APPENDIX C
Report by the Office of the Deputy Prime Minister
on later responses to consultation on the proposal
Summary of additional responses received since
the end of the consultation on reforms to Part 2 of the Landlord
and Tenant Act 1954
The Government's consultation on reforming the Part
2 of the Landlord and Tenant Act 1954 ended in June last year.
Since then, the Department has received a small amount of additional
correspondence on the proposals.
The 14-day notice procedure
There were concerns that the Department's proposals
for landlords to serve a notice to exclude security of tenure
would 'inevitably' lead to litigation because the terms of the
lease could change within the notice period; and that the statutory
declaration procedure where the 14-day notice period was not possible,
would 'antagonise' prospective tenants.
The Department does not share either view. Our view
is that where the terms of the lease change within the notice
period, it would be open to a landlord to serve a fresh 14-day
notice or use the statutory declaration procedure. The reason
for the notice period is to obviate the situation where a tenant
is 'bounced' into a new lease.
On the second point, the Department is particularly
concerned about the small business sector where tenants may take
on a lease at short notice without considering the consequences
and without adequate professional advice. Though the need for
tenants who are fully aware of their rights to sign a statutory
declaration could be irksome, the Department feels that it is
cheaper and simpler than the present procedure of a joint application
to court.
The Department is not persuaded by the further comments
that the proposals for excluding security of tenure need to be
changed.
Agreements to surrender
Initially the Department proposed that the health
warning for agreements to surrender a lease should be endorsed
on the lease. One correspondent suggested it would be better
to endorse the agreement itself. This point was also picked up
by our Sounding Board.
On further consideration the Department accepted
that an endorsement on the agreement would overcome any difficulties
with oral leases or if the original lease were lost.
The Department now proposes that the health warning
for agreements to surrender a lease should be endorsed on the
agreement rather than the lease itself.
The Esselte and Singlehorse decisions
There were concerns that these decisions allow tenants
to leave before or at the end of the lease's term without giving
a landlord notice.
Following discussions with the Sounding Board, the
Department is satisfied that its proposals clarify what tenants
need to do at the end of a lease, while giving landlords the opportunity
to ascertain their intentions. Business tenants would be able
to quit premises by or on the contractual term date without having
to give prior notice or incur further liability for rent beyond
that date.
Landlords have no guarantee that even tenants who
are apparently keen to renew will actually do so, as a tenant
granted a new lease may apply to have the tenancy revoked.
The Department proposes to give landlords the right
to apply to the courts to renew a lease and this should help landlords
discover whether their tenants wish to renew or not where they
have been unable to ascertain a tenant's intentions.
Limited liability partnerships
Limited liability partnerships (LLPs) and the perceived
problem of separate legal personalities was raised. This point
was aired with the Sounding Board whose view was that at present
there are very few LLPs and so a change in the law to accommodate
them would not be justified.
However, the position of LLPs as business tenants
will be kept under review.
Interim rent
This has proved to be one of the most technically
difficult issues to emerge from the Government's reform proposals:
striking a balance between complexity which produces a fair result
to both parties, and simplicity which could produce rough justice.
The concern was how tenants at lower end of the market
would fare and whether it would be cost effective for tenants
to go to court to challenge a landlord's proposals. Also, there
was the fear that in a rising market, landlords would be tempted
to spin out proceedings and get a windfall in interim rent.
We hope that our current proposals would deter landlords
from spinning out interim rent negotiations and we believe that
these coupled with the Civil Procedure Rules will also make for
a speedier settlement.
This is a difficult area but we consider that our
current proposals achieve a reasonable balance.
Section 40 Notices
One correspondent questioned why it was proposed
only to extend Section 40 Notices to cover a landlord's break
clause and not a tenant's.
We did not think it would be relevant to cover a
tenant's break clause as a tenant exercising a break clause would
normally do so with a view to ending the tenancy. However, when
a landlord exercises a break, the tenant may well wish to continue
in occupation and seek a renewal of the tenancy, in which case
either party may use Section 40 to get the information needed
to use the statutory procedures.
Office of the Deputy Prime Minister
October 2002
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