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Commercial Tenants’ Rights at the End of a Lease

Written by Yisroel Rosenthal

If you are a business owner renting a property and you are coming towards the end of the lease, it is very important to be aware of your rights. If you or your landlord does not take any action to end or enter into a new lease, then the status quo is preserved. If a notice is received to change the status quo then you must consider your position carefully and respond in a timely fashion. Failing to correctly respond to a notice can have enormous repercussions to yourself and your business.

A commercial tenant is protected under the Landlord and Tenant Act 1954. This act provides that the landlord cannot terminate the lease unless he follows strict protocol. The landlord must first serve the tenant with a Section 25 notice. This is a notice to terminate the existing lease and it will either set out the landlords’ proposals for a new lease or reasons why a new lease will not be agreed. The notice must be served between 6 to 12 months before the date of termination stated in the notice which cannot be in any event before the end of the existing lease.

If the tenant is not satisfied with the terms offered in a Section 25 Notice, or wishes to challenge the reason for opposition of a new lease, they must apply to the courts requesting an order for a grant of a new lease. Any application to court must be made before the day specified as the termination date in the Section 25 Notice otherwise the property will have to be vacated or the tenant will be bound by the terms of the new lease proposed by the landlord.

Rather than wait for the Section25 Notice from the landlord, towards the end of the lease, the tenant has the option of serving the landlord with a Section 26 Notice which is a Notice to renew the tenancy. A Section 26 Notice has the same time limits as a landlord’s Section 25 Notice.

This Notice allows the tenant to propose new lease terms. The landlord can respond with a counter-notice which must be served within two months of the service of the Section 26 Notice stating the ground(s) on which he seeks to oppose the tenants’ proposals. If an agreement is not reached by the parties then the matter can be referred to Court to determine the terms of the new lease.

Once a Section 25 Notice is served the tenant cannot serve a Section 26 Notice and vice versa.

Complex arguments are often raised in these matters including whether the landlord who has been served with a Section 26 notice is the competent landlord for the purposes of the Landlord and Tenant Act 1954 and whether the notices have been properly served. Given the seriousness of failing to comply with this procedure and the complex nature of the process a qualified legal practitioner would be best equipped to advise.

Alison Rocca

Author Alison Rocca

Alison is a solicitor in our Litigation department.

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