AS the Landlord and Tenant Act 1954 reaches its golden anniversary, major changes came into force today.

Although the basic framework of the Act remains in place, the proposals are intended to modernise and streamline procedures for the benefit of both tenants and landlords in commercial properties.

At present, tenants of commercial premises, subject to certain exceptions, have security which gives them a right to renew a business lease when their existing one expires. Where a landlord and tenant agree to exclude the security given by the Act, they must make an application to the court.

On or after next Tuesday, the requirement for a court order is abolished. This should substantially simplify the procedure and save costs and court fees. The landlord must, however, at least 14 days before completing the lease, issue a "health warning" explaining in plain English the implications of excluding security.

Under existing rules there is a strict timetable for service of notices and applications to court. Default, even by one day, may result in a tenant losing the lease. The new, more relaxed, regime enables parties to agree an extension of the time limits in which to apply to court. Now, provided both parties agree, the tenant need not apply.

There still remains a trap for the unwary. If time extension comes to an end and the parties have not reached agreement, the tenant will lose the right to renew.

Where a lease expires, the tenant will pay rent under the existing lease until the new lease is in place. There is presently provision for a landlord to apply for an interim (increased) rent that the tenant will pay between the expiry of the old lease and the start of the new. There was no provision in the Act to enable a tenant to apply. This anomaly has now been remedied so that either landlord or tenant can now apply for an interim rent to be determined - useful for the tenant in a falling market.

Other changes to the Act include provision for payment of statutory compensation where a lease is renewed, or where a landlord is guilty of misrepresentation.

There are also provisions requiring landlords who do not oppose the renewal of the lease to set out at an early stage their proposals for a new tenancy, including details of the property to be let and the rent to be payable. This is designed to speed up the renewal process, give greater openness between the parties and, hopefully, to avoid unnecessary applications to the courts, which fulfils the Law Commission's recommendation that recourse to the courts should be kept to a minimum.

In summary, the changes to the Act might be seen as neutral, as they aim to preserve the balance between landlord and tenant while correcting certain anomalies. But they are far-reaching, and those involved in business lease renewals should seek advice on these important changes before embarking on their next lease renewal.

Updated: 09:47 Tuesday, June 01, 2004