Lease renewals

Most commercial leases in this country are governed by the Landlord and Tenant Act 1954 (the “Act”) – why are we mentioning this? It is crucial for you understand your rights as a commercial tenant or landlord. A commercial tenant will want to ensure that the goodwill it has built at the property is not lost, and that it has the right to renew its lease. Conversely, a commercial landlord will want to ensure that it can obtain possession of a property if it wants to occupy it.

Commercial tenants who are in continuous occupation of commercial premises for 6 months or more gain the protection of the Act. This is known as “security of tenure”. Once a tenant has security of tenure, the lease is known as a “Protected Tenancy” and the landlord is obliged to renew the lease (on expiry of the old one) on terms substantially the same as the old lease, save in respect of the rent, unless it can prove any of the statutory grounds to oppose the renewal: for example, if it wants to re-develop the property.

To renew a tenancy, a statutory procedure must be followed. A tenant can either exercise its right of renewal, or “hold over” under the terms of the current tenancy until it is ready to exercise this right.  The right can be “opted out” (excluded) and strategically it is worth considering whether you want to establish your business in that particular location for a long period of time, or whether you only require the property as a stopgap. Equally, a landlord needs to consider whether it wishes to grant a tenancy within the Act.

We can advise you on the steps to take to exclude the Act from applying to the tenancy; initiate the statutory renewal process; prepare and serve the requisite notices; and negotiate the terms of the renewal and any interim rent payable until the new tenancy has been granted.