[F137Compensation where order for new tenancy precluded on certain grounds

(1)Where on the making of an application under section 24 of this Act the court is precluded (whether by subsection (1) or subsection (2) of section 31 of this Act) from making an order for the grant of a new tenancy by reason of any of the grounds specified in paragraphs (e), (f) and (g) of subsection (1) of section 30 of this Act and not of any grounds specified in any other paragraph of that subsection, or where no other ground is specified in the landlord’s notice under section 25 of this Act or, as the case may be, under section 26(6) thereof, than those specified in the said paragraphs (e), (f) and (g) and either no application under the said section 24 is made or such an application is withdrawn, then, subject to the provisions of this Act, the tenant shall be entitled on quitting the holding to recover from the landlord by way of compensation an amount determined in accordance with the following provisions of this section.

(2)[F2Subject to subsections (5A) to [F3(5E)] of this section] the said amount shall be as follows, that is to say,—

(a)where the conditions specified in the next following subsection are satisfied it shall be [F4the product of the appropriate multiplier and] twice the rateable value of the holding,

(b)in any other case it shall be [F4the product of the appropriate multiplier and] the rateable value of the holding.

(3)The said conditions are—

(a)that, during the whole of the fourteen years immediately preceding the termination of the current tenancy, premises being or comprised in the holding have been occupied for the purposes of a business carried on by the occupier or for those and other purposes;

(b)that, if during those fourteen years there was a change in the occupier of the premises, the person who was the occupier immediately after the change was the successor to the business carried on by the person who was the occupier immediately before the change.

(4)Where the court is precluded from making an order for the grant of a new tenancy under this Part of this Act in the circumstances mentioned in subsection (1) of this section, the court shall on the application of the tenant certify that fact.

(5)For the purposes of subsection (2) of this section the rateable value of the holding shall be determined as follows:—

(a)where in the valuation list in force at the date on which the landlord’s notice under section 25 or, as the case may be, subsection (6) of section 26 of this Act is given a value is then shown as the annual value (as hereinafter defined) of the holding, the rateable value of the holding shall be taken to be that value;

(b)where no such value is so shown with respect to the holding but such a value or such values is or are so shown with respect to premises comprised in or comprising the holding or part of it, the rateable value of the holding shall be taken to be such value as is found by a proper apportionment or aggregation of the value or values so shown;

(c)where the rateable value of the holding cannot be ascertained in accordance with the foregoing paragraphs of this subsection, it shall be taken to be the value which, apart from any exemption from assessment to rates, would on a proper assessment be the value to be entered in the said valuation list as the annual value of the holding;

and any dispute arising, whether in proceedings before the court or otherwise, as to the determination for those purposes of the rateable value of the holding shall be referred to the Commissioners of Inland Revenue for decision by a valuation officer.

An appeal shall lie to the Lands Tribunal from any decision of a valuation officer under this subsection, but subject thereto any such decision shall be final.

[F5(5A)If part of the holding is domestic property, as defined in section 66 of the Local Government Finance Act 1988,—

(a)the domestic property shall be disregarded in determining the rateable value of the holding under subsection (5) of this section; and

(b)if, on the date specified in subsection (5)(a) of this section, the tenant occupied the whole or any part of the domestic property, the amount of compensation to which he is entitled under subsection (1) of this section shall be increased by the addition of a sum equal to his reasonable expenses in removing from the domestic property.

(5B)Any question as to the amount of the sum referred to in paragraph (b) of subsection (5A) of this section shall be determined by agreement between the landlord and the tenant or, in default of agreement, by the court.

(5C)If the whole of the holding is domestic property, as defined in section 66 of the Local Government Finance Act 1988, for the purposes of subsection (2) of this section the rateable value of the holding shall be taken to be an amount equal to the rent at which it is estimated the holding might reasonably be expected to let from year to year if the tenant undertook to pay all usual tenant’s rates and taxes and to bear the cost of the repairs and insurance and the other expenses (if any) necessary to maintain the holding in a state to command that rent.

(5D)The following provisions shall have effect as regards a determination of an amount mentioned in subsection (5C) of this section—

(a)the date by reference to which such a determination is to be made is the date on which the landlord’s notice under section 25 or, as the case may be, subsection (6) of section 26 of this Act is given;

(b)any dispute arising, whether in proceedings before the court or otherwise, as to such a determination shall be referred to the Commissioners of Inland Revenue for decision by a valuation officer;

(c)an appeal shall lie to the Lands Tribunal from such a decision but, subject to that, such a decision shall be final.]

[F6(5E)Any deduction made under paragraph 2A of Schedule 6 to the Local Government Finance Act 1988 (deduction from valuation of hereditaments used for breeding horses etc.) shall be disregarded, to the extent that it relates to the holding, in determining the rateable value of the holding under subsection (5) of this section.]

