Landlord and Tenant Act 1954

[F1 37 Compensation where order for new tenancy precluded on certain grounds. E+W

[F2 (1) Subject to the provisions of this Act, in a case specified in subsection (1A), (1B) or (1C) below (a “compensation case”) the tenant shall be entitled on quitting the holding to recover from the landlord by way of compensation an amount determined in accordance with this section.

(1A) The first compensation case is where on the making of an application by the tenant under section 24(1) of this Act the court is precluded (whether by subsection (1) or subsection (2) of section 31 of this Act) from making an order for the grant of a new tenancy by reason of any of the grounds specified in paragraphs (e), (f) and (g) of section 30(1) of this Act (the “compensation grounds”) and not of any grounds specified in any other paragraph of section 30(1).

(1B) The second compensation case is where on the making of an application under section 29(2) of this Act the court is precluded (whether by section 29(4)(a) or section 31(2) of this Act) from making an order for the grant of a new tenancy by reason of any of the compensation grounds and not of any other grounds specified in section 30(1) of this Act.

(1C) The third compensation case is where—

(a) the landlord’s notice under section 25 of this Act or, as the case may be, under section 26(6) of this Act, states his opposition to the grant of a new tenancy on any of the compensation grounds and not on any other grounds specified in section 30(1) of this Act; and

(b) either—

(i) no application is made by the tenant under section 24(1) of this Act or by the landlord under section 29(2) of this Act; or

(ii) such an application is made but is subsequently withdrawn.]

(2) [F3 Subject to ][F4 [F5 the following provisions of this section, compensation under this section”; and] shall be as follows, that is to say,—]

(a) where the conditions specified in the next following subsection are satisfied [F6 in relation to the whole of the holding]it shall be [F7 the product of the appropriate multiplier and] twice the rateable value of the holding,

(b) in any other case it shall be [F7 the product of the appropriate multiplier and] the rateable value of the holding.

(3) The said conditions are—

(a) that, during the whole of the fourteen years immediately preceding the termination of the current tenancy, premises being or comprised in the holding have been occupied for the purposes of a business carried on by the occupier or for those and other purposes;

(b) that, if during those fourteen years there was a change in the occupier of the premises, the person who was the occupier immediately after the change was the successor to the business carried on by the person who was the occupier immediately before the change.

[F8 (3A) If the conditions specified in subsection (3) above are satisfied in relation to part of the holding but not in relation to the other part, the amount of compensation shall be the aggregate of sums calculated separately as compensation in respect of each part, and accordingly, for the purpose of calculating compensation in respect of a part any reference in this section to the holding shall be construed as a reference to that part.

(3B) Where section 44(1A) of this Act applies, the compensation shall be determined separately for each part and compensation determined for any part shall be recoverable only from the person who is the owner of an interest in that part which fulfils the conditions specified in section 44(1) of this Act.]

(4) Where the court is precluded from making an order for the grant of a new tenancy under this Part of this Act in [F9 a compensation case], the court shall on the application of the tenant certify that fact.

(5) For the purposes of subsection (2) of this section the rateable value of the holding shall be determined as follows:—

(a) where in the valuation list in force at the date on which the landlord’s notice under section 25 or, as the case may be, subsection (6) of section 26 of this Act is given a value is then shown as the annual value (as hereinafter defined) of the holding, the rateable value of the holding shall be taken to be that value;

(b) where no such value is so shown with respect to the holding but such a value or such values is or are so shown with respect to premises comprised in or comprising the holding or part of it, the rateable value of the holding shall be taken to be such value as is found by a proper apportionment or aggregation of the value or values so shown;

(c) where the rateable value of the holding cannot be ascertained in accordance with the foregoing paragraphs of this subsection, it shall be taken to be the value which, apart from any exemption from assessment to rates, would on a proper assessment be the value to be entered in the said valuation list as the annual value of the holding;

and any dispute arising, whether in proceedings before the court or otherwise, as to the determination for those purposes of the rateable value of the holding shall be referred to the Commissioners of Inland Revenue for decision by a valuation officer.

An appeal shall lie to the [F10 Upper Tribunal] from any decision of a valuation officer under this subsection, but subject thereto any such decision shall be final.

[F11 (5A) If part of the holding is domestic property, as defined in section 66 of the Local Government Finance Act 1988,—

(a) the domestic property shall be disregarded in determining the rateable value of the holding under subsection (5) of this section; and

(b) if, on the date specified in subsection (5)(a) of this section, the tenant occupied the whole or any part of the domestic property, the amount of compensation to which he is entitled under subsection (1) of this section shall be increased by the addition of a sum equal to his reasonable expenses in removing from the domestic property.

(5B) Any question as to the amount of the sum referred to in paragraph (b) of subsection (5A) of this section shall be determined by agreement between the landlord and the tenant or, in default of agreement, by the court.

