Renewal of Business Tenancies

We asked Michael Watson, Head of Property Litigation, to tell us more about what is involved renewing or terminating commercial tenancies.

What should a landlord and tenant consider as the expiry of a lease approaches?

The Landlord and Tenant Act 1954 provides security of tenure for those tenants who occupy premises for the purpose of a business. As the expiry of a lease approaches it is important for both landlords and tenants to consider their options in relation to their property and to develop a strategy to achieve their commercial aims.

For tenants, for example, it may be that their priority is to secure continued occupation and trading from the same location, or that they need to remain for a short period of time whilst they secure new premises. For landlords it could be that they want to retain the tenant or, for example, to redevelop the site.

For both landlords and tenants it may also be appropriate to consider the strategy under the 1954 Act at the same time as considering the position with regard to repair of the property and dilapidations.

How do you renew or terminate a tenancy?

The procedure to renew or terminate a tenancy under the 1954 Act is commenced by service of a formal notice by the landlord under section 25 or a request for a new tenancy under section 26. Specific forms must be used and great care is required to ensure that they are served by, and upon the correct legal person. Careful due diligence is, therefore, required.

For landlords there are limited statutory grounds upon which they may oppose the grant of a new tenancy and if they wish to do so very careful consideration of the circumstances and evidence should be undertaken before any notices are served.

If issues such as rent and other terms of a new tenancy are in dispute it will be necessary to instruct specialist surveyors as expert witnesses and this should be considered as part of the overall plan before a notice is served proposing terms for a new tenancy.

How can a landlord or tenant drive forward this process?

Once a notice or request has been served under the 1954 Act the landlord or tenant can make an application to the County Court to drive forward the renewal process. If the landlord is seeking to recover possession of the premises then the timing of an application will need to be co-ordinated with issues such as the obtaining of planning permission.

The time limits for applying to court are strict and therefore tenants need to be particularly careful, if they wish to remain in the premises, that they issue their court application prior to the deadline. Failure to do so could leave them locked out of their premises or negotiating for a new lease from a position of great weakness.

As with many risks associated with owning and occupying property a carefully thought through strategy, put in place early and methodically implemented, is likely to be the best way of mitigating risk.

Our team

Michael Watson

Partner

Head of Property Litigation

Direct Line +44 (0)113 297 1850

Helen Hill

Partner

Property Litigation

Direct Line +44 (0)113 297 3770

Richard Robinson

Associate

Property Litigation

Direct Line +44 (0)113 297 3783

Luke Maidens

Associate

Property Litigation

Direct Line +44 (0)113 297 8057

Paul Sagar

Solicitor

Property Litigation

Direct Line +44 (0)113 288 2816