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KB BUSINESS DEVELOPMENT

+ BUSINESS CLINIC + Expert advice on the business of running a garment decoration company

economy and it’s absolutely vital that lenders do what they can to support their growth.”

n In January Metro Bank announced that it had ring-fenced £1 billion to lend to new and existing businesses and commercial customers in 2017. The bank says it takes a case-by-case approach to lending. Mark Stokes, managing director of commercial banking at Metro Bank, said: “Businesses are the very bedrock of the UK

n A CBI survey of UK manufacturers at the end of 2016 found that production growth is at its highest level since 2014, with expectations for growth in Q1 2017 remaining solid.

Q&A I ’m looking at leasing a commer- cial property as a long-term home for my garment decoration busi- ness, and I am expecting to spend some money on making the property suitable for my print and embroidery operations. Someone has mentioned security of tenure to me – what is it, and will I have to pay more for it? Security of tenure refers to the right giv- en by the Landlord & Tenant Act 1954 to business tenants to remain in occupation of premises at the end of the contractual term (that is, the number of years grant- ed) of a tenancy and to apply to court for the grant of a new lease. The rights will only arise where: n there is a tenancy, usually granted by a lease (that is, neither a correctly drawn licence nor tenancy at will would suffice), giving the tenant exclusive possession of premises for a term and at a rent; n the tenant must be in occupation of the premises for the purposes of its business; and n the rights have not been specifically excluded (that is, ‘contracted out’) from the tenancy. Accordingly, at the end of contractual term, where the rights apply, a tenancy

will continue on the same terms and at the same rent until terminated in accordance with the 1954 Act either by the landlord or the tenant properly serving notice in the correct form. If a tenancy benefiting from security of tenure is terminated by the landlord then the tenant will have the right to apply to court for a new lease and there are only limited grounds upon which the landlord can successfully oppose the renewal of a lease. In certain circumstances (that is, generally where the tenant is not in de- fault) a business tenant may be entitled to receive compensation from the landlord upon being required to vacate business premises as a result. Such rights will be particularly impor- tant to a tenant who is intending to make a significant investment in the premises

occupied, or wanting more certainty, and can be acquired either on the grant of a new tenancy or the acquisition of an existing tenancy. A tenant should not normally expect to pay more for security of tenure (for example, by way of higher rent); how- ever, in practice that will be a matter of negotiation. A tenant occupying under a tenancy benefiting from security of tenure must be aware that, generally speaking, they cannot simply walk away from the ten- ancy at the end of the contractual term. If the tenancy has not been brought to an end by proper service of the correct notice then it will continue as will the tenant’s liability under it – for example, for payment of rent and business rates, and for repair of the premises.

Nick Sanders is a partner at Mayo Wynne Baxter, which provides comprehensive and personal service to a broad spectrum of local,

national and international clients. w www.mayowynnebaxter.co.uk

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