Dental Leases and Security of Tenure

Security of Tenure under the Tenant and Landlord Act 1954

The Security of Tenure means that once the fixed term of a lease has expired, the Tenant has the right to renew their lease on the same terms as previously agreed. This is extremely beneficial for a Tenant as they have a security, to continue their lease – save for a few exemptions.

The Landlord is only able to oppose this renewal if one of the statutory rights apply from the Land and Tenant Act. This is not as beneficial for the landlord as if they cannot rely on a particular “statutory right” – and if the Tenant is not in breach of the lease – they wouldn’t be able to remove that, Tenant. If the Lease does not contain security of tenure, you will be contracting out of the Act, which means you will be required to vacate the premises when your term is up, unless an entirely new lease can be agreed between the parties.

Essentially, most tenants will want to ensure they have security of Tenure, and most landlords will want to ensure that the lease is “contracted out” of the Act.

Understanding if your dental lease has Security of Tenure

Whether your dental lease has security of tenure or not, will likely depend on a few factors.

Firstly, the heads of terms, often heads of terms summarise the agreement which the parties wish to proceed with – and most heads of terms will likely be drafted to assume that security of tenure is granted. It is only if the landlord spots this assumption and expressly changes this position for the lease to contracted out.

Secondly, the incoming Tenant’s lender. If your tenant is taking on the lease because they are purchasing a practice – or if you are entering into a lease as part of a practice purchase – it make be likely that a lender is involved. A tenant’s lender will more than likely be taking a charge over the leasehold title and will more than likely want for the lease to benefit from security of tenure.

It is important to ensure that you, or the Tenant as the case may be, are aware from the outset whether the lease has security of tenure or not. If this is not known until further along the transaction, a Tenant’s lender may expect to have this security and if it cannot be given this could cause the purchase of the business to fall apart.

We would advise that you check very early on in a deal, whether it is just taking on a new lease or purchasing a business, that you know whether the lease has security of tenure or not, as this could seriously affect your ability to complete the deal.