lease renewals in commercial property

Leases for commercial premises will normally qualify as Business Tenancies under Part II of the Landlord and Tenant Act 1954. Tenants are entitled to a new lease for the occupied premises under the same terms as the existing lease. Landlords have limited grounds for opposing the grant of a new lease.

Our Chartered Surveyors have experience of representing Landlords and Tenants through the lease renewal process. We believe that forward planning and sound professional advice are the keys to maximising the opportunities presented by a lease expiry.

The landlord can serve notice under Section 25 of the 1954 Act, either offering terms for a new lease or citing specified grounds for terminating the tenancy. The tenant can serve notice under Section 26 requesting terms for a new lease. In either instance, the effective date will fall between 6 and 12 months from the date of the Notice and cannot be before the end of the term stated in the lease.

Alternatively, a tenant wishing to vacate may hand back the premises at the expiry of the term or give three months notice if they remain in situ after the expiry date. The tenant may be liable for dilapidations and wants of repair.

Should the process of agreeing terms for a new lease go beyond the expiry date of the lease then a tenant can remain under a Statutory Tenancy. Essentially, the occupation continues on the same terms as the old lease until the property is surrendered or a new lease is completed.

'Contracting out' is a term used to describe an agreement between the landlord and tenant to exclude the tenant's rights of renewal. To be valid, the agreement must be reached before the lease begins and be in a prescribed format. Leases which are contracted out are referred to as being 'outside the act'. In these cases, planning ahead is vital in order to prevent complex and potentially costly problems arising at the expiry of the lease term.

Please contact us should you require any advice or assistance with an upcoming lease expiry.