(6)The Commissioners of Inland Revenue may by statutory instrument make rules prescribing the procedure in connection with references under this section.

(7)In this section—

• the reference to the termination of the current tenancy is a reference to the date of termination specified in the landlord’s notice under section 25 of this Act or, as the case may be, the date specified in the tenant’s request for a new tenancy as the date from which the new tenancy is to begin;

• the expression “annual value” means rateable value except that where the rateable value differs from the net annual value the said expression means net annual value;

• the expression “valuation officer” means any officer of the Commissioners of Inland Revenue for the time being authorised by a certificate of the Commissioners to act in relation to a valuation list.]

[F7(8)In subsection (2) of this section “the appropriate multiplier” means such multiplier as the Secretary of State may by order made by statutory instrument prescribe [F8and different multipliers may be so prescribed in relation to different cases].

(9)A statutory instrument containing an order under subsection (8) of this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.]

[F138 Restriction on agreements excluding provisions of Part II

(1)Any agreement relating to a tenancy to which this Part of this Act applies (whether contained in the instrument creating the tenancy or not) shall be void (except as provided by subsection (4) of this section) in so far as it purports to preclude the tenant from making an application or request under this Part of this Act or provides for the termination or the surrender of the tenancy in the event of his making such an application or request or for the imposition of any penalty or disability on the tenant in that event.

(2)Where—

(a)during the whole of the five years immediately preceding the date on which the tenant under a tenancy to which this Part of this Act applies is to quit the holding, premises being or comprised in the holding have been occupied for the purposes of a business carried on by the occupier or for those and other purposes, and

(b)if during those five years there was a change in the occupier of the premises, the person who was the occupier immediately after the change was the successor to the business carried on by the person who was the occupier immediately before the change,

any agreement (whether contained in the instrument creating the tenancy or not and whether made before or after the termination of that tenancy) which purports to exclude or reduce compensation under the last foregoing section shall to that extent be void, so however that this subsection shall not affect any agreement as to the amount of any such compensation which is made after the right to compensation has accrued.

(3)In a case not falling within the last foregoing subsection the right to compensation conferred by the last foregoing section may be excluded or modified by agreement.

(4)The court may—

(a)on the joint application of the persons who will be the landlord and the tenant in relation to a tenancy to be granted for a term of years certain which will be a tenancy to which this Part of this Act applies, authorise an agreement excluding in relation to that tenancy the provisions of sections 24 to 28 of this Act; and

(b)on the joint application of the persons who are the landlord and the tenant in relation to a tenancy to which this Part of this Act applies, authorise an agreement for the surrender of the tenancy on such date or in such circumstances as may be specified in the agreement and on such terms (if any) as may be so specified;

if the agreement is contained in or endorsed on the instrument creating the tenancy or such other instrument as the court may specify; and an agreement contained in or endorsed on an instrument in pursuance of an authorisation given under this subsection shall be valid notwithstanding anything in the preceding provisions of this section.]

General and supplementary provisions

39 Saving for compulsory acquisitions

(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1

(2)If the amount of the compensation which would have been payable under section thirty-seven of this Act if the tenancy had come to an end in circumstances giving rise to compensation under that section and the date at which the acquiring authority obtained possession had been the termination of the current tenancy exceeds the amount of [F2the compensation payable under section 121 of the M1Lands Clauses Consolidation Act 1845 or section 20 of the M2Compulsory Purchase Act 1965 in the case of a tenancy to which this Part of this Act applies], that compensation shall be increased by the amount of the excess.

(3)Nothing in section twenty-four of this Act shall affect the operation of the said section one hundred and twenty-one.

40 Duty of tenants and landlords of business premises to give information to each other

(1)Where any person having an interest in any business premises, being an interest in reversion expectant (whether immediately or not) on a tenancy of those premises, serves on the tenant a notice in the prescribed form requiring him to do so, it shall be the duty of the tenant to notify that person in writing within one month of the service of the notice—

(a)whether he occupies the premises or any part thereof wholly or partly for the purposes of a business carried on by him, and

(b)whether his tenancy has effect subject to any sub-tenancy on which his tenancy is immediately expectant and, if so, what premises are comprised in the sub-tenancy, for what term it has effect (or, if it is terminable by notice, by what notice it can be terminated), what is the rent payable thereunder, who is the sub-tenant, and (to the best of his knowledge and belief) whether the sub-tenant is in occupation of the premises or of part of the premises comprised in the sub-tenancy and, if not, what is the sub-tenant’s address.

