Does a landlord have to renew a commercial lease?

A landlord does not need to renew a commercial lease if the tenant has breached the terms of the lease or they need to use the property for their own business or to live in. 

For instance, the tenant could have faulted on their rental payments, paid late or failed to keep the property in good order causing damage and disrepair. In these example cases, the landlord has the right to refuse an extension on the lease. 

In most cases, tenants have the right to renew their commercial lease providing they haven’t breached any conditions and are continuing the same business activity. In fact, the Landlord and Tenant Act 1954 says that most business tenants who are already leasing a commercial property can extend that lease. Unless they fall under the following situations: they have a farming business, or a mining business, they are a service tenant employed by the landlord, the tenancy is fixed for 6 months or less or the right to renew was waived at the beginning of the lease.

When a commercial lease expires, it continues under the same terms and conditions as before unless either the landlord or tenant ends the agreement or renegotiates. 

Before the lease comes to an end, either party can propose a new tenancy. The landlord can do this by serving a Section 25 notice and the tenant can do this by serving a Section 26 notice 6-12 months before the end of the lease. The landlord will have to respond to the request within two months if they don’t agree with the renewal. If at the beginning of the tenancy, the landlord made it clear that the tenancy would continue and introduced an “opt-out” clause for instance, it would not be appropriate for the tenant to serve the Section 26 notice.  

The tenant or landlord may want to take the opportunity to renegotiate the terms of the lease. Perhaps rents in the area have gone down or the business operations have changed slightly. In that case, it’s a good idea to instruct a commercial lease solicitor to ensure the terms are made legally binding. If for instance, the landlord wants to increase the rent or make changes that the tenants are unsure about, it’s important to find a commercial lease solicitor to ascertain whether the conditions are fair and in the best interests of everyone with no hidden surprises. 

At GloverPriest, we can provide the expertise, guidance, and negotiation skills necessary to ensure that your lease agreement is comprehensive, fair, and beneficial for your business.

From negotiating favourable lease terms to identifying potential risks and loopholes, GlovePriest is here for you. 

If you would like further advice on your commercial property, please don’t hesitate to speak to one of our expert commercial lease solicitors today. Complete our enquiry form.