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The process of renewing a commercial lease explained

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The process of renewing a commercial lease explained

In this article, Commercial Property Solicitor Patsy Whitford answers some common questions around renewing a commercial lease and outlines the process of renewal.

Can I renew my commercial lease?

Yes, this can either be done via negotiation with the landlord, or you may benefit from a legal right often called security of tenure or LTA rights, which is granted by the Landlord and Tenant Act 1954.

This entitles a tenant to stay in the property beyond the end of the lease term and to request a new lease on substantially the same terms as the existing lease.

As with all these things, there are conditions attached, but if these are satisfied and the correct procedure followed, then the tenant can renew their commercial lease. 

Can I renew if my lease is contracted out?

Yes of course!  Any tenant can ask their landlord for a new lease at the end of the term.  This form of renewal is much more of a standard commercial negotiation, similar to the conversations both parties would have had before the previous lease was granted. 

Can I renew if I sublet part of the commercial premises?

The answer to this is both yes and no. Part of the criteria for requesting a new lease is that you are in occupation of the premises.

You can request a new lease for the part of the premises that you are occupying, but not the part that you have sublet.

If your subtenant leaves the property before the end of the lease, then you could request a new lease of the whole of the premises, so each case needs to be considered on its own set of circumstances. 

How do I renew my commercial lease?

As explained above, you can either approach the landlord to discuss a new lease, or if you have a lease that benefits from security of tenure, you can follow the legal procedure and serve a s26 notice on the landlord.

This notice sets out your suggestions for a new lease, which normally includes at least a new rent and term and any other items you may wish to vary from your existing lease terms.

It is advisable to broadly stick to the terms of the existing lease, as if the matter has to go to court, the existing lease terms are the ones the court will start with when deciding what the new lease should include. 

How much notice do you need to give for a s26 notice?

The s26 notice needs to specify the proposed start date for the new lease. This cannot be more than 12 months or less than six months after the making of the request.

The date specified as the start date for the new lease cannot be before the end date of the existing lease. 

Can my landlord refuse to renew my commercial lease?

Yes, the landlord does have some options for refusing to renew your lease if you have served a s26 notice on them.

These are limited to specific grounds that the landlord can rely on and include circumstances such as the landlord wants to use the property for themselves or they intend to redevelop the property. 

Each of the grounds have criteria that the landlord would have to prove, but there are circumstances when the landlord could refuse to renew the lease.

When can a landlord refuse lease renewal?

The landlord cannot be forced to renew a lease for a ‘bad’ tenant.  For example, if you have failed to pay the rent then the landlord is not obliged to grant you a new lease.   

If you have served a s26 notice on the landlord, then the landlord has two months to respond if they wish to oppose the grant of a new leases. 

Can you revoke a section 26 notice?

Yes, if the lease has not yet expired, you can withdraw the notice. 

There are strict criteria on who can, when and how notices for lease renewals are served, so if you need assistance with this, please contact a member of our Commercial Property Team.

Expert Commercial Property Solicitors

Members of our team would be happy to discuss your individual circumstances and help you prepare for a sale.    

If you have any queries following this article, please get in touch with our bright Commercial Property team for expert advice.

We offer a free initial appointment to all new clients. To get in touch with our bright lawyers simply call 01202 499255 or visit our get in touch page.