Business Renewal

The Business Tenancies Act (NI) 1964 applies to tenancies of premises occupied wholly or partly for trade, profession, or employment, or any body carried on by a corporate or incorporate body of persons, whether or not carried on for reward. It does not apply to certain categories of tenancies unless there has been at least six months of occupation for the same business.

The Act grants a right of compensation for improvements on termination of a business premises letting, a right to renew tenancy, and a right to compensation for disturbances, in some cases.

The tenant is entitled to compensation for improvements that add to the letting value of the premises. The position is determined at the end of the tenancy and may be referred to the Lands Tribunal in case of a dispute.

A notice of improvement must first be served on the landlord. The landlord has three months in which to either serve a notice of objection and notice of undertaking. Objections may be the subject of reference to the Lands Tribunal.

Business tenancies may continue until terminated under the legislation. A letting can only be terminated by a notice to determine served on the tenant, specifying a date of termination. This date should not be more than 12 months and not less than six months after service.

The tenant must notify the landlord within two months as to whether they are willing to surrender the premises. The notice must require the tenant to specify whether they are willing to give up possession, and if not, on what grounds under the legislation they propose to request a new tenancy.

The tenant may terminate their tenancy by requesting a new tenancy, in which case the landlord has months to make objections and state the grounds.

An application may be made to the Lands Tribunal for a new tenancy. The landlord may only oppose the application on the grounds set out in Section 10. This includes

• failure to repair and maintain, persistent delays in paying rents, and substantial breaches of obligations.
• The landlord, if willing to offer or provide secure alternative accommodation, intends to demolish, rebuild, undertake a substantial construction scheme, or
• occupy the premises for a reasonable time for their own business or as their residence.

If any of the above grounds are established to the satisfaction of the Tribunal, the landlord has no entitlement for a new tenancy.

The tenancy is fixed by the Tribunal as is reasonable in the circumstances, with a maximum term of 14 years. The rent is determined by the Tribunal at the open market trend, taking into account goodwill and improvements undertaken by predecessors.

If the application is dismissed other than by reason of the tenant’s default, the tenant is entitled to compensation for disturbance upon quitting the premises. The compensation is based on the net annual value of the holding or twice this amount if the tenant or their predecessor has occupied the premises for at least 14 years.

Agreements to the contrary, which remove any rights under the legislation, are ineffective.

Supplemental tenancies to which the legislation applies do not come to an end unless terminated in accordance with the legislation. They may be terminated by a notice to determine served by the landlord or a request for a new tenancy by the tenant.

Where a tenancy continues but ceases to be subject to the legislation, it may be terminated by not less than three nor more than six months’ notice in the prescribed form. If a landlord serves a notice to quit premises that do not qualify, and these premises are then used as a business during the notice period, it does not thereby become entitled to the rights of renewal under the legislation.

Where a tenancy requires more than six months’ notice, apart from statutory periods, then a period of 12 months’ notice is substituted for six months above.

Notice to determine requires the tenant, within two months of the service of notice, to notify the landlord in writing whether or not they are willing to give up possession of the property and state whether the landlord would oppose an application to the Lands Tribunal and, if so, on what grounds.

A tenant may request a new tenancy where the tenancy under which they hold is a tenancy granted for a term exceeding one year, whether or not continued above, or the tenancy is for a term certain exceeding one year and thereafter year-to-year, or the tenancy is granted for a period dependent on the life or other uncertain event.

The request for the tenancy shall be a tenancy beginning at a date not more than 12 nor less than six months after the request, as may be specified.

The tenant’s request for a new tenancy must be in a prescribed form, served on the landlord, and set out the general terms the tenant proposes for the property to be comprised, the rent, duration, and other terms of the tenancy. A tenant’s request for a new tenancy shall not be made if the landlord has already served a notice to determine, and no notice shall be served by the landlord or the tenant after the making by the tenant of a request for a new tenancy.

Where the tenant makes a request for a new tenancy under the legislation, the existing tenancy terminates immediately before the date specified in the request for the new tenancy.

Within two months of the tenant’s request for a new tenancy, the landlord may serve a notice to the tenant stating their opposition to the application to the Land Tribunal for the grant of a new tenancy.

The above does not prevent the termination of a tenancy by surrender, forfeiture, or lawful objection for nonpayment of rent.

Where only for the statutory rights, the tenancy would end due to termination of the term, and the tenant, not later than three months before the date on which the tenancy would come to an end, serves a notice on the immediate landlord stating their desire not to continue the tenancy, the statutory right of renewal shall not apply.

A tenancy that would have expired due to the termination of the term and is continuing thereafter, pending a new lease or termination in accordance with the procedures, may be brought to an end on any gale day by not less than three months’ notice served by the tenant on the immediate landlord.

