Unopposed Lease Renewals

Security of tenure is a statutory protection available to tenants of business premises under Part II of the Landlord and Tenant Act 1954. It gives business tenants a right to a new lease when their current one comes to an end.

However, this protection is subject to certain exceptions and can be disapplied by the parties by express agreement. This process is known as "contracting out" of security of tenure. 

How security of tenure arises: 

• Expressly, through the terms of a written commercial lease. 
• Impliedly, based upon the conduct of the parties, even if nothing is written down. 

Where security of tenure applies, tenants are granted a statutory right to renew their lease at the end of its contractual term. 

What Does Security of Tenure Mean for Business Tenants? 

When security of tenure applies, a lease doesn’t simply end when its contractual term expires. If the tenant stays in the premises and continues using them for business purposes, a continuation tenancy is created. This process is often referred to as “holding over.” This continuation tenancy remains in place on the same terms as the original lease until either the landlord or tenant takes formal steps to bring it to an end.

A tenancy with security of tenure can only be terminated using one of the prescribed mechanisms under the Act. Where the parties wish to renew their lease, they first need to terminate the existing tenancy. This can be achieved in two ways: 

1. By the landlord serving notice under Section 25 of the Act; or 
2. By the tenant serving notice under Section 26 of the Act

Unless the landlord intends to oppose the grant of a new tenancy, either of the above notices will propose terms for a renewal lease. The notice must be in the prescribed statutory form and comply with the required notice period. Additionally, if the contractual term of the existing lease has not yet expired, the termination date specified in the notice must not precede the expiry of that term. Failure to comply with these requirements may render the notice invalid. It is also essential to verify the identity of the receiving party to ensure proper service and receipt. 

Once the appropriate notice has been served, the notice period (known as the Statutory Period) is typically used by the parties to negotiate the terms of the new lease. If agreement is not reached - and a new lease hasn’t been completed - by the end of this period, the tenancy will come to an end unless one of the following steps is taken: 

• The parties agree in writing to extend the Statutory Period 
• Either party (though it’s usually the tenant) issues "protective" court proceedings to ask the Court to grant a new tenancy 

If neither of these steps is taken, the tenant will lose their security of tenure and their right to remain in the premises. 

The expiry of the notice can also have implications for interim rent. This is particularly relevant in unopposed lease renewals and can significantly affect a business’s cash flow if not properly addressed. 

Our expert team of real estate disputes lawyers are specialists in unopposed lease renewals, and once terms are agreed our expert team of commercial property lawyers will guide you through the process of documenting the renewal lease. Together, our experts are able to guide you through this complex area of law and help you to avoid some of the more common pitfalls. Being results driven, our team will carefully listen to your objectives to create the most effective strategy to realise them. 

To find out how our expert team of real estate disputes lawyers can help you, contact us today on  0330 123 1229, send us an email via  info@smithpartnership.co.uk or complete our contact form.