In this blog we will look at what defines a lease, the provisions of the Business Tenancies (Northern Ireland) Order 1966 and the landlords perspective vs the tenants perspective. When looking at the rights of business tenants the best starting point is to look at what defines a commercial lease itself.

A lease is a relationship which is deemed to subsist in all cases in which there is an agreement by one party to hold land from another in consideration of rent.

Deasy’s Act – Section 3

There is a relationship between the initial landlord and the initial tenant set by the lease as negotiated between them. For most tenants, looking at their lease, it is assumed that the term referred to in the lease is absolute and that on the date specified in the lease, the tenant is obliged to vacate the premises.

Business Tenancies (Northern Ireland) Order 1996

If the lease , is one to which the 1996 Order applies, the lease does not come to an end automatically on that date and can only be terminated in accordance with the provisions of the 1996 Order. To recite from the 1996 order:

A tenancy to which this Order applies shall not come to an end unless terminated in accordance with the provisions of this Order; and subject to the following provisions of this Order such a tenancy may be terminated by:

(a)  a notice to determine served by the landlord in  accordance with the provisions of Article 6; or

(b)a request for a new tenancy made by the tenant in accordance with the provisions of Article 7

Business Tenancies (Northern Ireland) Order 1996

In essence, what this means is that the lease continues until either the tenant requests a new tenancy or the landlord seeks to determine the lease in accordance with the legislation. The law relating to the Business Tenancies (Northern Ireland) Order 1996 is complex and tenants and landlords alike are cautioned to take specialist advice in relation to service of notices as strict timescales apply.

If a tenant is keen to preserve the goodwill which attaches to the premises which they trade from, they need to familiarise themselves with the law and procedure relating to this area. If a landlord refuses the grant of a new tenancy, a tenant needs to understand the grounds upon which a landlord can do that, and whether or not they are entitled to be compensated for such refusal.

The landlord’s perspective

When a Landlord creates a commercial lease he is creating an investment. The landlord’s business is investing in the premises by creation of the commercial lease. This lease will seek to maximise rent and security for payment of rent, and uniformity of covenants and restrictions on individual tenants.

The tenant’s perspective

The tenant wishes to set up and operate their business from the premises without undue interference. They will be willing to repair the premises or if they are a tenant in a shopping centre to pay for maintenance of the shopping centre but they will not want to renew the premises or pay for the Landlord to renew or upgrade their investment at the tenant’s expense.

The tenant will want to be able to alter the premises as their business changes and they will need to consider structural and non-structural alterations and the required levels of consent or non consent. They may want freedom to change use as their business develops or to suit the requirements of an assignee.

Finally they will definitely wish to be able to assign their interest in the premises if their business at the premises does not succeed or where the business is to be sold at a premium.

If you are a business landlord or tenant and have any issues in relation to your lease you can speak to our business tenancy expert Maria Conway.