Holding over after expiry
Where a business tenancy benefits from security of tenure under the Landlord and Tenant Act 1954 (1954 Act), it will generally continue under the Act after its contractual expiry. Different considerations apply where the lease has been contracted out of that protection.
If the tenant remains with the landlord’s consent after a contracted-out lease expires, the parties may have a tenancy at will or a periodic tenancy. A tenancy at will is an arrangement that either party can generally terminate at any time. A periodic tenancy continues from one rental period to the next and requires appropriate notice to terminate. Crucially, a periodic tenancy will always be protected under the 1954 Act. A periodic tenancy cannot be excluded.
Getting that distinction wrong can therefore have significant consequences. A landlord may find that recovering possession is less straightforward than expected if a periodic tenancy has arisen, while a tenant may discover that it has neither the security nor the exit arrangements it assumed if it is held to have a tenancy at will.
Case facts
In EE, the original lease was contracted out of the 1954 Act and expired in February 2013. The occupiers remained and continued paying rent quarterly.
They requested consent to upgrade works and later attempted to begin discussions about a new agreement. Rent demands included wording such as “without prejudice”, “lease expired”, “holding over” and “lease outstanding”.
The First-tier Tribunal concluded that a protected periodic tenancy had arisen. The Upper Tribunal disagreed and found that, even though there had been such a long period post expiry, the occupiers held as tenants at will.
The established approach
The decision is a reminder of the familiar principles developed in earlier Court of Appeal cases.
In Javad v Aqil [1991] 1 WLR 1007, an occupier entered business premises and paid rent while negotiations for a lease continued. When negotiations failed, the occupier claimed a protected periodic tenancy. The court instead found a tenancy at will.
The court recognised that occupation and payment of periodic rent could, “failing more”, support an inference of a periodic tenancy. But that qualification matters: where there are additional circumstances, the whole picture must be considered. Occupation pending negotiations for a formal lease is a classic example of a situation pointing towards a tenancy at will.
In Barclays Wealth Trustees (Jersey) Ltd v Erimus Housing Ltd [2014] EWCA Civ 303, a tenant remained after its contracted-out lease expired, paying rent while discussions about a replacement lease proceeded sporadically. The Court of Appeal held that it remained a tenant at will and confirmed that payment of rent gives rise to no presumption of a periodic tenancy. Continuing negotiations for a replacement lease supported the conclusion that occupation was temporary pending agreement, rather than under a new periodic tenancy. The discussions did not have to be intensive or close to completion.
The Upper Tribunal decision
Applying those principles, the Upper Tribunal emphasised that EE was not a case of occupation and rent payments alone.
The Upper Tribunal held that the original lease’s exclusion from the 1954 Act was particularly significant. The parties had deliberately excluded renewal protection, and there was no evidence that either had changed that position, making it less likely that they objectively intended to create a new periodic tenancy carrying statutory protection.
The rent-demand wording supported that conclusion when considered alongside the other circumstances. “Without prejudice” was not decisive, but references to “lease expired”, “holding over” and “lease outstanding” helped show that the landlord was seeking to avoid suggesting that a new periodic tenancy had arisen.
Taken together, the circumstances pointed to a tenancy at will.
Commentary
EE does not establish a new rule that tenants holding over are always tenants at will. It reinforces the need to examine the parties’ objective intentions.
Negotiations for a replacement lease are important evidence, but they are not essential to a tenancy at will. Equally, contracting out the original lease does not automatically prevent a later protected periodic tenancy arising.
The practical lesson is that documents and day-to-day communications matter. Invoice wording can support the intended position, but labels alone cannot determine the legal relationship.
