Contracting Out of the 1954 Act: A Landlord Guide

Contracting out removes the tenant's security of tenure, so the lease simply ends on its expiry date with no right to renew. Landlords often want this, and there is a strict procedure to make it valid.

Why contract out

A contracted-out lease gives you certainty: at the end of the term you get the property back without the tenant having a statutory right to a new lease and without paying compensation. It is common on shorter lettings and where you may want the space back.

The procedure

Contracting out must be completed before the lease is entered into, and both steps must be done correctly:

1. The landlord serves a warning notice on the tenant explaining that the lease will not have 1954 Act protection.
2. The tenant makes a declaration. If the warning notice is given at least 14 days before the lease is entered into, a simple declaration is enough. If there is less than 14 days, the tenant must make a statutory declaration before an independent solicitor.

Getting it wrong

If the procedure is not followed correctly the lease may end up with full security of tenure, which is the opposite of what you intended. Because the steps and timing are exact, this is one to have a solicitor handle. See the 1954 Act renewal guide for what protection you are excluding.

When must contracting out be completed?

Before the lease is entered into. The landlord serves a warning notice and the tenant makes a declaration, either simple (if 14 or more days before) or a statutory declaration (if less).

What happens if the contracting-out procedure is wrong?

The lease may end up with full security of tenure, the opposite of what you intended, so the steps and timing must be exact.