Are we sitting tenants? What rights do we have?

[2inbrighton]

Greetings folks. I was hoping you could advise me on an issue I'm having with my office rental.

Just over 4 years ago our old ltd company signed a 3 year lease on an office space in a building, which also houses a shop, a restaurant and another office space which has been unoccupied all the time we've been there. The lease expired just over a year ago. At the same time we applied to have our old ltd company dissolved because it was no longer a viable business, and we started trading through our new ltd company in the same office. We informed all the relevant parties about the closure and proposed striking off of the old company and it went through without any problems. Our new company was issued new contracts by the utilities/telecoms etc, but we heard nothing from our landlord.

We were fully expecting to be asked to sign a new lease. I suspect we weren't, because we are fully up to date with our rent which is paid by standing order every month and I know the landlord can't get anyone interested in the other office which remains empty. He would have been concerned that if asked to sign a new lease, we might have served notice to quit and then he would have 2 empty offices.

Our landlord has now hinted at a rent increase and additional charges. Our new company has been paying rent for over a year now and I was wondering what rights we have as tenants without a lease agreement in place? Are we actually sitting tenants? How much notice do we have to give our landlord if we wish to leave and how much notice does he need to give us if he wants us out? Is he legally allowed to increase the rent or charge us for things like buildings insurance?

Also am I right in thinking that as the old company that signed the lease is dissolved, none of the terms and protection offered by this lease apply to our new company?

Sorry to be so long winded. Any help on the above would be much appreciated.

 

[kulture]

Property law is complicated and I am hesitant to answer your questions directly. That said, your position cannot be as secure as it could be without a lease. A lease would give you security and detail things like when/if rent increases etc are due. Not having a lease leaves you somewhat at the whim of the landlord.
I suspect you are right, the landlord does not want to rock the boat and loose his only tenant. As such his hinting at a rent increase is only that, a hint. He wants to keep you and probably wants that more than an increase. He is trying it on. You could hint at a rent decrease as its costing you more to heat the office with all the empty space around you.

 

[2inbrighton]

Thanks for that. I don't think it will happen but if he decided he wanted us out, any idea how much notice he would need to give us, or how much we'd need to give him if we decide to bail?

 

[kulture]

You are paying monthly. So in the absence of an agreement, that is the notice period either way. I must however stress that this may be wrong, depending on the wording on the old lease, what you may have agreed verbally, and other possible things. You really should get a solicitor involved where the full details can be determined.

 

[2inbrighton]

Brilliant, thanks again. Sorry to keep asking you stuff but you're being really helpful. I'd read somewhere that sitting tenants in commercial property needed 6 months notice, but I'm guessing this might be only applicable to tenants who pay every six months? Is anything on the old lease relevant now that we are a different company to the one who signed it?

 

[Chris Ashdown]

I thought that if a new lease was not taken, the old lease would continue in the same terms

 

[deniser]

The situation is not clear cut.

It depends to some extent on the timing of the lease expiry vis-a-vis the trading start date of the new company. Did the lease definitely expire before the new company started to trade?

It also depends on whether the original lease was contracted out of the security of tenure provisions of the LTA54. Was it?

 

[2inbrighton]

I don't know if it was contracted out of LTA54 or not but I can confirm that the new company had actually started trading in 2011 and the original lease expired in May 2013.

 

[deniser]

I don't know if it was contracted out of LTA54 or not.

You need to look at the lease and see. Otherwise your question can't be answered properly.

Also, when did the new company make the first rental payment in its name (rather than the original company's name)?

 

[2inbrighton]

I've checked and it appears it was contracted out of LTA54. The standing order was changed to the new company's account to pay rent for the month following the expiry of the lease. The new company has only paid rent since the expiry of the lease and the old company ceased trading. This is why I thought we might be classed as sitting tenants. The landlord has actually admitted he deliberately didn't offer us a new lease and was happy for us to 'hold over' because he thought we might leave if we had to sign up to another fixed period. I don't think he understood the implications of us being a new company.

 

[Diane@JFS]

Given that the old company is no longer in existance, the lease is no longer valid. This is a complicated situation and these matters depend very much on the individual circumstances. However, from what you have advised, I would class this as a tennancy at will. You have the permission of the landlord to be in the property but currently no lease in place. Tenancies at will are normally for companies that are in possession of the property and negotiations regarding the lease are ongoing. As I note there have been no discussions regarding a new tenancy, then it could be argued that rather than being a tenancy at will, this could be a liscense. However, I would tend to take this as being a Tenancy at will.

A tenancy at will does not provide for any notice period and offers the tenant no protection. A landlord can therefore take possession of the propoerty at any point (subject to the tenant being afforded reasonable time to retrieve any goods from the property).

We would therefore recommend that you enter discusions about a new lease and formulate one as soon as possible in order to provide your company with protection.

Joseph Frasier Solicitors

 

[2inbrighton]

Thanks for that. I'm assuming from what you're saying that this means we don't have to give any notice if we want to leave either? Also I'm assuming this means that the landlord has no leverage to increase the rent or levy additional charges, apart from booting us out (which he doesn't want to do because it's a difficult property to let)? Doesn't having paid rent since last May mean that there is some kind of contract in place, or is a Tenancy at will a contract of sorts?

 

[Diane@JFS]

A tenancy at will is a contract which means that permission has been given for you to occupy the property and in return rent is paid. A tenancy at will can be verbal or written but the main point is that there is clearly consent for your occupation, which being as the Landlord has never commented otherwise, it can be taken that he does consent in the very fact that he has accepted the rent payments.

You are correct in that there is also no notice period required for the tennant to quit.
If the landlord wishes to increase the rent, then you either must negotiate on the amount payable, if this can be agreed then either a new lease can be entered into or the tenancy at will will continue to roll over with the increased rent being payable. However, if you do not agree to the rent increase then the landlord can terminate the tenancy at will with no notice period.

This is a gamble that you will have to take on deciding whether or not to entertain a rent increase. Please remember however, that if you do state you are not prepared to increase the rent, then the landlord can terminate the tenancy immediatly and you may be left with no premesis from which to conduct your business.

Joseph Frasier Solicitors