Real Estate Tip of the Week: Keep on negotiating At Will
Published 24 March 2014
Prudent landlords will be wary about inadvertently creating landlord and tenant relationships with occupiers who might then acquire security of tenure under the Landlord and Tenant Act 1954. There is often uncertainty after a lease expires and the tenant remains in occupation. On 18 March, the Court of Appeal affirmed that, so long as there are negotiations where both parties "remain of the intention that there should be a new lease on terms to be agreed", the occupation will be construed as a tenancy at will and so no security arises. Either party can determine the tenancy "at will", i.e by giving minimal notice. In the case in question, negotiations had been going on for some two years after the original lease expired.
Landlords should continue to be wary but, so long as the intention of a new lease remains and terms are being discussed, even somewhat sporadically, arguments from occupiers that they have security of tenure should be dismissed. Risk can be minimised by a short letter, preferably counter-signed by the tenant, recording that occupation continues under a tenancy at will.