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What is the effect of section 42(2)(c) of the Landlord and Tenant Act 1954?

We act for a group of companies, one of which ('Co A') has a 40 year lease of premises, with 10 years left to run. The lease has security of tenure under the Landlord and Tenant Act 1954 (LTA 1954). Part of the premises are underlet to a third party.

As part of a restructuring of the group, Co A wants to assign the lease to another group company (Co B). The group then want to dissolve Co A.

We have noticed section 42(2)(c) of the LTA 1954. This seems to suggest that after the assignment, Co A will, for the purposes of the LTA 1954, remain the tenant of the lease (and so the competent landlord for the purposes of the underlease). If the assignment takes place and Co A is dissolved, a number of questions are raised:

  1. Will Co B lose their entitlement to compensation under the LTA 1954 at the end of the term (at the rate Co A is currently entitled to)?
  2. Does Co A have to remain on the Companies Register at Companies House for Co B to keep its rights under the LTA 1954?
  3. If Co A has to remain in existence, does it have to be a group company, at the time the tenant wants to take advantage of the rights under the LTA 1954?
  4. If Co A is still for the purposes of the LTA 1954, the tenant, is it also the competent landlord for the purpose of serving notices in relation to the underletting?
  5. If Co B wants to terminate the underlease using Ground G in section 30(1) of the LTA 1954 – own occupation, does the assignment and subsequent dissolution of Co A mean that the 5 year rule (section 30(2)) will not be satisfied until 5 years after Co A has dissolved?
Anonymous (Private practice)

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