(2)Where the tenant of any business premises, being a tenant under such a tenancy as is mentioned in subsection (1) of section twenty-six of this Act, serves on any of the persons mentioned in the next following subsection a notice in the prescribed form requiring him to do so, it shall be the duty of that person to notify the tenant in writing within one month after the service of the notice—

(a)whether he is the owner of the fee simple in respect of those premises or any part thereof or the mortgagee in possession of such an owner and, if not,

(b)(to the best of his knowledge and belief) the name and address of the person who is his or, as the case may be, his mortgagor’s immediate landlord in respect of those premises or of the part in respect of which he or his mortgagor is not the owner in fee simple, for what term his or his mortgagor’s tenancy thereof has effect and what is the earliest date (if any) at which that tenancy is terminable by notice to quit given by the landlord.

(3)The persons referred to in the last foregoing subsection are, in relation to the tenant of any business premises,—

(a)any person having an interest in the premises, being an interest in reversion expectant (whether immediately or not) on the tenant’s, and

(b)any person being a mortgagee in possession in respect of such an interest in reversion as is mentioned in paragraph (a) of this subsection;

and the information which any such person as is mentioned in paragraph (a) of this subsection is required to give under the last foregoing subsection shall include information whether there is a mortgagee in possession of his interest in the premises and, if so, what is the name and address of the mortgagee.

(4)The foregoing provisions of this section shall not apply to a notice served by or on the tenant more than two years before the date on which apart from this Act his tenancy would come to an end by effluxion of time or could be brought to an end by notice to quit given by the landlord.

(5)In this section—

• the expression “business premises” means premises used wholly or partly for the purposes of a business;

• the expression “mortgagee in possession” includes a receiver appointed by the mortgagee or by the court who is in receipt of the rents and profits, and the expression “his mortgagor” shall be construed accordingly;

• the expression “sub-tenant” includes a person retaining possession of any premises by virtue of [F1the M1Rent Act 1977] after the coming to an end of a sub-tenancy, and the expression “sub-tenancy” includes a right so to retain possession.

41 Trusts

(1)Where a tenancy is held on trust, occupation by all or any of the beneficiaries under the trust, and the carrying on of a business by all or any of the beneficiaries, shall be treated for the purposes of section twenty-three of this Act as equivalent to occupation or the carrying on of a business by the tenant; and in relation to a tenancy to which this Part of this Act applies by virtue of the foregoing provisions of this subsection—

(a)references (however expressed) in this Part of this Act and in the Ninth Schedule to this Act to the business of, or to carrying on of business, use, occupation or enjoyment by, the tenant shall be construed as including references to the business of, or to carrying on of business, use, occupation or enjoyment by, the beneficiaries or beneficiary;

(b)the reference in paragraph (d) of [F1subsection (1) of] section thirty-four of this Act to the tenant shall be construed as including the beneficiaries or beneficiary; and

(c)a change in the persons of the trustees shall not be treated as a change in the person of the tenant.

(2)Where the landlord’s interest is held on trust the references in paragraph (g) of subsection (1) of section thirty of this Act to the landlord shall be construed as including references to the beneficiaries under the trust or any of them; but, except in the case of a trust arising under a will or on the intestacy of any person, the reference in subsection (2) of that section to the creation of the interest therein mentioned shall be construed as including the creation of the trust.

[F141A Partnerships

(1)The following provisions of this section shall apply where—

(a)a tenancy is held jointly by two or more persons (in this section referred to as the joint tenants); and

(b)the property comprised in the tenancy is or includes premises occupied for the purposes of a business; and

(c)the business (or some other business) was at some time during the existence of the tenancy carried on in partnership by all the persons who were then the joint tenants or by those and other persons and the joint tenants’ interest in the premises was then partnership property; and

(d)the business is carried on (whether alone or in partnership with other persons) by one or some only of the joint tenants and no part of the property comprised in the tenancy is occupied, in right of the tenancy, for the purposes of a business carried on (whether alone or in partnership with other persons) by the other or others.

(2)In the following provisions of this section those of the joint tenants who for the time being carry on the business are referred to as the business tenants and the others as the other joint tenants.

(3)Any notice given by the business tenants which, had it been given by all the joint tenants, would have been—

(a)a tenant’s request for a new tenancy made in accordance with section 26 of this Act; or

(b)a notice under subsection (1) or subsection (2) of section 27 of this Act;

shall be treated as such if it states that it is given by virtue of this section and sets out the facts by virtue of which the persons giving it are the business tenants; and references in those sections and in section 24A of this Act to the tenant shall be construed accordingly.

(4)A notice given by the landlord to the business tenants which, had it been given to all the joint tenants, would have been a notice under section 25 of this Act shall be treated as such a notice, and references in that section to the tenant shall be construed accordingly.

