Holding over at the end of a lease – a warning for landlords and tenants

Landlords have always known “holding over” is a risk but recent case law shows there are also pitfalls for the unwary tenant.

A dangerous time for landlords is the holding over period between the expiry of one lease and its renewal. Let negotiations stall and your tenant could claim a new tenancy has arisen with full tenant protection. A landlord can then only remove the tenant with at least six months’ notice and in compliance with strict statutory grounds.

Tenants must also be wary. While it is often thought that termination during this holding over is “at will” (ie, no notice period required) this is not the case if a “periodic” tenancy has arisen. The period for giving notice then depends on how the rent is calculated and can be extremely onerous for a tenant looking to vacate - a recent case on this point awarded an additional 13 months rent to a landlord where the tenant had failed to give the correct amount of notice.

If genuine negotiations continue during the holding over period then these issues will not arise. However, it is not uncommon for parties to feel that it is easier to allow negotiations to lapse than go to the trouble and expense of a new lease, particularly when a tenant is ambivalent as to whether it wishes to take a new lease. This recent case has proved that both landlords and tenants must treat any holding over period with extreme care.

Barclays Wealth Trustees (Jersey) Ltd v Erimus Housing Ltd (2013)

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