Commercial lease renewals

We assist the negotiation between landlord and tenant ahead of the point of lease expiry to find an agreeable outcome for all involved.

Experts in lease renewal negotiations

What do we do?

Acting for either the landlord or tenant, we advise on your options and provide open market rental valuations ahead of lease expiry. At the point when either party wishes to initiate or respond to a renewal of a business lease under the Landlord and Tenant Act 1954, we ensure the right procedure is followed, correct Notices are served and negotiate on your behalf.

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 basis on which the rent will be determined will be specified in the lease agreement and is usually the open market rental value’ of the premises at the date of the rent review but some leases will link the new rent to the increase in the retail price index instead. Either landlord or tenant can request a rental valuation at any time to establish if they’re getting the best deal available to them.

The lease renewal process can be triggered by either a landlord or a tenant but we can only act for one side of the negotiation at any one time. So if you’re landlord has already instructed us, we cannot work for you as the tenant too.

We act and advise on

The best options for your business needs at the point of lease expiry

Serving a section 25 Notice (for the landlord) to bring the protected lease to an end

Serving a section 26 Notice (for the tenant) to bring the protected lease to an end

Responding to a section 25 Notice (for the tenant)

Responding to a section 26 Notice (for the landlord)

Rental valuations

Our service includes

  • Initial advice in respect of an upcoming lease renewal or expiry
  • Discussion regarding your business needs to ensure the correct strategy is put in place for the renewal process
  • Excellent knowledge of the Landlord & Tenant Act 1954
  • Negotiation with the other party (landlord or tenant)

Advice for landlords

If the landlord initiates proceedings by serving a section 25 Notice, the document will state that the lease will end at the original contracted date and if they wish to offer a new lease, the terms proposed for it.

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. The landlord then has two months to respond and let the tenant know if they agree to their request.

Key things for landlords 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

Advice for tenants

As a tenant, you need to evaluate your business needs to decide if a lease renewal is wanted at the point of expiry or if you will use the expiry as a chance to scale up or scale down your business premises. (see our acquisitions service for help here)

It is important to check whether your lease falls inside or outside of the Act so you understand the position you will be in at the end of the lease term and can plan your strategic negotiations accordingly. Lease renewal presents the perfect time to renegotiate rents which can be negotiated up or down depending on the open market rental value at the time of renewal.  

If the tenant initiates proceedings with a section 26 Notice the document will state the terms you require including length of new lease and expected rent etc. The landlord then has two months to respond and let you know if they agree to your request.

If the landlord initiates proceedings by serving a section 25 Notice, the document will state that the lease will end at the original contracted date and if they wish to offer you a new lease, the terms proposed for it.

Key things for tenants to remember

You should start to consider your options for a lease expiry at least 24 months before the expiry date.

If your lease falls outside of the Act, you will have to leave at the end of the lease unless you can agree terms for a new lease or the lease contains a right to renew.

If your lease falls outside of the Act and you want to stay, you will need to begin negotiations in plenty of time to allow for securing a new premises if the landlord pulls out.

Although tenants protected by the Act have the right to renew, a lease renewal can be refused if any of the statutory grounds to deny are met, including; the landlord wants to occupy the building or develop it, or the tenant has persistently breached lease terms.

  • You should start to consider your options for a lease expiry at least 24 months before the expiry date.
  • If your lease falls outside of the Act, you will have to leave at the end of the lease unless you can agree terms for a new lease or the lease contains a right to renew.
  • If your lease falls outside of the Act and you want to stay, you will need to begin negotiations in plenty of time to allow for securing a new premises if the landlord pulls out.
  • Although tenants protected by the Act have the right to renew, a lease renewal can be refused if any of the statutory grounds to deny are met, including; the landlord wants to occupy the building or develop it, or the tenant has persistently breached lease terms.

For guidance on your individual options, please get in touch

CONTACT US

Commercial lease renewal FAQs

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. Here are the answers to some of the most commonly asked questions about commercial lease renewals. 

  • I’m a tenant, when should I start thinking about a lease expiry?

    Tenants should consider their options at least 24 months before their lease expiry date. Consider if the premises is still suitable for your business or if relocation is needed.

  • I’m a landlord, when should I start thinking about lease expiry?

    At least 18 months before a lease expiry date Landlords should consider their future intentions for the building. Will you keep it? Redevelop it? Enhance its value?

  • I have received a Section 25 notice, what should I do?

    A section 25 Notice is served by the landlord and is intended to tell the tenant of their property if they intend to oppose a tenancy renewal or set out proposed terms if they intend to offer a renewal on new terms. This document should be checked carefully and not ignored as you may need have an unplanned move to plan for. Contact a Chartered Surveyor for advice on the actions to take. Kempton Carr Croft can assist you here. 

  • Who should initiated lease renewal negotiations? The landlord or the tenant?

    Either party can initiate lease renewal negotiations by serving either a Section 25 Notice (landlords) or a Section 26 Notice (tenants). We would recommend that either side consider their options as early as possible before the lease expiry date as if the tenant has the protection of the Landlord & Tenant Act 1954, strict procedures and strategic timing of notices must be adhered to. We would advise you to contact a valuer to discuss your options as early as possible. Kempton Carr Croft can assist  you here. 

Our Team

Julia Garrard

BA (Hons) MRICS

Chartered Surveyor and RICS registered Valuer
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Paula Harrington

MRICS

Chartered Surveyor & RICS Registered Valuer
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Michael Darroch

BSc (Hons) MRICS

Chartered Surveyor & RICS Registered Valuer
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