The Regulatory Reform (Business Tenancies)(England and Wales) Order 2003 came into force on 1 June 2004. It removed the need for a court order and substituted a new procedure for contracting out of security of tenure under Part II of the Landlord and Tenant Act 1954. Landlords now have to serve a warning notice on prospective tenants, explaining the implications of agreeing to give up statutory renewal rights, and, before committing themselves, tenants must sign a formal declaration confirming that they accept the consequences of entering into an agreement excluding security of tenure under the Act.
The order prescribes alternative forms of declaration: a “simple declaration” for use where the tenant has had at least 14 days in which to reflect on the warning notice and to decide whether to look for alternative premises with security of tenure under the Act; or a “statutory declaration” for use in cases where the parties want to proceed without delay. Statutory declarations must be sworn before an independent solicitor (or another person qualified to administer oaths). This requirement seeks to protect tenants landlords seeking to exclude renewal rights at the last minute, without giving the tenant any realistic opportunity to consider other alternatives.
The Regulatory Reform (Business Tenancies)(England and Wales) Order 2003 came into force on 1 June 2004. It removed the need for a court order and substituted a new procedure for contracting out of security of tenure under Part II of the Landlord and Tenant Act 1954. Landlords now have to serve a warning notice on prospective tenants, explaining the implications of agreeing to give up statutory renewal rights, and, before committing themselves, tenants must sign a formal declaration confirming that they accept the consequences of entering into an agreement excluding security of tenure under the Act. The order prescribes alternative forms of declaration: a “simple declaration” for use where the tenant has had at least 14 days in which to reflect on the warning notice and to decide whether to look for alternative premises with security of tenure under the Act; or a “statutory declaration” for use in cases where the parties want to proceed without delay. Statutory declarations must be sworn before an independent solicitor (or another person qualified to administer oaths). This requirement seeks to protect tenants landlords seeking to exclude renewal rights at the last minute, without giving the tenant any realistic opportunity to consider other alternatives. The requirements are mandatory. Landlords must use the statutory declaration procedure if a warning notice is given less than 14 days before the tenant enters into an agreement for lease or lease. If more than 14 days have elapsed since the warning notice was given, tenants must make a simple declaration. Consequently, some practitioners have been concerned that an agreement to contract out would be void in cases where landlords accept a statutory declaration and then allow more than 14 days to elapse before the tenant enters into the agreement for lease or lease. To avoid this risk, some solicitors have been advising landlords not to rely upon the statutory declaration given, and to require tenants to make a further, simple declaration before proceeding. The county court decision in Patel v Chiltern Railway Co Ltd [2007] PLSCS 156 offers welcome reassurance that this is unnecessary. The judge followed in the footsteps of the Court of Appeal in Brighton and Hove City Council v Collinson [2004] 2 EGLR 65; [2004] 28 EG 178 (a decision on the requirements for court orders authorising agreements to contract out of the Act where the court refused to allow over-technicality to prevail over common sense), and ruled that the parties had validly contracted the tenancy out of the Act. Quite right too. The legislation requires tenants to make simple declarations “in the form, or substantially in the form” prescribed by the order. A statutory declaration is in substantially the same form as a simple declaration and, by adopting the more stringent procedure requiring a sworn declaration, the landlord had gone further than was necessary to contract the lease out of the Act. The rationale is not reversible, however, and landlords should not accept a simple declaration in circumstances where a statutory declaration is required. Allyson Colby is a property law consultant