(5C) If the whole of the holding is domestic property, as defined in section 66 of the Local Government Finance Act 1988, for the purposes of subsection (2) of this section the rateable value of the holding shall be taken to be an amount equal to the rent at which it is estimated the holding might reasonably be expected to let from year to year if the tenant undertook to pay all usual tenant’s rates and taxes and to bear the cost of the repairs and insurance and the other expenses (if any) necessary to maintain the holding in a state to command that rent.

(5D) The following provisions shall have effect as regards a determination of an amount mentioned in subsection (5C) of this section—

(a) the date by reference to which such a determination is to be made is the date on which the landlord’s notice under section 25 or, as the case may be, subsection (6) of section 26 of this Act is given;

(b) any dispute arising, whether in proceedings before the court or otherwise, as to such a determination shall be referred to the Commissioners of Inland Revenue for decision by a valuation officer;

(c) an appeal shall lie to the [F12 Upper Tribunal]from such a decision but, subject to that, such a decision shall be final.]

[F13 (5E) Any deduction made under paragraph 2A of Schedule 6 to the Local Government Finance Act 1988 (deduction from valuation of hereditaments used for breeding horses etc. ) shall be disregarded, to the extent that it relates to the holding, in determining the rateable value of the holding under subsection (5) of this section. ]

(6) The Commissioners of Inland Revenue may by statutory instrument make rules prescribing the procedure in connection with references under this section.

(7) In this section—

• the reference to the termination of the current tenancy is a reference to the date of termination specified in the landlord’s notice under section 25 of this Act or, as the case may be, the date specified in the tenant’s request for a new tenancy as the date from which the new tenancy is to begin;

• the expression “ annual value ” means rateable value except that where the rateable value differs from the net annual value the said expression means net annual value;

• the expression “ valuation officer ” means any officer of the Commissioners of Inland Revenue for the time being authorised by a certificate of the Commissioners to act in relation to a valuation list. ]

[F14 (8) In subsection (2) of this section “ the appropriate multiplier ” means such multiplier as the Secretary of State may by order made by statutory instrument prescribe [F15 and different multipliers may be so prescribed in relation to different cases ] .

(9) A statutory instrument containing an order under subsection (8) of this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.]

Textual Amendments

F1 S. 37 substituted by virtue of Law of Property Act 1969 (c. 59) , s. 15 , Sch. 1

F2 S. 37(1)-(1C) substituted (1.6.2004) for s. 37(1) by The Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (S.I. 2003/3096), art. 19(1)

F3 Words inserted by Local Government and Housing Act 1989 (c.42, SIF 75:1) , s. 149 , Sch. 7 para. 2(2) (subject to savings in paras. 3 , 4 )

F4 Word substituted by S.I. 1990/1285 , art. 2 , Sch. Pt. I para. 4 (a)

F5 Words in s. 37(2) substituted (1.6.2004) by Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (S.I. 2003/3096), arts. 1(3), 19(2)(a)

F6 Words in s. 37(2)(a) inserted (1.6.2004) by Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (S.I. 2003/3096), arts. 1(3), 19(2)(b)

F7 Words inserted by Local Government, Planning and Land Act 1980 (c. 65, SIF 103:1, 2) , s. 193 , Sch. 33 para. 4(1)

F8 S. 37(3A) inserted (1.6.2004) by Regulatory Reform (Business T(3B)enancies) (England and Wales) Order 2003 (S.I. 2003/3096), arts. 1(3), 19(3)

F9 Words in s. 37(4) substituted (1.6.2004) by Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 (S.I. 2003/3096), arts. 1(3), 19(4)

F10 Words in s. 37(5) substituted (1.6.2009) by The Transfer of Tribunal Functions (Lands Tribunal and Miscellaneous Amendments) Order 2009 (S.I. 2009/1307), art. 1, Sch. 1 para. 20 (with Sch. 5)

F11 S. 37(5A)–(5D) inserted by Local Government and Housing Act 1989 (c. 42, SIF 75:1) , s. 149 , Sch. 7 para. 2(3) (subject to savings in paras. 3 , 4 )

F12 Words in s. 37(5D)(c) substituted (1.6.2009) by The Transfer of Tribunal Functions (Lands Tribunal and Miscellaneous Amendments) Order 2009 (S.I. 2009/1307), art. 1, Sch. 1 para. 20 (with Sch. 5)

F13 S. 37(5E) inserted by S.I. 1990/1285 , art. 2 , Sch. Pt. I para. 4(b)

F14 S. 37(8)(9) added by Local Government, Planning and Land Act 1980 (c. 65) , Sch. 33 para. 4(2)

F15 Words added by Local Government and Housing Act 1989 (c. 42, SIF 75:1) , s. 149 , Sch. 7 para. 2(4) (subject to savings in paras. 3 , 4 )

Modifications etc. (not altering text)

C1 S. 37 modified by Local Government and Housing Act 1989 (c. 42, SIF 75:1) , s. 149 , Sch. 7 para. 4

C2 S. 37 excluded by Leasehold Reform Act 1967 (c. 88) , s. 35(6) ; restricted by Land Compensation Act 1973 (c. 26) , s. 37(4)