Business Lease Renewal under the Landlord and Tenant Act

Property Disputes overview
Termination of Business Tenancies

If you have a lease, which is protected under the Landlord & Tenant Act 1954 (i.e. one where property is occupied by the tenant for a purpose connected with his business) and the Act has not been excluded from applying the following should be borne in mind. 

1. There is nothing a landlord can do to stop a tenant walking away from a property when the lease expires. A tenant does not have to serve notice to the landlord that he is going to leave on the expiry date.
2. If the tenant stays in occupation after the lease ends and the lease is protected by the Act the lease will continue to run until either the tenant gives notice to end the lease and vacates or either the landlord or the tenant starts the procedure for a new lease to be granted.
3. Assuming that the landlord wants to either offer the tenant a new lease, or the tenant wants a new tenancy, then one or the other must serve a notice. Both the landlord’s notice terminating the lease and the tenant’s notice requesting a new lease have to be a minimum of 6 months and a maximum of 12 months. The notice cannot give a date to end the lease earlier than the contractual term ends. The landlord has two choices of notice. He can serve a notice advising that he will not grant a new lease and terminating the current lease, giving one of the specified grounds for termination. Alternatively there is a separate form of notice stating that he will grant the tenant a new lease specifying the basic terms of the new tenancy that are being offered. If the tenant wishes to start the procedure for a new lease his notice must put forward the terms on which he is proposing the lease be granted. Both the landlord and the tenant should take advice as to the terms that they are proposing.
4. In the case of a landlord’s notice there is no requirement for the tenant to respond to it at all let alone within any time limit. If, however, the tenant requests a new tenancy the landlord must respond within 2 months stating whether he is prepared to give a new tenancy or not and if not the grounds on which he is opposed to it.
5. By the date given in the notice for the end of the current lease either the landlord or the tenant must apply to the Court for a new lease. That date can be extended by mutual agreement but, because of the importance of that date, it is vital that written agreement between the landlord and tenant is entered into before the date is passed.
6. If the matter is referred to the Court then the Court is likely to want to progress the matter through to trial or settlement as quickly as possible. If the landlord is seeking to avoid granting a new lease he will need to make sure he has all his evidence to back up his claim ready, so far as is possible, before he issues his court case.
7. The right to apply for an interim rent (the rent that is payable between the date specified in the appropriate notice for expiry and the date the new tenancy commences) can either be exercised by the tenant or the landlord. This is obviously of benefit to the tenant if the market rent is less than the rent that he is paying under his existing lease.