Important Issues For Tenants Of Commercial Premises To Consider Before The Expiry Of Their Lease

If you are a tenant of commercial premises and your lease is nearing the end of its contractual term, or you are considering serving a tenant's notice to quit, or exercising a tenant's break option, there are a number of very important issues to carefully consider and planning ahead is crucial.

1. Contracted-out Tenancies

   If your tenancy does not provide you with a statutory right to renew when the term comes to an end, it will be entirely at your landlord's discretion as to whether they are prepared to offer you a new lease. Engaging with your landlord at an early stage to ascertain whether they are prepared to grant a new lease and on what terms it is strongly advisable. This will help to provide adequate time to negotiate new terms before your existing tenancy comes to an end, or if your landlord is unwilling to grant you a new tenancy, to locate and move into your new premises by the expiry of your existing lease (thereby minimising the disruption to your business).

2. Protected Tenancies

   If your tenancy does provide you with a statutory right to renew your lease, your landlord is only able to oppose the grant of a new lease on certain limited grounds.

   You can serve your landlord with a request for a new tenancy pursuant to Section 26 of the Landlord and Tenant Act 1954. Alternatively your landlord can serve you with a notice pursuant to Section 25 of the 1954 Act to bring your tenancy to an end, and either propose terms on which it is prepared to grant a new tenancy or specify one or more of the limited grounds on which it intends to oppose the grant of a new tenancy.

   If your landlord successfully opposes the grant of a new tenancy, you will have to move out of your premises but may be entitled to statutory compensation. However, this is unlikely to be sufficient to cover the costs and potential losses to your business of having to re-locate.

   There are important timing issues as to when such requests or notices may be served and there are strict time limits which apply to the steps to be taken in the renewal process. Failure to comply could result in you losing your right to new tenancy and having to vacate the premises.

3. Notices to Quit

   If you are considering serving a notice to quit to bring your tenancy to an end, you should carefully consider the timing of such notice to ensure that you allow yourself sufficient time to secure and then relocate to alternative premises.

   You must be ready to vacate on or before the expiry of the...