DAC Beachcroft Real Estate Adviser Tip of the Week: A Bit On The Side - DAC Beachcroft

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DAC Beachcroft Real Estate Adviser Tip of the Week: A Bit On The Side

Published On: 8 December 2014

Care should be taken when side letters (usually containing personal concessions to tenants) are issued in connection with leases which have the protection of the Landlord and Tenant Act 1954.

If the lease is later renewed under the 1954 Act, the Court is only empowered to grant a new lease. It does not have the power to order that any terms are included in a separate document. In the absence of agreement between the parties, it will be for the Court to determine the terms of the new lease and in doing so, the Court will have regard to the terms of the existing lease and all relevant circumstances, including rights "enjoyed by the tenant in connection with" the premises. Therefore, there is a risk that the provisions of the side letter may be incorporated into the terms of the renewal lease.

It is normal practice to specify that terms of a side letter are intended to be personal to the tenant to whom the letter is addressed. It is better practice to make it clear (if that is what the parties intend) that the terms are not to be included on any renewal of the lease.

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