Key things for landlords to consider at the point of lease renewal
The Landlord and Tenant Act 1954 protects tenants of commercial property with the automatic right to renew their lease upon expiry however this right can be excluded by the landlord at the outset of the lease.
If protected by the Act, either the Landlord or tenant can service notice on the other via a section 25 Notice (for the Landlord) or a Section 26 Notice (for the tenant) in the last 12 months of the lease term to initiate lease renewal or termination proceedings.
The commercial lease renewal process needs to be handled correctly to ensure your business isn’t negatively affected. Ensuring you have the right advice, strategy, timing and notices is key.
Key things to remember
- A lease can be protected by the Landlord & Tenant Act 1954 or fall outside of it. Check yours now.
- Check the expiry dates for your leases – You should start to consider your options for a lease expiry at least 18 months before the expiry date.
- Although tenants protected by the Act have the right to renew, you can dispute this if you provide any of the statutory grounds to deny the renewal. E.g. you wish to occupy the building yourself, develop it or the tenant has persistently breached lease terms.
- If you successfully prevent a renewal on the grounds above, you are required to pay statutory compensation to the tenant
How to initiate lease renewal proceedings
If you’re a commercial landlord and want to initiate lease renewal proceedings, you need to prepare and issue a section 25 Notice with the help of a surveyor. The document will state that the lease will end at the original contracted date and if you wish to offer a new lease, the terms proposed for it.
The lease renewal process can be triggered by either a landlord or a tenant but a surveyor can only act for one side of the negotiation at any one time. So if your tenant has already instructed us, we cannot work for you as the landlord too.
If the tenant initiates proceedings with a section 26 Notice the document will state the terms they require including length of new lease and expected rent etc. You, as the landlord then have two months to respond and let the tenant know if you agree to their request
Need advice or services?
We have an experienced team of surveyors specialising in commercial lease renewals and rent reviews operating throughout London, Buckinghamshire, Surrey, Hampshire, Oxfordshire and Hertfordshire. Use our contact form to get in touch to discuss your needs.
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