Living 'above the shop' is quite common in the small business sector. Where the premises are rented, the lease often covers both the business and residential parts of the property. However, the basis for repossession is different for commercial and residential premises.
Recently a landlord was seeking to repossess, due to rent arrears, premises it had let to a fishmonger. The premises consisted of the shop on the ground floor and a first-floor flat in which the fishmonger lived.
The District Judge considered the tenancy to be a business tenancy, and therefore not protected by the provisions of the Housing Act. He granted a possession order in favour of the landlord. On appeal, the Judge ruled that the initial decision was wrong in regarding the lease as commercial when a residential tenancy had been created and he set aside the possession order.
The Landlord and Tenant Act applies when the premises are occupied for business purposes. Therefore, the question was whether the residential occupation of any part of the premises was for the purpose of a business carried on by the tenant. If so, the use of the residential part of the premises was incidental to the lease of the business premises. The initial purpose of the fishmonger’s lease was to secure the business premises, so the landlord appealed to the Court of Appeal and won.
Frettens Solicitors' Commercial Property Partner and Landlord and tenant specialist, Oonagh McKinney, explains the significance of this for commercial landlords, stating ”This is something that Landlords who let mixed accommodation need to consider and separate leases for the commercial and residential parts of the premises may become increasingly useful. The importance of an appropriately drafted contract cannot be underestimated.”
Frettens Solicitors are skilled at dealing with both contentious and non contentious aspects of landlord and tenant law in commercial and residential spheres. Contact Oonagh McKinney on 01202 499255 for further information.