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LTA 1954 – exclusion Print
The obvious way of avoiding the application of LTA 1954 is to follow the contracting-out procedures as introduced by Regulatory Reform Order 2003. But there may be simpler alternative ploys:

short-term lettings: fixed-term tenancies not exceeding six months are generally excluded. But, those short-term tenancies will be protected if either the tenancy contains provisions for renewing the term or for extending it beyond six months, or if T has been in occupation for a period (including occupation by a predecessor in the same business) exceeding 12 months. What this means is that T can safely be granted a fixed term of six months, followed by a further term of just less than six months (provided that the first tenancy does not include a right to be granted a second tenancy). In theory this could stretch to a third term of six months, provided the third tenancy was granted within 11 months and, say, 25 days of T first taking occupation. Note also that this cannot apply if it is a periodic tenancy (since that will not be for a ‘term certain’);

licence: licences are excluded from the Act, which only applies to tenancies;

tenancy at will: LTA 1954 only contemplates tenancies granted for a fixed term, or alternatively, periodic tenancies. So, a carefully drafted tenancy at will can be used to deal with temporary exclusive possession of the property (especially as an intermediate step) in order to avoid statutory protection. But, you must ensure that the arrangement is terminable at the will of either side (it is helpful to say that any overpayment of rent will then be refunded). It is possible to reserve a market rent, but a forfeiture clause would be inconsistent with a tenancy at will (as would be provisions for notice to quit, or L’s right of entry, or T’s right of assignment);

other exclusions: service tenancy, agricultural holdings, and mining leases are all outside LTA 1954.

Also, of course, LTA 1954 can only apply if T is in ‘occupation’ of the premises, and those premises are being used ‘for the purposes of a business’. For an introductory article see [2006] 175 Property Law Journal 3.

October 2006
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