A flat over the shop? Landlords beware the 1977 legacy!
Landlords with non-paying tenants are often keen to use the right to forfeit when the rent is unpaid for more than 21 days. It's a basic self-help remedy which has ancient origins. This is still included in most leases, residential or commercial, but it is largely meaningless for a residential letting. Every day, however, defaulting business tenants find that their locks have been changed and their landlord has taken back the property by "peaceable re-entry", normally using a certificated bailiff, with no court involvement at all.
As with many things in life, lettings are frequently neither solely residential, nor solely commercial, and the prudent Landlord will proceed with caution where an element of residential occupation is present.
Two Court of Appeal cases (Patel -v- Pirabakaran [2006] EWCA Civ 685 and Tan -v- Sitkowski [2007] EWCA Civ 30) each considered commercial lets with residential property included, from different angles. The typical example of this would be the shop with a flat above. The impact of two important acts from 1977 - the Rent Act and the Protection from Eviction Act has been clarified for landlords, tenants, bailiffs and their advisors.
Both of these acts can bite where premises have been "let as a dwelling". There has been uncertainty over whether a mixed-use letting comes within this definition.
It took until 2006, in the Patel case, for the question of whether the Protection from Eviction Act 1977 applies to mixed-use lettings. The answer was a resounding yes. It is quite clear now that it is unlawful to use the peaceable re-entry provisions to forfeit a mixed-use letting where the tenant lives on the premises. This is vitally important to bear in mind as the penalties for contravening this Act are harsh, with the local authority empowered to prosecute.
There must surely still be mixed-use business tenancies out there which were entered into before 1988. Some of those businessmen or traders will have retired. Can a tenant who has shut up the shop, but who continues to reside in the flat above it, claim the protection of either the Landlord and Tenant Act 1954 or the Rent Act 1977 ?
The answer to this question, following the Tan case, appears to be no. The requirement for premises to be let as a "separate dwelling" in the 1977 Rent Act would exclude mixed-use lettings from its ambit, and cessation of the business activity will lose a tenant the protection of the 1954 Act.
Finally, it is useful at last to have a Court of Appeal authority in Tan, confirming that receipt of housing benefit (which can be paid in respect of rent due for mixed-use premises) does not mean that a Landlord is taken to have consented to a change in use from mixed use to residential use alone.