The renewal of a business lease under the Landlord and Tenant Act 1954 will, in almost every case, create a “new tenancy” for the purpose of the Landlord and Tenant (Covenants) Act 1995. This means that where the current lease was granted before 1996, an unwary landlord will no longer be in a position (as under the current lease) to hold the tenant responsible after an assignment of the lease. Landlords have accordingly been advised to press for the inclusion of a clause (an AGA provision), whereby the tenant will be unable to assign without first entering into an authorised guarantee agreement complying with section 16 of the 1995 Act.
However, when it falls to the court to determine the desirability of such a provision, there is, prima facie, a tension between: (a) the requirement, in section 35 of the 1954 Act, to have regard to the terms of the current tenancy; and (b) a line of authority that says that the tenant should not be deprived of the benefit of supervening legislation.
In Wallis Fashion Group v General Accident Life Assurance Ltd [2000] 27 EG 145, the parties were agreed upon the inclusion of an AGA provision, but the landlord resisted a reasonableness qualification that was urged upon the court by the tenant. It was held, following the guidance given in O’May v City of London Real Property Co Ltd [1982] 1 EGLR 76, that the wording proposed by the tenant struck a fair balance between the interests of the parties.
PP 2000/26
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The renewal of a business lease under the Landlord and Tenant Act 1954 will, in almost every case, create a “new tenancy” for the purpose of the Landlord and Tenant (Covenants) Act 1995. This means that where the current lease was granted before 1996, an unwary landlord will no longer be in a position (as under the current lease) to hold the tenant responsible after an assignment of the lease. Landlords have accordingly been advised to press for the inclusion of a clause (an AGA provision), whereby the tenant will be unable to assign without first entering into an authorised guarantee agreement complying with section 16 of the 1995 Act.
However, when it falls to the court to determine the desirability of such a provision, there is, prima facie, a tension between: (a) the requirement, in section 35 of the 1954 Act, to have regard to the terms of the current tenancy; and (b) a line of authority that says that the tenant should not be deprived of the benefit of supervening legislation.
In Wallis Fashion Group v General Accident Life Assurance Ltd [2000] 27 EG 145, the parties were agreed upon the inclusion of an AGA provision, but the landlord resisted a reasonableness qualification that was urged upon the court by the tenant. It was held, following the guidance given in O’May v City of London Real Property Co Ltd [1982] 1 EGLR 76, that the wording proposed by the tenant struck a fair balance between the interests of the parties.
