Briefing - Property Group (Property Updates), May 2009
29.05.2009
The long awaited Section 47 of the Civil Law (Miscellaneous Provisions) Act 2008 (“the 2008 Act”) finally allows tenants of non-office space to renounce the entitlements they might otherwise accrue (after 5 years in certain circumstances) to call for a new lease under Landlord and Tenant legislation. Previously, it was not possible for tenants of non-office space to remove renewal rights. Landlords and tenants will have been well aware of the difficulties that the legislation had created in both office and non-office lettings previously. The legislation had regularly resulted in leases of 4 years and 9 months being granted, often in situations where a longer term would have been preferred by both parties, and tenants having to leave premises where both landlord and tenant would have preferred occupation to have continued. As of 20 July 2008, commercial tenants of both office and nonoffice lettings are now permitted to renounce the rights that they might otherwise accrue after a period of 5 years continuous oc pation (subject to certain conditions). As before, the tenant is required to renounce in writing and have received independent legal advice prior to executing the renunciation. In addition to this change, it is no longer a specific and crucial requirement for the renunciation to be executed prior to the lease being executed and occupation being taken. A renunciation can now be executed subsequent to the lease. Section 47 is silent on whether accrued rights can be signed away, but our view is that a tenant can validly do so. Section 47 therefore undoubtedly now provides landlords and tenants with more flexible options in the grant of new leases, and in certain circumstances where leases have already been granted and rights have accrued.
