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Section 37: Compensation where order for new tenancy precluded on certain grounds.

Landlord and Tenant Act 1954 · 1954 c. 56View on legislation.gov.uk

Part II: Security of Tenure for Business, Professional and other Tenants

Subject to the provisions of this Act, in a case specified in subsection (1A), (1B) or (1C) below (a “compensation case”) the tenant shall be entitled on quitting the holding to recover from the landlord by way of compensation an amount determined in accordance with this section.

The first compensation case is where on the making of an application by the tenant under section 24(1) of this Act the court is precluded (whether by subsection (1) or subsection (2) of section 31 of this Act) from making an order for the grant of a new tenancy by reason of any of the grounds specified in paragraphs (e), (f) and (g) of section 30(1) of this Act (the “compensation grounds”) and not of any grounds specified in any other paragraph of section 30(1).

The second compensation case is where on the making of an application under section 29(2) of this Act the court is precluded (whether by section 29(4)(a) or section 31(2) of this Act) from making an order for the grant of a new tenancy by reason of any of the compensation grounds and not of any other grounds specified in section 30(1) of this Act.

The third compensation case is where—

the landlord’s notice under section 25 of this Act or, as the case may be, under section 26(6) of this Act, states his opposition to the grant of a new tenancy on any of the compensation grounds and not on any other grounds specified in section 30(1) of this Act; and
either—
no application is made by the tenant under section 24(1) of this Act or by the landlord under section 29(2) of this Act; or
such an application is made but is subsequently withdrawn.

Subject to the following provisions of this section, compensation under this section”; and shall be as follows, that is to say,—

where the conditions specified in the next following subsection are satisfied in relation to the whole of the holdingit shall be the product of the appropriate multiplier and twice the rateable value of the holding,
in any other case it shall be the product of the appropriate multiplier and the rateable value of the holding.

The said conditions are—

that, during the whole of the fourteen years immediately preceding the termination of the current tenancy, premises being or comprised in the holding have been occupied for the purposes of a business carried on by the occupier or for those and other purposes;
that, if during those fourteen years there was a change in the occupier of the premises, the person who was the occupier immediately after the change was the successor to the business carried on by the person who was the occupier immediately before the change.

If the conditions specified in subsection (3) above are satisfied in relation to part of the holding but not in relation to the other part, the amount of compensation shall be the aggregate of sums calculated separately as compensation in respect of each part, and accordingly, for the purpose of calculating compensation in respect of a part any reference in this section to the holding shall be construed as a reference to that part.

Where section 44(1A) of this Act applies, the compensation shall be determined separately for each part and compensation determined for any part shall be recoverable only from the person who is the owner of an interest in that part which fulfils the conditions specified in section 44(1) of this Act.

Where the court is precluded from making an order for the grant of a new tenancy under this Part of this Act in a compensation case, the court shall on the application of the tenant certify that fact.

If part of the holding is domestic property, as defined in section 66 of the Local Government Finance Act 1988,—

the domestic property shall be disregarded in determining the rateable value of the holding under subsection (5) of this section; and
if, on the date specified in subsection (5)(a) of this section, the tenant occupied the whole or any part of the domestic property, the amount of compensation to which he is entitled under subsection (1) of this section shall be increased by the addition of a sum equal to his reasonable expenses in removing from the domestic property.

Any question as to the amount of the sum referred to in paragraph (b) of subsection (5A) of this section shall be determined by agreement between the landlord and the tenant or, in default of agreement, by the court.

If the whole of the holding is domestic property, as defined in section 66 of the Local Government Finance Act 1988, for the purposes of subsection (2) of this section the rateable value of the holding shall be taken to be an amount equal to the rent at which it is estimated the holding might reasonably be expected to let from year to year if the tenant undertook to pay all usual tenant’s rates and taxes and to bear the cost of the repairs and insurance and the other expenses (if any) necessary to maintain the holding in a state to command that rent.

The following provisions shall have effect as regards a determination of an amount mentioned in subsection (5C) of this section—

the date by reference to which such a determination is to be made is the date on which the landlord’s notice under section 25 or, as the case may be, subsection (6) of section 26 of this Act is given;
any dispute arising, whether in proceedings before the court or otherwise, as to such a determination shall be referred to the Commissioners of Inland Revenue for decision by a valuation officer;
an appeal shall lie to the Upper Tribunalfrom such a decision but, subject to that, such a decision shall be final.

Any deduction made under paragraph 2A of Schedule 6 to the Local Government Finance Act 1988 (deduction from valuation of hereditaments used for breeding horses etc. ) shall be disregarded, to the extent that it relates to the holding, in determining the rateable value of the holding under subsection (5) of this section.

The Commissioners of Inland Revenue may by statutory instrument make rules prescribing the procedure in connection with references under this section.

In this section—

  • the reference to the termination of the current tenancy is a reference to the date of termination specified in the landlord’s notice under section 25 of this Act or, as the case may be, the date specified in the tenant’s request for a new tenancy as the date from which the new tenancy is to begin;

  • the expression “ annual value ” means rateable value except that where the rateable value differs from the net annual value the said expression means net annual value;

  • the expression “ valuation officer ” means any officer of the Commissioners of Inland Revenue for the time being authorised by a certificate of the Commissioners to act in relation to a valuation list.

In subsection (2) of this section “ the appropriate multiplier ” means such multiplier as the Secretary of State may by order made by statutory instrument prescribe and different multipliers may be so prescribed in relation to different cases .

A statutory instrument containing an order under subsection (8) of this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.

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This legislation text comes from legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. These source and reuse terms cover the legislation text, not Remedy's commentary.

Reuse reviewed 21 August 2026 under Open Government Licence v3.0.