Where a landlord and tenant agree to the grant of a future tenancy, to commence on a specified date, the existing tenancy shall continue until that date and shall not be subject to the above statutory right. The new agreement takes effect in substitution.

A tenant under a tenancy to which the legislation applies may apply to the Lands Tribunal for the grant of a new tenancy, where the landlord has served a notice to determine or where the tenant has made a request for a new tenancy. In the case of a notice to determine by the landlord, the tenant must have notified the landlord that they will not be willing to give up possession at the date of termination.

The application must be made between two and four months after service of the landlord’s notice to determine or after the making of the tenant’s request for a new tenancy. The landlord may agree to a longer period.

The tenancy will continue on an interim basis pending determination of the matter by the Lands Tribunal.

The grounds of resistance on the part of the landlord include the tenant’s failure to comply with its repairing obligations, persistent delay in paying rent, other substantial breaches, offering other reasonable alternative accommodation, intending to demolish and rebuild the premises, or carrying out substantial construction works, and proposing to occupy the premises for their own business or as their residence.

The Lands Tribunal may require the landlord to furnish evidence of planning permission for rebuilding works, etc.

Where a tenant applies for a new tenancy and the landlord fails to establish one of the grounds of opposition, the Lands Tribunal will order the grant of a new tenancy. The property is to be designated by reference to the circumstances existing at the date of the order.

The tenancy is for such a period as is agreed or, in default of agreement, up to fourteen years, as determined by the Lands Tribunal. The rent is to be determined by the Lands Tribunal. In the absence of agreement, it is to be the rent between a willing lessor and lessee, as might reasonably be expected in the open market. It disregards the fact that the tenant and their predecessors had been in occupation, goodwill attaching by reason of the tenant’s business, and any improvements carried out by the tenant or a predecessor in their title.

When an order is made, the landlord is bound to execute a lease in favor of the tenant. The tenant is bound to accept the tenancy. The tenant may, within fourteen days of the making of the order, apply for it to be revoked. If it is agreed or determined by the Lands Tribunal, the current tenancy shall continue beyond the date at which it would have come to an end or for such a period as may be agreed or determined to afford the landlord a reasonable opportunity for re-letting or otherwise disposing of the premises. Where a tenancy is revoked, the Land Tribunals may vary its order as to costs.

If a landlord or tenant refuses to execute the lease, the Lands Tribunal may, on application, nominate a party to execute it on their behalf.

Where a landlord cannot be found or is under a disability or acting in a fiduciary capacity, the Tribunal may make such an order as it thinks fit to enable the new tenancy to be granted.

Where a tenancy is refused due to the latter grounds, i.e., the non-default grounds, the tenant is entitled to compensation upon quitting the premises. The amount is the net annual value of the holding, which is twice the net annual value in the case of leases or premises that have been used for a business for over fourteen years.

The net annual value is referred to the Commissioner for Valuation and shall be the net annual value shown in the valuation list or, if none exists, it is to be the value certified by the Commissioner of Valuation as attributable to the value or the assessment as would be entered on the valuation list by the Commissioner for Valuation.

Agreements relating to tenancies and rights of renewal that purport directly or indirectly to preclude the tenant from making an application or request under the legislation or provide for termination and surrender of the tenancy in the event of making an application or request for the imposition of a penalty, restriction, or disability are void.

Where during the five years immediately preceding the date on which the tenancy concerned is to quit the premises, which have been occupied for the purpose of a business carried on by the occupier, or for those or other purposes, or if there was a change, a business is carried on by the successor, any agreement that purports to exclude or reduce compensation is void. This does not affect any agreement as to the amount of any compensation made after the right to compensation has accrued.

A Land Tribunal may make an order of compensation where a landlord succeeds in opposing a tenancy but fails to fulfill their intentions to redevelop, etc., without reasonable excuse.

There are penalties for fraud or willful concealment of material facts in relation to applications under the legislation. If a person, by fraudulent or willful concealment of material facts, induces a landlord to grant or refuse a new tenancy, they are guilty of an offense, subject on summary conviction to a fine of up to level 3 on the standard scale, imprisonment for six months, or on indictment, an unlimited fine, or imprisonment up to two years.

Tenants and landlords of business premises have duties to give each other information relevant to the application. A landlord may serve a notice on the tenancy requiring the tenant to notify that person whether they occupy the premises wholly or partly for business purposes and whether the tenancy has effect subject to any sub-tenancy, together with details of the rent, etc.

A tenant may serve notices on immediate landlords requiring such landlords to inform them of the nature and duration of the landlord’s reversion. There are provisions for service of notices on superior landlords or their agent.

It is the duty of the person who has a notice to give the requisite information within one month. If they fail or neglect to do so, the person by whom the notice was served may apply to the Lands Tribunal for a compulsory order.