Protecting your café or restaurant location with ‘security of tenure’

March 5, 2025

Protecting your café or restaurant location with ‘security of tenure’

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By Siôn Fôn

There are a number of crucial factors to the success of a business in the hospitality industry. One of these is location. For many café and restaurant owners, your premises will be a key part of your business identity and it is important to try and protect this when it comes to entering new leases.

Our property disputes expert, Siôn outlines some key points for tenants to be aware of when entering into new leases.

What is security of tenure?

The Landlord and Tenant Act 1954 gives important security rights to commercial tenants.

The Act was created to help tenants of commercial properties by creating what is called ‘security of tenure’. This means that a tenant has the right to renew their lease or remain in the property at the end of the contractual term.

This statutory right to renewal automatically applies where the property is used for a business purpose. The landlord can then only end the tenancy in certain specified situations and must have a good reason to do so.

This right for stay or seek a renewal is upheld unless the parties ‘contract out’ of the Act.

Why is this important to businesses such as cafes and restaurants?

There are many benefits for business owners that come from creating a lease ‘inside the Act’. These include court assessed rent valuations and control over the timing of their exit if the lease is not going to be renewed.

However, the most important benefit to a thriving hospitality business is the ability to stay at the location and protect the goodwill of their business without the threat of the landlord allowing a competing business to move into the location at the end of the lease.

Danger of ‘contracting out’ of the Act

The biggest danger of contracting out of the Landlord and Tenant Act is that any the renewal of your lease is then at the discretion of the landlord. This can be detrimental to business and leaves room for the landlord to lease to another similar business, that may then subsequently capitalise on the reputation of the location and existing business.

Process of ‘contracting out’ of the Act

Any agreement to contract out of the Act will be invalid unless it follows the following procedures:

• Statutory declaration– the landlord serves a warning notice less than 14 days before the lease is complete and the tenant replies with a statutory declaration.
• Advance notice – the landlord serves a warning notice 14 days or more before the lease is complete and the tenant replies with a simple declaration.

It is important that tenants take expert legal advice before entering into a new lease.

If you would like to discuss your options as a tenant or a landlord please don’t hesitate to contact Darwin Gray’s property experts for a free no-obligation call on 01248 301 100 or contact us via our Contact Form.