of Landlord and Tenant concentrates on the contract agreements that allow the tenants to take occupancy of a piece of property for a length of time in return for periodic payments of rent (Thomas 2011). Modern property law has a dual nature and is quite complicated. First, its basis is the common law of contract that has changed in the course of the past few centuries. Nevertheless, the legislature has the power to modify or override the common law by passing statutory regulations and codes. Contemporary property laws, as well as legal systems, vary throughout the Western world despite the fact that the fundamental legal doctrines are similar. The entire legislation is gradually changing as new laws emerge and as the courts set new precedents in their interpretations of statutes and common law principles (Castaldo 2012). A corporate tenancy refers to a contract between the tenant and the landlord controlled by common law for the length of the lease term. The legislation that exists regarding the tenant and the landlord gets consulted whenever disputes arise at the conclusion of business tenancies concerning the tenure security as well as the possession grounds. Corporate Tenancies in Wales and England are contained in Landlord and Tenant Act of 1954 Part II. The 1954 Act only fails to apply when both parties agree early enough to contract outside its provisions. With residential tenancies, statutory rules apply from the first day of the lease. While the residential agreement remains as a contractual relationship between either private parties, much of the relationship that exists between the tenant and the landlord in Wales and England is under the control of the Acts of Parliament (Dowden 2015). Until 1914, almost 90 percent of all housing in Britain was under private rent agreements. At the end of the century, however, only between 10 and 11 percent of such contracts existed. However, experts predict that the private rental sector will probably reach 20 percent of the entire housing market in 2020. The decline in private renting in the course of the 20th century resulted from social legislation and trends to turn the balance of power to favor the tenant rather than the landlord. The initial Rent Act got ratified during the First World War in 1915 as a way of preventing owners from exploiting the rising wages of people working in ammunition shops. Such was the beginning of legislative acts aimed at protecting tenants, although in practice moderated against the provision of rental accommodation and ended up harming the people it sought to protect (Castaldo 2012). Rent controls, as well as the complete security of tenure in England and Wales, shifted the balance so much that in the course of a century such that the decline in private rental residential buildings changed in a dramatic fashion. Therefore, leasing residential property in much of the 20th Century proved uneconomic for the private landlord. Many owners saw their profits cut as a result of unprofitable tenants. The results were that the national residential housing stock deteriorated and finally died. In the course of the following years, several attempts were made to arouse supply. Nevertheless, none proved effective until the ratification of the 1988 Housing Act that brought about the Assured Short hold Tenancy. Such was the turning point that enabled landlords to lease at close to the market rents with a guarantee of reacquiring their property (Brennan 2013). The 1954 Act A section 40 notifications gets issued to a tenant by a landlord searching for information on the receipt of an agreement from any sub-letter or if an S25 or S26 notice has been served. On the other hand, a section 40 notice gets issued by the occupant to the property owner requiring the owner to indicate, instances of a superior lease, in which an S25 or S26 notification is served (Thomas 2011). A Section 25 notification gets used by a property owner with a corporate license in Wales or England. The 1954 Act gives corporate tenants the security of tenure or the right to renew the lease when it ends. A landlord can prevent the renewal of a contract for a particular period and for specific reasons. For example, if the occupant does not pay rent or in case the property owner intends to renovate the property or reacquire it for his use, he has the choice of applying to a court of law to conclude the occupancy or he can choose to oppose the tenant’s application for restoration of the tenancy (Brennan 2013). To end the present contract, and suggest terms for renewal or bar the occupant from restarting the lease, the landlord needs to serve the tenant with an S25 notice. It is crucial to note that there are various S25 notifications based on whether the owner is ready to recommence the occupancy or not. There is a Section 25 notification that opposes renewal and a S25 notice that recommends restoration of the lease. Nevertheless, this should be sent between six and twelve months of the present lease expiry date (Castaldo 2012). In such a situation, the leasing value of the assets exceeds the current market rate. Therefore, the landlord can choose to maximize earnings through continuation tenancy. The Act contains rules that apply to continuation tenancies. If a tenant, on expiry of the occupancy remains an occupant of the buildings in a new agreement among the same property-owner and the same occupant, the beginning time of the new lease is considered the starting day of the initial contract. On the other hand, if the property owner intends to restart the contract, he will only be entitled to the current rent in the market. The implication of this is a massive income loss for the property owner (Thomas, 2011). The owner who issues a current tenancy for a ten year period will choose provisional rent. Interim rent should get paid from the initial date that should have been published in the S25 notification served by the landlord or the current S26 request served by the tenant. Consequently, the first period when it is likely for provisional rent to get paid immediately after the term date of the contract should be indicated. It is vital to recall that the interim rent should be predated to the start date whether it is the occupant or the landlord who initiated the submission, and regardless of when the application was made (Brennan 2013). In the new structure, interim rent payment will be made from the earliest date that should have been placed on the general Section 25 notice served by the landlord or the current Section 26 request given by the client. Therefore, the initial period when it is likely for provisional rent to get paid will directly follow the conclusion of the period of the contract. The interim rent is backdated to the original date regardless of whether it is the landlord or the tenant who makes the application. The date gets backdated regardless of when the request was made. The period for interim rent payment will normally be six months after issuing a Section 25 notification or Section 26 request or in case it gets made later, the valid term date is considered. The backdating implies that neither the landlord nor the occupant will profit from influencing the extent of the Section 25 notification or the Section 26 request (Dowden 2015). To further increase the amount of the interim rent, the lessor must contemplate approving a trimestral start of base leasing on the initial date of the month. Consequently, provisional rent may be capitalized on after thirty days within such an arrangement and