How long can a commercial tenant stay after the lease expires?
How long a tenant can stay in a commercial premises after the lease expires depends on the type of lease, namely whether it is “protected” or “unprotected”. This will determine what happens and how quickly a tenant can renew it or leave the property when it expires.
What are Protected Commercial Leases?
A protected lease will not automatically end on the date of expiry. This means, when the lease expires, the tenant can continue to occupy the property on the same terms until either the tenant or landlord serves notice to end the lease.
If three criteria are fulfilled, usually they can continue to stay in the commercial property after it expires (unless notice has been served). These include the following:
- The tenant occupies the property exclusively for business use and pays rent.
- The tenant has exclusive possession of the property.
- The lease is on a fixed-term basis.
If the lease is “holding over” (which means the tenant is remaining in the property once the original term is over), and the tenant wishes to vacate the property, they are legally bound to give the landlord three months' notice. On the other hand, if the tenant wants to leave within the contracted period, they simply have to wait until the expiry date of the lease.
In addition to this, the tenant is given 6-12 months' notice prior to the expiry date of the lease, to consider a landlord’s wish to renew the terms of the lease or to get repossession of the property. Regaining possession of a property takes more time than under an unprotected lease.
What is an Unprotected Commercial Lease?
An unprotected lease will expire at the end of the lease term and the tenant must vacate the commercial property. If you have an “unprotected” commercial lease, your legal rights as a tenant are quite different from those with protected leases.
With an unprotected lease, you have “contracted out” of the provisions of the Landlord and Tenant Act (1954), meaning you do not have an automatic right to renew the lease or renegotiate the lease when it expires.
Instead, the landlord serves the tenant with a legal notice, and the tenant acknowledges in writing that they are forfeiting their rights. Consequently, if the landlord wants the tenant to leave, they are legally obliged to do so.
Can a landlord refuse to renew a lease?
A landlord cannot refuse to renew a lease unless specific reasons are given under the terms of the Landlord and Tenant Act (1954). Following a tenant’s request to renew the lease, a landlord would have to issue a counter-notice within two months. This notice would have to confirm the reasons for denying the request. These would normally include:
- Non-payment of rent
- Breach of the covenant to repair the property
- Re-development of the property
- The landlord wants to use the property as their business premises
Do I need a commercial lease solicitor?
When both landlord and tenant agree to negotiate or renegotiate the terms of a lease, it is important to employ the services of an expert commercial lease solicitor who may need to liaise with chartered surveyors or commercial valuers to ensure that tenants are paying the right price for their business premises.
Also, with the complexities of commercial leases, it is necessary to ensure that a legally binding agreement is in place which protects tenants during the contracted period and also gives them an informed choice on whether to renew, extend or end the lease once it expires.
How Can GloverPriest Help?
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.
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