Are You Extending or Renewing Your Lease? Don’t Get Caught in a Property Dispute: Here’s What You Need to Know
As a landlord or tenant of commercial premises, you will have to make critical decisions well in advance as the lease term approaches its end. The team at Anwar Legal is here to help you decide the best course of action that aligns with the success of your business.
Our goal is to ensure that you have the necessary information, and tools regarding the renewal of the lease, to make informed decisions that will benefit your business in the long run.
How Does The Renewal or Termination of a Lease Start?
A lease (which has protection under the Landlord and Tenant Act 1954) can be renewed or terminated by:
- Drafting and serving a written notice under section 26 of Landlord and Tenant Act 1954 (Section 26 Notice) from the tenant to the landlord seeking a new lease; or
- Drafting and serving a written notice under section 25 of Landlord and Tenant Act 1954 (Section 25 Notice) from the landlord to the tenant ending the lease, or proposing terms of a new lease.
We understand the complexity of commercial lease disputes and the need for careful legal advice, which is why our Team at Anwar Legal is available to help you navigate this process. You can book a Consultation Call by completing the Contact Us Form or email us on email@example.com
What Steps Should a Tenant Take to Renew a Lease?
- Ideally, prior to the expiry of the lease, the tenant should serve a Section 26 notice on the landlord, which specifies the date on which they wish to renew the lease and the terms they are seeking.
- The landlord then has two months to respond with a counter-notice, setting out the terms they are willing to offer, or reasons for refusing a lease.
- If the parties cannot agree on the terms of the new lease, within a specific period of time for negotiations, then the matter must be referred to the courts, who will determine the appropriate terms based on the evidence presented by both parties.
- It is important for tenants to seek legal advice before serving a Section 26 notice, as failure to comply with the procedural requirements, and starting court proceedings by a specific deadline, can result in the loss of the right to renew the lease.
Do The Terms of the Existing Lease Impact The Terms of New Lease?
The terms of the existing lease can have a significant impact on the renewal or ending of a commercial lease in England and Wales.
- If the lease does not contain a break clause, the landlord may not be able to include a break clause in the new terms of the lease given that it was unreasonable, and not accepted in the existing lease.
- The term of the lease may be a contentious point. Therefore, it is important to review the existing lease and attempt to agree on a reasonable term.
- The new lease will need to be drafted in accordance with reasonable terms. If there is any dispute about the terms of the new lease then the parties should attempt to agree on terms similar to the Law Society in England and Wales’ model commercial leases.
- It is therefore important for both landlords and tenants to review the terms of the existing lease carefully before taking any steps towards renewal or ending of the lease.
What Happens If The Landlord and Tenant Cannot Agree a New Lease?
- If the landlord and tenant cannot agree on the terms of a new lease in England and Wales, the matter must be referred to the courts for determination.
- The courts will consider the evidence presented by both parties, as well as the terms of the existing lease and any relevant market conditions, in order to determine the appropriate terms of the new lease.
- Expert evidence may be required from a surveyor or planning consultant to guide the Court on technical legal issues.
Our Lease is Ending, But No Agreement Has Been Reached With The Landlord. What Should We Do?
If a landlord refuses, or delays, the renewal of a commercial lease in England and Wales, and the appropriate notice has been served, the tenant should try to negotiate a written extension of time to agree terms of a new lease. If this fails, then the tenant has the following options:
- Find new commercial premises and move the tenant’s fixtures and fittings. The tenant may be eligible for statutory compensation payable by the landlord depending on the number of years of occupation in the commercial property.
- The landlord can refuse to grant a new lease on a number of grounds under section 30(1) of the Landlord and Tenant Act 1954. A tenant should challenge the landlord’s grounds for refusal of a new lease in Court. The landlord will need to convince the Court, at the date of the trial, that they have genuine intention and reasons to refuse a new lease. More information is provided in a separate blog.
- 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).
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.