CONTROLLED TENANCIES

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Section 2 of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act Cap 301 defines a controlled tenancy as a tenancy of a shop, hotel or catering establishment which;

  1. Has not been reduced into writing; or
  2. In the event that it has been reduced into writing and which;
  • Is for a period not exceeding five years; or
  • Contains a provision for termination, other than for breach of covenant, within five years from the commencement thereof; or
  • Relates to premises of a class specified by notice in the Gazette by reference to rent paid or rateable value entered in valuation for Rating Act (Cap 266), classes of shops, hotels or catering establishments tenancies of which shall be regarded as controlled tenancies regardless of the form or period of such tenancies.

The exception to this provision is that there shall not be a controlled tenancy where the Government, community or local authority is a party; whether landlord or tenant.

The Act is intended to protect tenants from the exploitation and eviction from business premises by the landlord.

The supremacy of the Act when compared with other statutes applicable on tenancies derives from Section 2 (3) which implies that where there is a controlled tenancy, all other statutes relating to the matter and in conflict with the Act should be disregarded.

 

TERMINATION OF A CONTROLLED TENANCY

Section 4 of the Act provides that a controlled tenancy cannot be terminated nor the terms or conditions, rights or services enjoyed be altered except as provided for in the Act and for the grounds specified in Section 7.

It also provides that a landlord who wishes to terminate a controlled tenancy or to alter to the detriment of the tenant any term or condition or right or service enjoyed shall give notice to the tenant in the prescribed form. (FORM A)

The same concept also applied to a tenant who wishes to obtain a reassessment of the rent or alteration of any term or condition or right or service enjoyed by him shall also give notice in the prescribed form. (FORM A1)

The minimum prescribed notice period should not be less than two (2) months from the date of receipt thereof and the termination notice must also inform the tenant of his right within one (1) months from the date of the notice to communicate to the landlord of whether or not he intends to comply with the notice or oppose it.

A receiving party who wishes to oppose a tenancy notice and has notified the requesting party of the same may refer the matter to a Tribunal and such notice shall have no effect until the determination of the Tribunal.

 

GROUNDS FOR TERMINATION AS PROVIDED FOR UNDER SECTION 7

  1. The tenant’s failure to comply with the obligations in respect of repair and maintenance of the Premises as comprised in the Agreement;
  2. Default in payment of rent for a period of 2 months after such rent has become due;
  3. Commission of substantial breach of obligations under the Agreement and is connected with the tenant’s use or management of the premises;
  4. That the landlord has offered or is willing to provide or secure the provision of alternative accommodation for the tenant and the terms which provide for the same are reasonable and accommodation suitable for the tenant’s requirements;
  5. That the tenancy was created by subletting part of the premises whereby the landlord is the owner of the interest in that upon termination of the superior tenancy, the landlord requires possession of such premises as a whole for the purpose of letting or disposing the same as a whole;
  6. That upon termination of the tenancy, the landlord intends to demolish or reconstruct the premises or a substantial part thereof or carry out substantial work of construction on the premises or part and that he could not reasonably do so without obtaining possession of such premises; and
  7. That on the termination of the tenancy, the landlord himself intends to occupy the premises for a period of not less than one year for the purposes or part purposes of a business to be carried out by him or as residence.

 

Where the landlord permits the tenant to continue holding over the Premises after the termination of the original protected tenancy and continues to accept rent, the tenancy between the parties will resume being a protected tenancy.

 

CONSEQUENCES OF A CONTROLLED TENANCY

 

  1. GROUNDS FOR TERMINATION BY TENANT

It is important to note that the Act does not provide for grounds on which a tenant can terminate a controlled tenancy however, if the tenant wishes to obtain a reassessment of rent or alter terms of the agreement, he must do so in accordance Section 4.

 

  1. FAILURE TO NOTIFY

If the tenant does not notify the landlord of the willingness to comply with the notice or to refer the matter to the Tribunal, then such notice will have effect from the date therein specified to terminate the tenancy, alter the terms and conditions or rights and services enjoyed under such Agreement.

 

The tenant automatically loses his ‘protected’ status at the expiry of the notice period and in the event of such a termination, the Tribunal is prohibited by law from having any legal jurisdiction in the matter. This means that the landlord can take the possession of the premises from the tenant, if this can be done peacefully but if the tenancy refuses to part with possession of the leased premises, the landlord will be obliged to seek eviction orders from the court.

 

  1. GROUNDS OF TERMINATION

On seeking to terminate a tenancy, the landlord must rely on one or more grounds as provided for under the Act. However, a landlord should not seek to terminate the tenancy and at the same time alter terms and conditions of the tenancy. This is because Section 4 uses a disjunctive “or” implying that a notice should not have double-barreled effect for example; the landlord cannot seek to terminate the tenancy as well as increase the rent.

 

  1. TIME CONSUMING

In the event that either party wishes to refer the matter to the Tribunal, such notice will have no effect and the tenancy shall not be terminated until such matter has been decided upon by the Tribunal or the Court in the case of an Appeal.

 

  1. PAYMENT OF DOUBLE RENT

Where the tenant gives the notice to terminate the tenancy, he must vacate the premises at the expiry of the notice period and failure to do so would make such a tenant liable to pay double rent for the period of holding over as provided for in section 14 of the Distress of Rent Act (Cap. 293).

 

 

  1. EFFECT OF NOTICE TO ALTER TERMS AND CONDITIONS (TENANT)

With regard to a notice to alter the terms and conditions of a controlled tenancy, it is important to note that a tenant’s notice does not have a binding effect as that of a landlord’s notice as provided for under Section 10 of the Act.  The courts have held that with regard to alteration of terms and conditions of the tenancy or increase of rent, section of the Act 10 applies only in the event of a landlord’s notice and never in the case of a tenant’s notice.

 
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