(5)An application under section 24(1) of this Act for a new tenancy may, instead of being made by all the joint tenants, be made by the business tenants alone; and where it is so made—

(a)this Part of this Act shall have effect, in relation to it, as if the references therein to the tenant included references to the business tenants alone; and

(b)the business tenants shall be liable, to the exclusion of the other joint tenants, for the payment of rent and the discharge of any other obligation under the current tenancy for any rental period beginning after the date specified in the landlord’s notice under section 25 of this Act or, as the case may be, beginning on or after the date specified in their request for a new tenancy.

(6)Where the court makes an order under section 29(1) of this Act for the grant of a new tenancy on an application made by the business tenants it may order the grant to be made to them or to them jointly with the persons carrying on the business in partnership with them, and may order the grant to be made subject to the satisfaction, within a time specified by the order, of such conditions as to guarantors, sureties or otherwise as appear to the court equitable, having regard to the omission of the other joint tenants from the persons who will be the tenants under the new tenancy.

(7)The business tenants shall be entitled to recover any amount payable by way of compensation under section 37 or section 59 of this Act.]

[F142 Groups of companies

(1)For the purposes of this section two bodies corporate shall be taken to be members of a group if and only if one is a subsidiary of the other or both are subsidiaries of a third body corporate.

• In this subsection “subsidiary” has [F2the meaning given by section 736 of the Companies Act 1985].

(2)Where a tenancy is held by a member of a group, occupation by another member of the group, and the carrying on of a business by another member of the group, shall be treated for the purposes of section 23 of this Act as equivalent to occupation or the carrying on of a business by the member of the group holding the tenancy; and in relation to a tenancy to which this Part of this Act applies by virtue of the foregoing provisions of this subsection—

(a)references (however expressed) in this Part of this Act and in the Ninth Schedule to this Act to the business of or to use occupation or enjoyment by the tenant shall be construed as including references to the business of or to use occupation or enjoyment by the said other member;

(b)the reference in paragraph (d) of subsection (1) of section 34 of this Act to the tenant shall be construed as including the said other member; and

(c)an assignment of the tenancy from one member of the group to another shall not be treated as a change in the person of the tenant.

(3)Where the landlord’s interest is held by a member of a group—

(a)the reference in paragraph (g) of subsection (1) of section 30 of this Act to intended occupation by the landlord for the purposes of a business to be carried on by him shall be construed as including intended occupation by any member of the group for the purposes of a business to be carried on by that member; and

(b)the reference in subsection (2) of that section to the purchase or creation of any interest shall be construed as a reference to a purchase from or creation by a person other than a member of the group.]

43 Tenancies excluded from Part II

(1)This Part of this Act does not apply—

(a)to a tenancy of an agricultural holding [F1 [F2which is a tenancy in relation to which the Agricultural Holdings Act 1986 applies or a tenancy which would be a tenancy of an agricultural holding in relation to which that Act applied if subsection (3) of section 2 of that Act][F3 did not have effect or, in a case where approval was given under subsection (1) of that section], if that approval had not been given];

[F4(aa)to a farm business tenancy;]

(b)to a tenancy created by a mining lease;

(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F5

[F6 [F7(d)to a tenancy of premises licensed for the sale of intoxicating liquor for consumption on the premises, other than—

(i)premises which are structurally adapted to be used, and are bona fide used, for a business which comprises one or both of the following, namely, the reception of guests and travellers desiring to sleep on the premises and the carrying on of a restaurant, being a business a substantial proportion of which consists of transactions other than the sale of intoxicating liquor;

(ii)premises adapted to be used, and bona fide used, only for one or more of the following purposes, namely, for judicial or public administrative purposes, or as a theatre or place of public or private entertainment, or as public gardens or picture galleries, or for exhibitions, or for any similar purpose to which the holding of the licence is merely ancillary;

(iii)premises adapted to be used, and bona fide used, as refreshment rooms at a railway station.]]

(2)This Part of this Act does not apply to a tenancy granted by reason that the tenant was the holder of an office, appointment or employment from the grantor thereof and continuing only so long as the tenant holds the office, appointment or employment, or terminable by the grantor on the tenant’s ceasing to hold it, or coming to an end at a time fixed by reference to the time at which the tenant ceases to hold it:

Provided that this subsection shall not have effect in relation to a tenancy granted after the commencement of this Act unless the tenancy was granted by an instrument in writing which expressed the purpose for which the tenancy was granted.

[F8(3)This Part of this Act does not apply to a tenancy granted for a term certain not exceeding six months unless—

(a)the tenancy contains provision for renewing the term or for extending it beyond six months from its beginning; or

(b)the tenant has been in occupation for a period which, together with any period during which any predecessor in the carrying on of the business carried on by the tenant was in occupation, exceeds twelve months.]