On 1 April 2017 adjustments to the rateable values of commercial properties come into force in England and Wales. While the reforms will primarily affect tenants, landlords should be alive to situations where a protected tenant's lease is about to expire (or where a tenant is holding over) and the landlord does not wish to grant a renewal lease.
The Landlord and Tenant Act 1954 gives business tenants with security of tenure the right to compensation. This arises where a landlord successfully opposes a lease renewal on one of the "no fault" grounds – typically because the landlord wants the premises back to occupy, redevelop or carry out improvements.
Compensation is calculated by applying a multiplier to the rateable value of the premises. This figure can then be doubled if the tenant (and any predecessor) has been in occupation of the premises carrying on the same business for 14 years or more.
The rateable value of the property is established by reference to the valuation list that is in force on the date of service of the landlord's notice (either a section 25 notice or a section 26 counter-notice depending on the circumstances).
Think fast – will the timing of service of your notice make a difference to the compensation you will have to pay a tenant? Or, might you be able to take advantage of a decrease in the rateable value by serving notice on 1 April or later?
Your surveyor will be able to assist with establishing the relevant rateable values but we can help with advice on the ins and outs of the legislation and, of course, drafting and serving any required notices ensuring that you remain within the statutory timeframes under the 1954 Act for service.