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ARTICLE · 14 JUNE 2022

Clarity On Contracting-Out

Herbert Smith Freehills Kramer LLP
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The process for contracting-out a new tenancy of business premises from the statutory right to renew under the Landlord and Tenant Act 1954 (the 1954 Act) is a key one for all landlords, and especially developers.

United KingdomReal Estate and Construction
Matthew Bonye
Matthew Bonye
Matthew Weal
Matthew Weal
Shanna Davison
Shanna Davison

The process for contracting-out a new tenancy of business premises from the statutory right to renew under the Landlord and Tenant Act 1954 (the 1954 Act) is a key one for all landlords, and especially developers. Commonly, pre-lettings are negotiated even before ground is broken on a site. Certainty that all those lettings are properly contracted out of the 1954 Act is important.

Since 2003, the property industry had been following the contracting-out procedure with little problem, however that was brought into question in 2018 with TFS Stores Ltd v The Designer Retail Outlet Centres (Mansfield) General Partner Ltd & Ors. Fortunately, having refused permission to appeal the Court of Appeal's 2021 decision, the Supreme Court has now closed the door on the challenge to the procedure giving developers one less thing to worry about.

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