If you are a landlord or tenant renewing a business lease, contact our highly experienced team on 01225 462871. Alternatively, you can email, or complete the contact form at the foot of this page.
Once you have found the perfect business premises to establish and grow your business, the last thing you need is to discover that you are unable to renew your lease when it expires. Fortunately, the Landlord and Tenant Act 1954 provides protection for tenants renewing a business lease.
“Thank you once again for your superb advice and guidance throughout this process. I recommend your services whenever possible.” HD
Landlord and Tenant Act 1954
The Landlord and Tenant Act 1954 (“the Act”) provides commercial leaseholders with ‘security of tenure’. That means leaseholders have a statutory right to renew their business tenancy upon expiry.
In most cases, landlords and tenants successfully negotiate the terms of a new lease. But if they cannot agree, either party can apply to the court to have a new tenancy granted. If there is a dispute over the new lease terms, the court applies a market rent based on expert evidence. In respect of other terms, the court strives as far as possible to maintain the status quo.
The Act also provides business tenants with the right to apply to the court for a new lease if their landlord refuses a renewal for a reason not permitted under the Act.
Among the tenancies excluded from the Act’s security of tenure provisions are:
- mining leases;
- agricultural tenancies;
- home business tenancies;
- agricultural tenancies;
- tenants who have contracted out of the Act; and
- fixed-term tenancies of 6 months or less (although they can enjoy security of tenure after 12 months as can periodic tenancies).
“Thank you for making a daunting process so straightforward.” JG
Can my landlord refuse to renew my lease?
A landlord has the right to refuse to renew your lease if:
- you are in breach of your lease obligations (eg, you are in arrears with your rent).
- they wish to redevelop the premises.
- they wish to use the premises themselves, either for their business, or to live there.
Contracting out of the 1954 Act
Commercial landlords and tenants can agree to contract out of the Act’s security of tenure provisions. However, at least 14 days before the tenant is contractually bound to enter into the lease, the landlord must serve a written warning notice on them. The notice explains the consequences of forfeiting their right to security of tenure. A copy of the lease or agreement for lease is usually attached to the warning notice.
If the tenant waives their right to security of tenure, the landlord has no obligation to renew the lease when it expires.
Renewing my commercial lease
Landlords wishing to initiate a lease renewal must serve a ‘Section 25 notice’ on the tenant. They should do this between 6 and 12 months before the termination date specified in the lease. If the tenant is holding over, the landlord must confirm a future date not less than 6 months after service of the notice. The notice must clearly state the landlord’s proposed new terms or the reason why they object to granting a new lease.
If the tenant opposes the new terms, and the parties cannot reach agreement through negotiation, either can ask the court to set fair lease terms.
If the tenant initiates the lease renewal process, they must serve a ‘Section 26 notice’ on the landlord. They should do this between 6 and 12 months before the proposed start of the new lease. The tenant can propose lease terms, but if agreement is not possible, either party can apply to the court. However, it is very rare for these proceedings to reach a final hearing.
Whether you are a landlord or a tenant, we recommend that you contact us for legal advice prior to renewing a commercial lease. Often, rent is the main focus of discussion. Working closely with your valuation surveyor, we will put your best case forward.
Our team are available on 01225 462871.