OGR Stock Denton’s Property team considers two important points for landlords and tenants:
- For landlords of mixed use buildings to note ( where a building consists of a commercial unit(s) and residential flats: if the annual rent is more than £100,000 then, even if the residential tenancy may have been expressed specifically as an assured tenancy, the tenancy won’t be an assured tenancy. The relevance of this is under section 5 Landlord and Tenant Act 1987 (1987 Act) under which a landlord who wishes to sell the freehold or a superior long lease has to first serve notice on the residential tenants giving them the first right to buy the freehold or long lease but landlords are relieved of this obligation where the tenancy is an assured tenancy under The Housing Act 1988 (H A 1988). However, subject to other conditions of the HA 1988 being satisfied ,a tenant of a flat which isn’t an assured tenancy has to be served with this section 5 notice under the 1987 Act which , obviously will cause the landlord considerable delay in being able to sell the property – if the section 5 notice procedure applies, the Landlord commits a criminal offence if the Landlord fails to do so.
- For tenants of long leases who wish to sublet: if a lease allows subletting on an assured shorthold tenancy basis only then it could prevent the tenant subletting if the annual rent the tenant could command in the open market for subletting is more than £100,000 which would not be an assured shorthold tenancy – therefore it is important to ensure that any subletting clause in a long lease doesn’t limit subletting to an assured shorthold tenancy- rather, it should state “any tenancy which does not confer security of tenancy on the subtenant.”