An Introduction to Unopposed and Opposed Lease Renewals under Part II of the Landlord and Tenant Act 1954

Subject to certain exceptions, Part II of the Landlord and Tenant Act 1954 (Act) can give to tenants of business premises a special form of statutory protection known as “security of tenure”. Where it applies, security of tenure:-

1. Gives to business tenants a statutory right to renew their lease at the end of its contractual term; and
2. Prevents the tenancy (created by the lease) from coming to an end unless it is terminated in accordance with the Act.

The Continuation Tenancy

Where a tenant has security of tenure, their tenancy will not necessarily come to an end upon the contractual expiry of the lease. Where the tenant is in occupation of the premises for business purposes at term end, a “continuation tenancy” will arise. This will be on the same terms as the lease (save for duration), and will continue until terminated in accordance with the Act.

Lease Renewals under the Act

Neither party has to wait until a continuation tenancy has arisen under the Act before taking steps to begin the renewal process, but any notice served (for which see below) must:-

1. Ensure that the correct period of notice is given (which must be not less than 6 nor more than 12 months); and
2. Not expire before the contractual expiration date of the lease

In most cases, either the landlord or tenant may serve a statutory notice to begin the lease renewal process. In the case of the landlord, they will serve notice to either:-

1. Terminate the existing tenancy and propose terms for a new one; or
2. Terminate the existing tenancy, and specify grounds for opposing the grant of a new one.

Subject to some exceptions, the tenant is only able to serve notice to terminate their existing tenancy and request a new one. In this scenario, the landlord then has a choice whether to oppose the lease renewal or not. If they do, then must serve a counter-notice on the tenant within 2 months’ of receiving the tenant’s request specifying their grounds of opposition.

Unopposed Lease Renewals

Where the renewal is “unopposed”, the parties will seek to agree the terms of the new lease, usually via their respective surveyors. However, where the terms cannot be agreed, either party may apply to the court for the disputed term or terms to be determined.

Historically, the most disputed terms were rent, interim rent and the length of the new term, but disputes regarding redevelopment breaks and the imposition of so-called “green lease” provisions are on the rise. These kinds of disputes will be examined more closely in future articles.

Opposed Lease Renewals

There are seven specific grounds of opposition set out within the Act, ranging from allegations of disrepair to the landlord wishing to occupy the premises themselves. Each ground relies upon specific evidence being produced in support (in the event of challenge) and some grounds (known as “non-fault” grounds) will trigger a statutory right of compensation.

It is not unusual for a landlord to rely upon several grounds at the same time to increase their chances of success, but advice should be taken before the service of a notice specifying grounds of opposition (sometimes called a “hostile” notice) to ensure that the ground(s) of opposition can be made out.

Once a hostile notice is served, either party can make an application to the court. The landlord will be seeking an order that the tenancy be terminated, whilst the tenant will be seeking the grant of a new tenancy (i.e. it will be seeking to challenge the landlord’s ground(s) of opposition).

The Court Application Deadline

Whether initiated by the landlord or the tenant, the notice must specify an “end” date. In the case of the landlord’s notice, this will be the date that the tenancy is said to terminate. In the case of the tenant’s notice, this will be the date for the commencement of the newly requested tenancy. If initiated by the tenant however, the tenancy will terminate the day before the date specified in their notice. This is because they are requesting a new tenancy to begin on the date they have specified, and this new tenancy cannot be created whilst the old tenancy still exists.

In either case, the termination date of the existing tenancy is also the date that either party (although usually the tenant) must apply to the court to either:-

1. Determine any disputed terms (in an “unopposed” renewal); or
2. Challenge the landlords’ ground(s) of opposition (in an “opposed” renewal).

If proceedings are not brought by that date (or the parties do not agree to extend time in writing under the Act) then the tenancy will terminate and the tenant’s rights of occupation will come to an end.

Key Takeaways

1. Where a tenant has security of tenure, their tenancy will not necessarily come to an end upon the contractual expiry of the lease;
2. Pre or post contractual lease expiry, the tenancy cannot be terminated (for lease renewal purposes) unless it is in accordance with the Act;
3. Subject to some exceptions, either party may serve a statutory notice to begin the lease renewal process, which will either be “unopposed” or “opposed”. In the event of dispute, the court can be asked to intervene; and
4. Great care must be taken to note the court application deadline to ensure that rights are not inadvertently lost.

How We Can Help

Lease renewals under the Act must be approached with great care. It is a complex area of law, with numerous pitfalls that need to be avoided. To find out more about how our expert team can help, do not hesitate to contact us on  0330 123 1229, send us an email via info@smithpartnership.co.uk or complete our contact form.