Compensation under Business Tenancies (NI) Order 1996

October 23, 2014

In certain circumstances compensation is paid under the Business Tenancies NI Order 1996, for example , where the Landlord has served a Notice to Determine.

A Landlord may terminate a tenancy by service of a Notice to Determine under Article 6 of this Order.
This notice cannot be served more than 12 or less than 6 months before the date of termination specified in tenancy agreement. Such a notice will state if the Landlord is agreeable to a new tenancy or if he is opposed to it. Should he be agreeable he must state the following:

(i) the property to be comprised in the new tenancy (being either the whole or part of the property comprised in the current tenancy);
(ii) the rent to be payable under the new tenancy;
(iii) the duration of the new tenancy;
(iv) the other terms of the new tenancy.

If the Landlord would oppose a new tenancy application by the tenant he must state the grounds of his opposition in accordance with Article 12. These grounds are as follows (in brief);

1. Where the Tenant has failed to comply with his obligation in respect of repair and maintenance;
2. Persistent delay in paying rent;
3. Substantial breaches under his tenancy or connected with the tenant’s use or management of the premises;
4. Where the Landlord has offered alternative accommodation and such is reasonable and suitable for the Tenant’s requirements.
5. Where the current tenancy was created by the subletting of part only of the property comprised in a superior Tenant and the landowner would be in a position to gain a higher rent if the property was rented as a whole;
6. On termination the Landlord intends to demolish the building to undertake substantial development or to carry out substantial construction works;
7. The Landlord intends that the premises will be occupied by a business or company that he has a controlling interest in or as his residence;
8. Where the premises are comprised in the tenancy of an estate acquired by a public authority and possession of the premises is reasonably necessary for the public authority to carry out  its functions under any statutory provision or rule of law.

Article 23 of the Order details compensation where an order for new a tenancy is opposed on certain grounds. Compensation is payable where the Landlord has served a notice to determine, or in response to the tenant’s request for a new tenancy, a notice under Article 7(6)(b) stating that he will oppose a new tenancy. This notice needs to state that a tenancy application will be opposed on any of the grounds specified in sub paragraphs (e), (f), (g), (h) and (i) of paragraph (1) of Article 12 (5 to 8 above). It should be noted that it is stated that compensation will not be awarded where the landlord is a public authority and the Tenant is aware of this, or should have been aware of this when he entered into the contract, and the contract of tenancy disentitled the tenant to compensation. The amount of compensation is discussed in Art 23(2) and this is dependent upon the period immediately preceding the termination of the current tenancy during which the occupation conditions have been complied with and shall be ascertained by multiplying the net annual value of the holding by, for each of the qualifying periods set out in column 1. These occupation conditions are as follows:

– During the whole of the qualifying period the premises have been occupied for the purposes of business carried on by the occupier or for those other purposes;
– If during this qualifying period there was a change in the occupier of the premises, the person who was the occupier immediately after the change was a successor to the business carried on by the original occupier.

The net annual value shall be determined under the valuation list in force under the Valuation Acts.

Please note this article is for information purposes only and should not be relied upon without further legal advice. For further information please get in touch with Patricia Cronin (p.cronin@cfrlaw.co.uk)