may be as extensive as 89 days. However, if the client fails to continue with the tenancy after twelve months, then the landlord can decide to pursue another option. Such options are totally viable in both scenarios based on the lease and whether a prolongation of the initial lease or the signing of the new contract is chosen (Bright 2007). The rent review gets done after every three years with an incremental provision only. The landlord may also ask third-party guarantee for the obligations of the tenant within the lease. A guarantee occurs in instances where the occupant is financially unstable. It means that if the tenant defaults, then the guarantor should compensate the landlord for all losses sustained when the resident breaks the terms of the occupancy. He also may let the properties if the tenancy ends because of the tenant’s violation. The landlord may decide to transfer the contract from the current tenant to another. The outgoing tenant should guarantee the performance of the obligations of the incoming tenant. Besides paying rent as well as the insurance premium, the new tenant can contribute or pay the entire amount towards mending and preserving the building, the exterior and any shared infrastructure by the occupants (Thomas 2011). A tenant who occupies the corporate grounds in a lease that excludes security of tenure given by the 1954 Act does not reserve the right to lease renewal at the conclusion of the contractual term, meaning that the property owner becomes authorized to possess the premises. Nevertheless, owners are usually willing to grant new leases to such occupants, hence maintaining rental income, particularly in the current leasing market. Contrary to protected leases, no legislative framework governs the renewal process (Brennan 2013). Usually, the contractual term expires before the completion of the new lease, and the tenant remains to occupy the premises as the negotiations of the agreements for new occupancy proceed. Among the primary concerns of the landlord is to ensure that the occupancy of the tenant does not develop into a timely occupancy that is protected by the 1954 Act. The creation or lack of creation of such a tenancy depends on the behavior and objectives of the individuals. Therefore, it is important that the property owner not to take further action that could overrule the perception that the occupant uses the property as a resident at will. It is the possible position in which the occupant remains in the building after the conclusion of the contractual term in the course of the negotiations (Castaldo 2012). Surprisingly, the request and approval of rent payment will necessarily not mean much. However, the cautious landlord will not collect any rent after the tenancy ends. Occupancy may be implied, meaning that it becomes necessary for the individuals to ratify an official agreement to deed their objective. It is unusual for tenants to delay the negotiations, with the hope of achieving the terms or postponing the ratification of a long-term contract agreement with such harsh and questionable trade circumstances. In such a situation, the landlord may try to rely on a less known ancient statutory provision found in the 1730 version of the Act. The provision enables the property owner who issued the notice requiring possession or termination at the will of the tenant or where a tenant fails to vacate; which requires the tenant to pay twice the annual value in rent. Such an arrangement starts from the day of the notification until the occupant leaves (Bright 2007). Therefore, twice the sum that the occupier pays is required for the related occupation of the period. Such a threat may result in the desired effect in that the occupant finalizes the negotiations swiftly and concludes the new tenancy to prevent the prospect of paying double. Nonetheless, there always is a possibility that the tenant vacates, and the landlord gets left with unoccupied buildings without rental income. In such an instance in which the paid rent is less than the marketplace rental fee the property owner needs to renew the lease based on the market rent with an increasing rent review provision for every three to five years and should request for a rent deposit for a year in advance. Therefore, the FRI obligation needs to be entirely on the tenant. It is difficult to form such an agreement. However, if it works out, it should be in the landlord’s favor (Dowden 2015). Leases exist in two forms known as the “Grantley House” that is under the protection of the 1954 Act. Next is the free from the 1954 Act and that the requirements of s24 to s28 of the Act related to the security of tenure get excluded regarding the tenancy. Several procedures should be assumed by the Property owner in either case if he fails to grant a fresh lease of his buildings. All of the above cases need to be dealt with separately due to the different lease types they have (Bright 2007). Conclusion In case the landlord uses this argument, the court can still grant new tenancy if particular conditions indicated in section thirty-one A of legislation are achieved. An instance of such a situation is when the court accepts the request of the property owner to renovate regardless of the planning difficulties. It should be done at the conclusion of the current tenancy and with the landlord planning to inhabit the property for the aim of a business. The tenant should make applications to the law court for a current occupancy before the end date stated in Section 25 notice. The tenant and the landlord need to agree to extend the deadline in such cases. They may decide to prolong the contract if the tenancy is extended automatically to cover that period. In the event, the tenant fails to apply to the law court, then the tenant’s right to a current tenancy will be void (Thomas 2011). If the tenant renews the lease for another ten years and maintains five-year tenure from the Act, it becomes enforceable if he selects a tenancy that is protected by either s24 to s28 of the legislation. Consequently, the occupant has no privileges to recommence the tenancy since its performance is outside the Act. Therefore, the 1954 Act plays a very crucial role concerning commercial rental and lease agreements that occur as a result. Both the owner and the occupant should understand the act so that they take advantage of the provisions it contains for their benefit. It is imperative that the participants adhere to the given dates and deadlines so that they know when to issue the appropriate notices and prevent incurring additional costs, such as paying double rent, or losing occupancy of their property in case of landlords. Everyone has different needs and motives about the property and their tenure security. However, it is crucial that both parties understand each other because the lack of understanding may result in costly court proceedings (Castaldo 2012). Reference List Brennan, G. (2013). Landlord and Tenant Law. Oxford University Press. Bright, S. (2007). Landlord and tenant law in context. Hart Pub. Castaldo, I. (2012). The Uniform Residential Landlord and Tenant Act: New Hope for the Beleaguered Tenant? St. John's Law Review, 48(3), 9. Dowden, M. J. (2015). Landlord and Tenant Act 1954: time for a change? Landlord and tenant update. Journal of Property Investment & Finance, 33(1), 107-112. Thomas, A. (2011). Landlord and Tenant 1954 Act Part II: Does it Still Fulfill Its Role in the Commercial Lease Market? [Electronic Resource]. University of the West of England. Read More