Commercial Lease Renewal Solicitors
Commercial leases set out the terms under which a tenant occupies a commercial property. When the time comes to consider renewing a commercial lease, it’s important to know what your rights are as a landlord or tenant.
Our commercial lease renewal expertise
Being familiar with your lease and how it might be renewed is crucial, both as a landlord and a tenant.
Our lease renewal solicitors advise landlords and tenants on the lease renewal process, including how to initiate it and what to do if both parties cannot agree on its terms.
Our commercial property litigation solicitors have decades of expertise advising landlords and tenants on lease renewals and extensions from our offices in Bristol and the surrounding area in Bedminster, Bishopston, Bristol city centre, Kingswood and Thornbury.
Barcan+Kirby’s commercial property dispute lawyers work with businesses across the UK. We pride ourselves on taking the time to understand the issues you are facing and how they affect your business goals so that we can find a solution that is tailored to your needs.
In addition to lease renewal, we advise commercial landlords and tenants on:
- Adverse possession
- Assignments, underletting and sub-lettings
- Breach of covenant
- Break notices
- Commercial land disputes such as boundaries, right of way, easements and right to light
- Commercial lease dilapidation claims
- Forfeiture
- Property occupation disputes
- Property possession
- Rent arrears
- Rent reviews
- Repair claims
- Service charge disputes
- Terminating a business lease
- Trespass
When should I renew my lease?
Commercial landlords or tenants should consider their options around 18 months before the current lease expires. When it comes to lease expiration, what happens depends on whether the tenant has security of tenure or not.
Security of tenure (under the Landlord and Tenant Act 1954) gives tenants the right to remain in possession of leasehold business premises after the lease fixed term ends. These leases are ‘within the Landlord and Tenant Act 1954’. The alternative is a business lease which is excluded from the Landlord and Tenant Act 1954 lease.
Tenants with security of tenure
A business tenancy (where a property is occupied for a trade or profession) that is protected under the Landlord and Tenant Act 1954 (‘the Act’) will not automatically end once the fixed term of the commercial lease expires. A lease that falls within the Act is often known as a Protected Tenancy.
No security of tenure
A lease that excludes the Act will end on the date specified within the lease, and the tenant must vacate the property on or before then.
If the commercial lease is excluded from the Act, the tenant will have signed a statutory declaration at the commencement of the lease.
How do I renew a commercial lease?
Where possible, the landlord and tenant should discuss a lease renewal as soon as the opportunity arises, and it is a good idea to seek advice on your options from our lease renewal solicitors before doing so.
Landlords and tenants can agree on a new lease, however, they are not obliged to do so. If you require assistance with a lease, our lease renewal solicitors can help.
Tenants with security of tenure
In this case, both the landlord and tenant have the option of initiating the commercial lease renewal process and the starting point is to serve notice.
A tenant can initiate a lease renewal by serving a Section 26 notice on their landlord. This notice must be in the prescribed form and meet statutory requirements, including setting out the date for when you wish the new lease to commence and include any new proposed terms. You must give between six and 12 months’ notice before the new lease begins.
A landlord can serve a counter notice to a tenant’s Section 26 notice.
There are strict timescales associated with this and if a party fails to comply with these, the tenant is at risk of their tenancy coming to an end and losing their right to a renewal lease.
Whether you are a commercial landlord or tenant, you should seek legal advice before serving a notice or immediately upon receipt of the notice.
Landlords
If a landlord initiates the renewal process, a Section 25 notice will be served on the tenant. This notice must be in the prescribed form and meet statutory requirements, including:
- Setting out the terms for a renewal lease or,
- If the landlord wishes to terminate the tenancy, specify the ground/s for opposing the renewal. The notice provides the tenant with six to 12 months’ notice.
To oppose a lease renewal, the landlord must meet one or more of the limited statutory grounds set out in the Landlord and Tenant Act 1954.
Tenants without security of tenure
The tenant’s right of occupation will end on the last date of the fixed term of the lease. If the landlord or tenant would like to enter into a further lease, discussions should take place before the end of the fixed term.
Occupation after the fixed term will amount to trespass unless otherwise agreed.
Court proceedings
If, following the service of a section 25 or section 26 notice, a new lease cannot be agreed upon, either party can make an application to the Court for a new lease to be granted.
If a landlord is opposing the grant of a renewal lease and the tenant does not agree, court proceedings will be required.
Strict timeframes
Section 25 and 26 notices are part of the statutory process of the Act which has strict deadlines. Landlords and tenants must be very aware of the deadlines, as a tenant risks losing their right to a new lease if they do not act quickly and/or a landlord may be unable to terminate a tenant’s occupation if they seek to do so.
Commercial lease renewal FAQs
A commercial lease within the Act does not automatically renew, however, until a new lease is agreed or Section 25 or Section 26 notice is served, the tenant will continue to occupy the property as per the terms of their lease (despite the fixed term having expired). This is known as ‘holding over’.
A commercial lease excluded from the Act does not automatically renew. If a tenant remains in occupation after the fixed term of their lease expires, they are a trespasser. If a landlord does not take action regarding the trespass, it is possible that a new lease has occurred (likely an implied periodic lease).
Whilst a landlord and tenant can arrange a lease renewal, it is strongly advised that you seek legal advice before doing so. Commercial leases can be complex; a specialist lease renewal solicitor can advise you on your rights and how to approach the process to make it as stress-free as possible. We can also assist you should a dispute arise.
This depends on the cooperation of the parties. If negotiations are unsuccessful, a notice period is six to 12 months. If proceedings are then required, it is likely that the court timetable will be set for a trial within 12 to 18 months. However, cases often settle before trial.
The cost of renewing a commercial lease varies depending on the complexity of negotiations and whether there is a dispute. When considering the cost of a lease renewal, it is important to factor in:
- Legal fees
- Land Registry fees if changes are made to the lease terms
- Stamp Duty Land Tax if there is an increase in rent or lease length
- Valuation fees; for some lease negotiations, it may be necessary to value the property or premises to determine the market rent
- Surveyor fees; it may be necessary to instruct a surveyor to look at the property’s condition to inform rent or repair obligations
Under the Act, commercial tenants have a statutory right to a renewal lease. This means that at the end of the lease, the tenant can ask the landlord for a new lease unless such right has been excluded.
Landlords do have some grounds to reject this request; for example, if they want to redevelop it, but they may have to compensate the tenant.
If the grounds for possession or proposed renewal terms are disputed, either the landlord or tenant must issue proceedings to resolve the matter. Additionally, for a tenant, proceedings will be required to enable them to continue to occupy the property whilst the dispute is resolved.
If both parties cannot agree on the terms of a new lease, our property litigation solicitors are here to help. The first step should be to try to resolve the dispute amicably through Alternative Dispute Resolution, however, if that fails, we can ask the court to decide.
Under the Act, the lease terms can be negotiated at the point of renewal.
Get in touch with our lease extension solicitors in Bristol
Renewing a commercial lease can seem like a complicated and time-consuming task. Our commercial property disputes team is experienced in dealing with lease renewals. Call us on 0117 325 2929 or complete our online enquiry form.