Posted by Paul Daniels, Partner
Dental practice premises: why security of tenure matters
Many dental practices occupy their premises under occupational leases. This can bring many benefits, such as a requirement for less capital outlay than freehold ownership, and the possibility to secure a space in a great location where there are no freehold opportunities available. Leases are also time-limited, but is that a help or a hindrance?
Help or hindrance?
The fact that occupational leases are time-limited may enable a practice to relocate more easily if its situation changes: for example, if it finds a space with a more competitive rent elsewhere, or premises with more up-to-date facilities come on the market.
However, the limited duration of a lease can turn out to be a double-edged sword. For instance, a practice may wish to remain in occupation once the lease term comes to an end, not least to preserve the goodwill it has built up in the premises in question. But what if the landlord refuses to offer a renewal lease on satisfactory terms – or at all?
Unfortunately, in this instance, the landlord is perfectly entitled to take this hard-line approach if the practice lease is excluded from the security of tenure provisions of the Landlord and Tenant Act 1954.
How can the 1954 Act help?
This Act was introduced to help business tenants by giving them a statutory right to a new lease on similar terms (known as “security of tenure”) once their lease comes to an end. While this was a welcome change for business tenants, the downside is that the parties to a lease are still permitted to exclude security of tenure when the lease is entered into. Moreover, landlords will regularly push for security of tenure to be excluded to give them maximum freedom for the future.
However, it is just as important for a practice to retain this statutory right. It should therefore make a strong case for this before the lease is entered into. Of course, the landlord may not play ball on this, in which case the practice will either need to accept that it won’t have security of tenure (and take its chances when the lease comes up for renewal), or consider alternatives, such as trying to take a lease of alternative premises where security of tenure will be offered.
Whether you are considering taking new leasehold premises for your dental practice, or are in the process of renewing your lease (with or without security of tenure), our team of specialist healthcare lawyers will be pleased to guide you through this process and help you avoid the many pitfalls of landlord and tenant law.
For further information on leasehold agreements, or for more legal support regarding your dental practice, please contact our specialist Health & Social Care team
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