In Short
- Commercial tenants have three key rights: exclusive possession, security of tenure, and the right to an Energy Performance Certificate (EPC) rated at least E.
- Exclusive possession allows tenants to occupy and use the property without interference from the landlord or others.
- Security of tenure offers renewal rights under the Landlord and Tenant Act 1954, unless the lease expressly excludes this protection.
Tips for Businesses
Before signing a commercial lease, confirm whether your lease includes or excludes security of tenure rights and check the property’s EPC rating. Always seek legal advice on key clauses to ensure your business’ occupation and operations are protected throughout the lease term.
As a tenant under a commercial lease, you will have certain rights. These are either set out in and granted to you by your lease, or will be guaranteed under statute. A lease is a legally binding contract that protects and enforces your rights against the landlord. If you fail to do this, your business use of the property may be restricted or face practical issues. Given you will be paying rent, you should understand these rights before entering the lease.
This article explains three key rights commercial tenants hold and why these rights matter in a commercial lease agreement.
This cheatsheet includes practical tips to understand key clauses and avoid disputes in leasing agreements.
1. Exclusive Possession
A fundamental right that you, as a commercial tenant, will enjoy is the right to exclusive possession of the commercial premises within the boundaries specified in the lease. This gives you the right to occupy your business premises exclusively, without sharing them with anyone, including your landlord. Any access to your property, even temporary access, will not be permitted unless it is included in the lease. This will usually allow the landlord access for inspections or repairs, for example.
2. Security of Tenure
Under the Landlord and Tenant Act 1954, business tenants obtain the right to a statutory continuation of their tenancy, meaning it would not automatically end at the end of the term. Tenants with security of tenure also have the right to request a renewal lease.
The landlord may only oppose renewal on specific statutory grounds, some of which entitle the tenant to claim compensation.
Continue reading this article below the form3. Rights Conferred by the Minimum Energy Efficiency Standards (MEES)
The Minimum Energy Efficiency Standards give commercial tenants the right to have a minimum energy efficiency rating on the commercial property they lease. Your business premises should have an Energy Performance Certificate (EPC), and by law, it should be no less than an E rating. Since April this year, landlords have committed an offence if their commercial property fails to meet the required standard.
A commercial tenant’s right to an EPC at a rate E does not apply if a specific exemption applies to the commercial property. These are generally as follows, where:
- your fixed term is more than 99 years;
- your fixed term is six months or less; and
- you lease a listed building and making it a rate E means its character or appearance changes as a result.
Key Takeaways
As a commercial tenant, you have key rights under a commercial lease. This article has explained three of these key rights. Firstly, it points out that commercial tenants have either the right to exclusive possession. The article then explains that, as a commercial tenant, you may have the right to compensation if you are in a lease that benefits from a specific statutory protection. The final right that tenants enjoy, which is highlighted in this article, is the right to an Energy Performance Certificate for the commercial property of at least an E rating.
If you are a commercial tenant and need help understanding your rights, contact our experienced leasing lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Exclusive possession gives you the right to occupy and use the premises without interference from the landlord or others. The landlord may only enter for specific reasons stated in the lease, such as inspections or repairs, ensuring your business can operate without disruption.
Security of tenure under the Landlord and Tenant Act 1954 allows you to remain in the premises after your lease ends and request a renewal. However, this right can be excluded if your lease “contracts out” of the Act, so it is vital to confirm your lease terms and seek legal advice.
We appreciate your feedback – your submission has been successfully received.
