Renewing a business lease: the 1954 Act timetable in plain English

If your company occupies premises under a business lease, Part II of the Landlord and Tenant Act 1954 may give it security of tenure. The lease does not end on its expiry date but continues on the same terms until ended in a way the Act allows, and the tenant is entitled to a new lease unless the landlord can prove one of the statutory grounds of opposition. The rights are valuable, but they run on a strict timetable, and missing a date can lose them.

First, check whether the Act applies

The Act protects tenants who occupy premises for the purposes of their business. It does not protect a lease that has been contracted out. To contract out, the landlord must serve a warning notice before the lease is granted and the tenant must sign a declaration, or a statutory declaration where the notice was served less than 14 days before; the lease should then refer to both. If the paperwork is missing or incomplete, get advice: a defective procedure can leave the lease protected. Most leases of six months or less are also outside the Act.

Notices, requests and the six to twelve month window

A protected lease is usually ended in one of three ways. The landlord’s notice and the tenant’s request share a basic rule: the date given must be no less than six and no more than twelve months after service, and cannot be earlier than the date the lease would otherwise have ended.

• Section 25 notice: served by the landlord to end the tenancy. It must say whether the landlord opposes a new lease and on which statutory grounds, such as redevelopment. If the landlord does not oppose, it must set out proposals for the new lease.

• Section 26 request: served by a tenant whose lease was granted for more than one year, asking for a new tenancy and setting out its proposals. A landlord who wants to oppose must serve a counter-notice within two months, stating its grounds.

• Section 27 notice: served by a tenant with a fixed term who does not want to renew, at least three months before the contractual end date.

A section 25 notice and a section 26 request cannot both be served, so whoever acts first sets the timetable. Either party may then apply to court for a new lease, and the landlord may instead apply to end the tenancy on its grounds. The deadline is the date given in the landlord’s notice, or the day before the date in the tenant’s request. The parties can agree in writing to extend it, but the agreement must be made before the deadline passes.

“The rights are valuable, but they run on a strict timetable, and missing a date can lose them.”

Interim rent and what to diarise

While a renewal is under way, the tenant usually keeps paying the old rent. Either side can apply to court for an interim rent, payable from the earliest date that could have been given in the notice or request. The application must be made no later than six months after the old tenancy ends.

For any protected lease, diarise the contractual expiry date; a review 12 to 18 months before it; the date of any notice or request served; two months after a tenant’s request, for the landlord’s counter-notice; and the court application deadline, with a reminder well before it. The Law Commission has been reviewing the 1954 Act, so check whether any reforms have taken effect. Thomas acts for business tenants and landlords on renewals and lease terms.