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.
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.
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.
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.