The Right to a New Tenancy in a Commercial Premises

Recent Success

Reddy Charlton LLP recently acted for one of Ireland’s largest pharmaceutical retailers in successfully securing a new lease of its premises in a Cork shopping centre under the Landlord and Tenant (Amendment) Act, 1980.

The necessity to bring the matter to the Circuit Court arose as a result of the disparity in the views of the valuers for both our client and the landlord on what the annual rent should be set at. Ultimately, we succeeded in obtaining a court order in favour of our client requiring the granting of a new lease for a ten year term with a tenant only break option at year five at a rental level acceptable to our client.

In the majority of cases, landlords and tenants will agree terms directly, however, the procedures set out in the Landlord and Tenant (Amendment) Act, 1980 are a useful aid for tenants where they come within the ambit of this provision.

The Law

The Landlord and Tenant (Amendment) Act, 1980 grants tenants of certain commercial premises a right to call for a new lease of that premises at the end of their tenancy provided the tenant has been in occupation for a whole period of five years. The occupation must be continuous and for the purpose of carrying out a business.

Care must be taken in interpreting the legislation. For example, the premises must satisfy the test of what comprises a “tenement”. In addition, there must be a “tenancy” in place. Matters can become muddied where tenants are in place under licence agreements which do not satisfy the definition of a tenancy.

Without going into too much detail here, in practice where a tenant is using a commercial premises (for example an office, an industrial or commercial premises comprising an actual building ) and there is a written lease in place, then, subject to certain  exceptions in the legislation, and subject to there being no Deed of Renunciation in place, that tenant will be entitled to call for a new lease for a term of 20 years or such lesser term as the tenant may nominate. However, the term cannot be fixed for a period less than five years without the landlord’s agreement. In essence, this wording gives the tenant the right to nominate a term of between 5 years and 20 years.

Conclusion

It is important for both landlords and tenants to be aware of the rights afforded by the Landlord and Tenant (Amendment) Act, 1980. This not alone covers rights to a new tenancy, but also matters such as how tenants can apply for compensation for improvements, compensation for disturbance and other matters. It is important to note that there are specific processes and timeframes governing the applications for these reliefs so it is important to take legal advice at the earliest possible opportunity.

If you have any queries in respect of the matters arising in this article, please feel free to contact Brendan Sharkey at bsharkey@reddycharlton.ie