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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Compensation: displaced tenants: business tenancies: security of tenure

Probably the most important consequence of a tenancy falling under the protection of the L&TA 1954 is the security of tenure which this provides to the tenant. Even though the tenancy will have been granted for a particular term, for example 10 years, the tenant will normally be entitled to continue to occupy and use the property following the expiry of that term. The manner in which this is achieved is as follows.

STATUTORY TENANCY

  • If the landlord and tenant do nothing, a statutory tenancy comes into being. This statutory tenancy will have the same terms, for example the same rent will be payable, as the original tenancy. The statutory tenancy will continue until either the landlord or the tenant brings it to an end by one of the actions referred to below.RIGHT TO NEW TENANCY

  • When a tenancy is coming towards the end of its term, the tenant is entitled to ask the landlord to grant a new tenancy, Section 26 L&TA 1954. The landlord is only entitled to refuse to grant a new tenancy in certain limited circumstances, see CG72333. If the landlord is not willing to grant a new tenancy, he must specify the grounds on which he opposes the new tenancy. The tenant can then apply to the Court for the grant of a new tenancy if he considers that the grounds specified by the landlord are invalid.NOTICE TO QUIT

  • When a tenancy is coming towards the end of its term, the landlord can issue a notice to quit, Section 25 L&TA 1954. This notice informs the tenant whether the landlord will oppose the grant of a new tenancy. If the landlord does oppose the grant of a new tenancy, the grounds of that opposition must be specified. Again there are only certain grounds on which the landlord can validly oppose the grant of a new tenancy and the tenant can apply to the Court if he considers that the grounds specified in the notice to quit are invalid.