The Rent Review Specialist
Contractual Term
Holding Over
Where a tenancy would on expiry of the contractual term qualify for rights under the Landlord and Tenant Act 1954 but no statutory procedures are implemented before the contractual expiry, the contractual term would end and thereafter the tenant would be able to ‘hold over’ on the same terms of the expired tenancy.
Holding over is also known as the statutory term. The distinction between contractual term and statutory term/holding over is important because different rules apply when the parties want to end the existing tenancy or grant a new tenancy.
When the tenancy is outside the Landlord and Tenant Act 1954, the tenant would have no legal right to remain in occupation of the premises after the contractual term expiry date. That does not mean that the tenant would necessarily have to vacate, simply there is no legal right to remain in occupation.
Holding over is also known as the statutory term. The distinction between contractual term and statutory term/holding over is important because different rules apply when the parties want to end the existing tenancy or grant a new tenancy.
When the tenancy is outside the Landlord and Tenant Act 1954, the tenant would have no legal right to remain in occupation of the premises after the contractual term expiry date. That does not mean that the tenant would necessarily have to vacate, simply there is no legal right to remain in occupation.
Break Clause
A break clause is a right entitling one or both parties to end the tenancy before the expiry of the contractual term.
The break date will normally be specified either as an actual date or a period of time before or after a particular event, for example within six months of a rent review being agreed or ascertained.
The period of notice and method of giving notice is a matter of agreement between the parties when the lease is granted.
A tenant's break clause will not normally require more than one notice. In other words, if the tenant may end the tenancy on giving at least 6 months notice in writing beforehand the tenant would not also have to give notice of any intention to give that 6 months' notice.
The procedure is not the same for the landlord. Where the tenancy would qualify for renewal rights per Landlord and Tenant Act 1954 Part II, a landlord is not able to end the tenancy on the break date without also serving s25 notice opposing renewal on one or more of the statutory grounds in the LTA54. Only if the tenant is outside the Act (ie, excludes s.24-s28) can the landlord simply give whatever period of notice the lease specifies without having to serve statutory notice as well.
Whether any conditions have to be satisfied before the tenant can end the tenancy would depend upon what the parties have agreed in the lease. Usually, the provisions in the lease for ending of a tenancy using a break clause would include without prejudice to the usual rights and remedies of either party before the break is implemented. For example, the tenant's right to break the tenancy would not exempt it from leaving the premises in good repair.
When drafting a break clause in a lease, care must be taken to avoid any correlation between the break date and a rent review date. Failure to do so would result in time becoming of the essence for operating the rent review procedure.
The break date will normally be specified either as an actual date or a period of time before or after a particular event, for example within six months of a rent review being agreed or ascertained.
The period of notice and method of giving notice is a matter of agreement between the parties when the lease is granted.
A tenant's break clause will not normally require more than one notice. In other words, if the tenant may end the tenancy on giving at least 6 months notice in writing beforehand the tenant would not also have to give notice of any intention to give that 6 months' notice.
The procedure is not the same for the landlord. Where the tenancy would qualify for renewal rights per Landlord and Tenant Act 1954 Part II, a landlord is not able to end the tenancy on the break date without also serving s25 notice opposing renewal on one or more of the statutory grounds in the LTA54. Only if the tenant is outside the Act (ie, excludes s.24-s28) can the landlord simply give whatever period of notice the lease specifies without having to serve statutory notice as well.
Whether any conditions have to be satisfied before the tenant can end the tenancy would depend upon what the parties have agreed in the lease. Usually, the provisions in the lease for ending of a tenancy using a break clause would include without prejudice to the usual rights and remedies of either party before the break is implemented. For example, the tenant's right to break the tenancy would not exempt it from leaving the premises in good repair.
When drafting a break clause in a lease, care must be taken to avoid any correlation between the break date and a rent review date. Failure to do so would result in time becoming of the essence for operating the rent review procedure.
Changing Market and Varying a Lease
The definition of ‘lease‘ is "the grant of a right to the exclusive possession of land for a determinate term less than that which the grantor has himself in the land". In practice, a lease is …for further reading, please visit LandlordZone newsletter issue 16 - click here