Agreements to Surrender Lease and Restrictions on Alientation and Improvements

Agreements to Surrender Tenancies

Under Article 25 of the Business Tenancies (Northern Ireland) Order 1996 (‘‘The 1996 Order’’) an Agreement to Surrender a tenancy is valid if (and only if) the Tenant is in occupation of the premises at the time of the Agreement and the Agreement receives the prior approval of the Lands Tribunal.   This applies to Agreements for Lease and tenancies entered into on or after 1 April 1997.

This procedure will be helpful where a tenant wishes to dispose of the interest in a lease to an incoming tenant and the landlord is prepared to consent, but prefers to grant a new lease. This is a common scenario in, for instance, shopping centres. Previously there were technical difficulties in tying in all the contractual arrangements, but now through the Lands Tribunal this should be possible.

Restrictions on Alienation and Improvements

Where a tenant wishes to alienate or make improvements to the property comprised in the tenancy and the tenancy provides that the tenant may not do so without the consent of the landlord, then Article 26 of the 1996 Order provides that the landlord’s consent may not be unreasonably withheld.

Again this provision applies only to tenancies granted on or after 1 April 1997. The tenant may apply to the Lands Tribunal if he considers that the consent of the landlord is being unreasonably withheld and the tenant is entitled to damages should the Lands Tribunal finds in the tenant’s favour.

This article has been produced for general information purposes and further advice should be sought from a professional advisor.

If you require any further advice in respect of the content herein please contact a member of our Commercial Real Estate Team.