When considering a lease renewal, it is important to know whether your current lease has “security of tenure”. Security of tenure is a right to automatically renew your lease at the end of the term and is governed by the Landlord and Tenant Act 1954. You will automatically have security of tenure unless you have specifically agreed in your lease to exclude this right. If the right is excluded you would have signed a statutory declaration before entering into the lease to confirm that you agreed to this.
No Security of Tenure
If you don’t have security of tenure your lease will end on the date specified in the lease. You must have vacated the premises by this date. The landlord may be prepared to offer you a new lease before the end of the term however there is no obligation for the Landlord to do so. The decision to renew is therefore up to the Landlord.
Security of Tenure
If your lease is protected by the LTA 1954, it will not terminate automatically at the end of the contractual term. It will continue under section 24 (1) of the LTA 1954 on the same terms of the original Lease until it is terminated in one of the ways specified by the Act.
The Landlord can only refuse to renew the Lease if one of the grounds under the LTA 1954 applies. These include for example, non-payment of rent or breach of lease, the landlord developing the property or the Landlord wanting to take back possession to occupy the property themselves.
The Renewal Process
There are different procedures for renewing the lease under the LTA 1954 depending on whether it is the Landlord or the Tenant initiating the renewal:
- The landlord can initiate renewal by serving a section 25 notice on the tenant
- The tenant can initiate renewal by serving a section 26 request on the landlord
If neither party initiates the renewal process, the lease will continue under the same terms. This is referred to as ‘holding over’.
Landlord’s Section 25 Notice
If the renewal is initiated by the Landlord by way of a section 25 notice, this must be served on the tenant between 6 and 12 months before the termination date specified in the existing lease. Alternatively, if the lease is holding over, it must be served by a date in the future which is at least 6 months after the notice is served.
The notice will either state the landlord’s proposed terms for a renewal lease or the notice will confirm the reason why the Landlord does not wish to grant a new lease.
If the tenant does not agree the new terms and the parties cannot come to an arrangement then either party may ask the court to decide on fair terms.
Tenant’s Section 26 Request
If the renewal is initiated by the Tenant by way of a section 26 request, again this must be served between 6 and 12 months before the termination date specified in the existing lease. A section 26 notice allows the tenant to propose terms. Similarly, if the parties cannot agree the terms then either party may apply to the court to decide them.
Where the Landlord is not prepared to offer a new lease, he must serve a counter-notice within 2 months of receiving the Tenant’s Section 26 request to confirm his grounds for opposition.
For any advice call our Specialist Team on 0800 088 6004.