Renewing your commercial lease
My colleague wrote last week about leases and what to do in anticipation of them ending. My message is the same as his – contact a professional and don’t leave things to the last minute!
The legal bit – Part II of the Landlord and Tenant Act 1954 (LTA 1954) says that when a tenant’s commercial tenancy comes to an end then (assuming the tenant is still in occupation at the end date), a statutory tenancy will follow until terminated in accordance with the Act. This means that a landlord must then grant their tenant a new tenancy on terms agreed between them or if they can’t agree, by the court.
How are leases ended/renewed? – Prior to lease expiry, if your landlord wishes to oppose your statutory right to a new tenancy then he must serve on you, as his tenant, a S25 NOTICE ending your business tenancy at the expiry of the lease and proposing a new one. The notice must comply with the statutory requirements otherwise it will be deemed invalid.
Alternatively you might want to instigate the renewal process and you can do this by serving a S26 NOTICE in which you request a new business tenancy. The notice must be in a prescribed form and set out the proposed terms of the new lease. Service of a section 26 request does not oblige you to take the lease rather it is seen as a trigger to initiate the renewal process.
If your landlord wants to oppose your request for a new tenancy, a counter-notice must be served on you within two months of your request being made. The counter-notice must specify the specific grounds (set out within the LTA 1954) on which the renewal is being opposed.
What if we can’t agree – If the parties cannot agree on the terms of the new lease,
either party can apply to court for an order for the grant of a new tenancy.
Where renewal is initiated by your landlord, either party can apply to the court as soon as the section 25 notice has been served.
Where renewal is initiated by you, neither you nor your landlord can apply to court until your landlord has served a counter notice or the date two months after you have made your section 26 request, whichever is the earlier.
What if I don’t like the lease terms ordered by the court? – Once the court has made an order to end the existing tenancy and grant a new tenancy, you will have a period of 14 days in which to ask the court to revoke the order, if you decide that you do not want to take a new lease on the terms that have been ordered and no longer want a lease renewal. If you don’t revoke within this period, you will be bound to enter into the new lease.
If you revoke the lease, then your existing tenancy will run for a minimum period of 3 months and 21 days to allow your landlord time to re-let the premises.
Alternatively parties can agree by consent not to act on the terms of the order made by the court for the new lease.
Do I need help? Yes – this is a complicated legal area and slipping up on dates and serving invalid notices can often result in a party having to enter into new leases on terms that they are unhappy with which in turn lead to contentious litigation or having to vacate a business premises when they don’t want to.
Please don’t hesitate to call Willsons Solicitors on 02476387821 and speak with me, Lorraine Walker, or my colleague, Manjit Kaur-Heer, if you suspect you or your landlord have done something wrong and you need some help or Ajmer Kang if you wish to discuss renewing your lease (12 months’ in advance is recommended!)