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Monthly Rolling Tenancy Agreements: What Should Landlords Consider?

January 23, 2018

Monthly rolling tenancy agreements of commercial premises could be an attractive option for Landlords if they wish to test the water with regard to the marketability, popularity and demand of their property. It is also a good option if you are unsure of the business and financial credentials of a proposed tenant.

However, there is a lack of certainty in respect of monthly rolling tenancy agreements in that the tenant could leave upon giving the requisite notice therefore leaving the Landlord to solely incur the expenses associated with owning a commercial property. It may also mean that there are periods where the property may be vacant which could lead to issues related to trespass and squatters.

A monthly rolling tenancy agreement does not protect the Landlord to the extent that a fully drafted lease does and therefore the Landlord should carefully consider whether this route is wise.

A major factor to consider when granting a monthly rolling tenancy agreement is that it is not possible to contract it out of the security of tenure provisions that are given by statute to tenants occupying commercial premises for business purposes. The tenant therefore acquires rights which may not be foreseeable to Landlords who have not considered the impact of monthly rolling contracts carefully.

A Landlord must also seek advice on how to end monthly rolling contracts and this can all depend on how often the rent is paid for example weekly or monthly. This impacts on the way in which a notice is served and whether it is served correctly in order to end the tenancy.

A good way to allow both parties to end a lease is to have a monthly rolling break option included in a fully drafted lease rather than utilising a monthly rolling tenancy agreement. The term of the lease could be longer for example 1, 2, or 3 years but with a monthly rolling break clause which could be drafted so that both the Landlord and tenant could exercise. It would be a monthly rolling break if the terms of the break are that one party must give at least 30 days written notice to the other after which the lease would determine. In this way, the Landlord has the benefit of a lease that is contacted out of the 1954 Act but also allows him to end the lease at short notice.

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Simrit Sandhu</a> LawBite Business Law Commercial Law