There are various types of Leases and for the Tenant and their business the main concern is when the lease will come to an end, how can you protect your business and potentially renew the lease?
The Lease must record if the Landlord and Tenant have agreed to “contract out”, which means that the tenant will not have any statutory rights to a new Lease under the Landlord and Tenant Act 1954 (LTA 1954).
The Lease Code 2007 (which promotes fairness in commercial Leases) provides that:
- Landlords must make offers in writing that clearly state (amongst other things), whether or not the tenant is to have security of tenure
- The default position under the LTA 1954 is that a business Tenant should have the right to renew their lease. Where this is not appropriate, the Landlord should state, at the start of negotiations that the protection of the LTA 1954 is to be excluded, and then encourage the tenant to seek early advice on the implications.
Where a Lease is granted it automatically continues after the expiry date if the Tenant remain in occupation, as long as it complies with the 1954 Act, by entering a period known as “holding over”, unless Landlord serves what is known as a s25 Notice..
If the tenancy satisfies the qualifying criteria of the LTA 1954, the Tenant is entitled to a Lease renewal of the tenancy and the Landlord can only oppose the Lease renewal on certain grounds. Either the Landlord can serve a s25 Notice or the Tenant a s26 notice to bring the existing lease to an end and offer terms for the proposed renewal.. . If both parties cannot agree the terms, either party can apply to the Court and ask the Court to make an order as to the terms.
However, if an application is not made to the Court by the termination date specified in any s25 Notice and a new Lease has not been negotiated and finalised, then the Tenant will have to vacate as the Lease and any holding over comes to an end.
If the Landlord serves a notice to terminate the Lease the landlord must state a termination date complying with the terms of the Lease and also the 1954 Act. The date of termination must be at least 6 months after service of the notice and cannot be before the expiry date of the Lease.
An excluded Lease removes the statutory right to a new Lease once your current Lease ceases. Unless you and your Landlord can agree new terms you would have to leave on the expiry of the lease. Usually when you enter into an Excluded Lease you would have made a Statutory Declaration before a solicitor confirming you are aware you have no right to renew the Lease when it comes to an end, before you entered into the Lease.