KEY POINT

• New rateable values come into force on 1 April 2005. The amount of compensation for nonrenewal of business tenancies will depend on exactly when the landlord's notice is served.

1 APRIL 2005 RATING REVALUATION - EFFECT ON TENANCY RENEWALS?

In fact, the effect is on non-renewals.

As is well known by now, new rateable values for business premises come into force on 1 April 2005 (based on values at 1 April 2003).

Section 37 Landlord and Tenant Act 1954 entitles a tenant of business premises to claim compensation (equal to either 1 x or 2 x the rateable value of the premises) if the landlord successfully opposes a renewal on grounds E, F or G.15

15 Ground E: consolidation of multiple sublettings. Ground F: landlord intends to carry out substantial works. Ground G: landlord intends to occupy premises.

The compensation is calculated by reference to the rateable value on the date the landlord served his section 25 notice or, if applicable, on the date he served his counternotice to the tenant's section 26 request. (This being the point at which the landlord informs the tenant that renewal will be opposed.)

With the new rateable values coming into force on 1 April next year, the amount of compensation will depend on precisely when the relevant landlord's notice or counternotice is served.

Both landlords and tenants should bear this in mind when timing service of any 1954 Act notices in the next few months.

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