Grounds to Oppose Lease Renewal for a Commercial Property

Grounds to Oppose Lease Renewal for a Commercial Property

Commercial lease renewals can be complex and it is important both landlords and tenants seek legal advice to protect their businesses and avoid a lengthy Property Dispute. Some landlords may wish to oppose a lease renewal request made by a tenant for a commercial property.

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As a landlord, it is important to approach the decision to oppose a lease renewal with care and consideration. This may involve weighing up the potential financial benefits of granting a new lease against the costs of allowing a tenant to remain in the property.

A landlord may also require legal advice to ensure that any decision to oppose a lease renewal is made in accordance with the provisions of the Landlord and Tenant Act 1954. Ultimately, a landlord’s decision to oppose a lease renewal must be based on a careful assessment of the circumstances and a genuine and fixed intention.

Can A Landlord Refuse to Renew a Lease?

Yes, a landlord can refuse a tenant’s request to renew a commercial lease under certain circumstances (even when the tenant has security of tenure under the Landlord and Tenant Act 1954). However, the landlord must have valid grounds for doing so as detailed in Section 30(1) of the Landlord and Tenant Act 1954. A piece of practical advice for any landlord would be to rely upon more than 1 ground to refuse a tenant’s request for a lease renewal.

It is worth noting that if the landlord wishes to oppose the lease renewal, they must serve notice on the tenant in accordance with the provisions of the Landlord and Tenant Act 1954, and the tenant has the right to challenge the landlord’s decision through court proceedings.

What are the Grounds for a Landlord to Oppose Renewal of a Lease?

A landlord has the right to oppose a lease renewal based on the grounds of opposition as detailed in Section 30(1) of the Landlord and Tenant Act 1954. The grounds of opposition are summarised as follows:

  • Ground A: Tenant has breached covenants resulting in disrepair of the premises,
  • Ground B: Tenant has been in persistent delay in rent arrears,
  • Ground C: Tenant has committed substantial breaches of other covenants,
  • Ground D: Landlord has offered the tenant other suitable alternative accommodation,
  • Ground E: The lease was created by a sub-letting and the landlord intends to let the whole premises,
  • Ground F: Landlord intends to redevelop, demolish or reconstruct the premises,
  • Ground G: Landlord intends to occupy the premises themself, or by a company owned by the landlord.

Each of the above grounds requires a different level of evidence by the landlord to succeed in their opposition to the lease renewal process. For example:

  • Ground F – Landlord intends to demolish or reconstruct the property. The landlord must provide evidence that the works are genuine and that they cannot be carried out while the tenant remains in occupation. Also, the landlord needs to show the building works are realistic and they have the funds to finance the same.
  • Ground G – Landlord intends to occupy the premises themselves. The Landlord must demonstrate a genuine intention to use the property for their own business and not just as a way of avoiding granting the tenant a new lease.
  • Grounds A to C – If the landlord claims that the tenant has breached covenants then this needs to be proven and evidenced i.e. emails/ letters/ formal notice of the tenant breaching covenants. They must demonstrate that the tenant’s conduct is of such a nature that it justifies the refusal to grant a new lease.

If the landlord opposes the lease renewal on any of the grounds set out in section 30(1), they must serve notice on the tenant in accordance with the provisions of the Landlord and Tenant Act 1954, and the tenant has the right to challenge the landlord’s decision through court proceedings. In such cases, the burden of proof falls upon the landlord to prove the ground(s) of opposition as a preliminary issue before the Court.

When is the Deadline to Apply to the Court for a Lease?

The deadline for the parties to apply to the Court to seek a new lease is:

  1. no later than the date proposed in the landlord’s s25 notice to end the old lease, or,
  2. the day before the date of the new lease specified in the s26 notice of the tenant.

If negotiations are ongoing, the parties can agree to extend the deadline for applications to the Court, but this must be agreed in writing, and obviously before the deadline in the respective notices.

What happens if Lease Renewal Notice Expires and No Party Applies to the Court?

If the S25 Notice or S26 Notice expires, and the landlord or tenant has not made an application to the court, the tenant’s right to a new lease will come to an end. The landlord will be entitled to repossess the property, at any time after the notice(s) have expired, the tenant will be required to vacate the premises.

However, it is worth noting a tenant may still have a claim for compensation under the Landlord and Tenant Act 1954 if they can demonstrate that they have suffered loss as a result of the landlord’s failure to grant a new lease and other factors. We can advise a tenant on any compensation they may receive.

Additionally, if the tenant continues to occupy the premises after the expiry of the notice, they may be liable to pay rent on a periodic basis, subject to the terms of the original lease. The tenant should seek to avoid this problem by starting court action before the expiry of the notice period in the respective notice.

Conclusion

There are a variety of grounds on which a landlord can oppose a commercial lease renewal under section 30(1) of the Landlord and Tenant Act 1954. Each of these grounds requires different levels of evidence to support them, and the landlord must serve notice on the tenant and follow the proper legal procedures if they wish to oppose the lease renewal.

Landlords and tenants involved in a lease renewal dispute should consider whether early mediation is a possibility to negotiate a settlement. Mediation can be highly successful. For more information, read our blog Mediation and Alternative Dispute Resolution (ADR).

For information regarding how to Extend or Renew Your Lease For a Commercial Property, please click on the following link.

Contact Us

If you need help with renewing or opposing a lease, you can book a Consultation Call with the team at Anwar Legal by completing the Contact Us Form or emailing us on hello@anwarlegal.co.uk

Still not convinced? Read some of our business client’s success stories and testimonials on how they settled their business disputes using our legal service.

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