If your business occupies commercial premises under a lease, you may have a statutory right to renew that lease when it expires — even if your landlord does not want to grant a new one. This right is provided by the Landlord and Tenant Act 1954 and is one of the most important protections available to business tenants.
Security of Tenure Under the 1954 Act
Most business leases are protected by the Landlord and Tenant Act 1954. This means that when your lease expires, it does not simply end — it continues on the same terms until either you or your landlord takes formal steps to bring it to an end. Your landlord cannot simply refuse to renew without a valid statutory ground.
Grounds for Refusing Renewal
Your landlord can only oppose your right to renew on specific statutory grounds, including:
- Persistent delay in paying rent
- Other substantial breaches of the lease
- The landlord intends to demolish or reconstruct the premises
- The landlord intends to occupy the premises for their own business or residence
- The premises are part of a larger holding and the landlord could obtain a substantially higher rent by letting as a whole
The Renewal Process
The renewal process is governed by strict procedural rules. Either party can trigger the process by serving a formal notice. Your landlord serves a Section 25 notice; you can serve a Section 26 request. Both must be served within specific timeframes — typically between 6 and 12 months before the lease expiry date.
Contracted-Out Leases
Not all commercial leases carry security of tenure. If your lease was 'contracted out' of the 1954 Act, you have no statutory right to renew. Contracted-out leases require a specific procedure before they are granted — your landlord must serve a warning notice and you must sign a declaration. If you are unsure whether your lease is contracted out, check the lease itself or take legal advice.
Negotiating the New Lease
If you are entitled to renew, the new lease will be on 'open market' terms — meaning the rent will be set at the current market rate, not the rate in your existing lease. This can work in your favour if market rents have fallen, or against you if they have risen. You can negotiate all the other terms of the new lease, including the length, break clauses, and repair obligations.
Missing the procedural deadlines under the 1954 Act can result in losing your right to renew entirely. If your lease is expiring within the next 12 months, take legal advice now.