Commercial Lease Renewal Rights: How the Landlord and Tenant Act 1954 Protects Business Tenants (England and Wales)

Many business tenancies in England and Wales carry on beyond their fixed term because of statutory protection under Part II of the Landlord and Tenant Act 1954, rather than because the lease document itself says so. This guide covers England and Wales, where the 1954 Act applies; Scotland has separate commercial lease law.

Continuation of the tenancy under section 24

Section 24 of the 1954 Act says a business tenancy within Part II does not come to an end unless it is terminated in accordance with the Act, so a lease term expiring on paper does not by itself bring the tenancy to an end. Either the landlord or the tenant can apply to court for a new tenancy, the landlord by first serving a notice under section 25, or the tenant by making a request under section 26. Section 24 also protects the process itself: once one party has applied to court and the application has been served, the other party cannot make a competing application, and a landlord cannot withdraw its own application without the tenant’s consent.

How a landlord ends the tenancy: the section 25 notice

A landlord who wants to end or renegotiate the tenancy must serve a notice under section 25 specifying a termination date. That date must be not less than six months and not more than twelve months after the notice is given, so a landlord cannot spring an abrupt termination on a tenant, and where the tenancy itself required a longer notice to quit, the notice period can extend up to eighteen months. If the landlord is opposing the grant of a new tenancy, the notice must state that opposition and specify one or more of the statutory grounds in section 30(1). If the landlord is not opposing renewal, the notice must instead set out the landlord’s proposals for the property to be let, the rent and the other terms of the new tenancy, giving the tenant a starting point for negotiation.

The seven grounds a landlord can rely on

Section 30(1) lists the only grounds available to a landlord who wants to oppose renewal. They are: the tenant’s failure to keep the holding in repair; persistent delay in paying rent that has become due; other substantial breaches of the tenant’s obligations, or reasons connected with how the tenant has used or managed the property; the landlord’s ability to offer suitable alternative accommodation on reasonable terms; where the tenancy is a sub-letting, that letting the property as a whole would produce a significantly better rent than letting it in parts; the landlord’s intention to carry out substantial demolition, reconstruction or construction work that requires possession; and the landlord’s intention to occupy the property itself for business or as a residence, subject to restrictions where the landlord only acquired its interest within five years of the tenancy ending. A landlord relying on one of these grounds still has to prove it, and the tenant can contest the notice and ask the court to grant a new tenancy regardless.

The tenant’s alternative: a section 26 request

Rather than waiting for the landlord to act, a tenant with the right kind of tenancy can take the initiative under section 26 and request a new tenancy directly, proposing its own terms and a start date. This can suit a tenant who wants certainty earlier, rather than waiting to see whether or when the landlord serves a section 25 notice. As with a section 25 notice, a landlord who wants to resist a section 26 request must object on one of the section 30(1) grounds.

Excluding the protection

Not every business tenancy carries these rights. Landlords and tenants can agree, before the tenancy is granted and following a specific statutory procedure involving a warning notice and a tenant’s declaration, to exclude the security of tenure that Part II otherwise provides. A tenancy granted on this excluded basis simply ends on its contractual expiry date, with no automatic right to renewal, which is why checking whether a lease is “inside” or “outside” the Act, usually stated in the lease itself, is one of the first questions in any commercial tenancy dispute or renewal negotiation.

Why the process matters in practice

Because the statutory notice periods and grounds are fixed rather than negotiable, missing a deadline or misreading which ground applies can be costly for either side. A tenant who does not respond appropriately to a section 25 notice, or who lets the time limit for applying to court lapse, risks losing security of tenure it would otherwise have kept; a landlord who serves a defective notice, or cannot make out the ground relied on, risks having to grant a tenancy it did not want to grant. Both sides typically take advice first.

FAQs

Does every business lease automatically renew under the 1954 Act?

Only tenancies within Part II that have not been validly excluded from security of tenure through the statutory contracting-out procedure.

How much notice must a landlord give to end a business tenancy?

Section 25 requires a termination date not less than six months and not more than twelve months after the notice, extending up to eighteen months where the tenancy required a longer notice to quit.

Can a landlord refuse to renew for any reason at all?

No. A landlord opposing renewal must rely on one or more of the seven specific grounds set out in section 30(1) and prove the ground relied on.

Can a tenant start the renewal process instead of waiting for the landlord?

Yes, using a section 26 request, provided the tenancy is the type of tenancy the section covers.

Bottom line

In England and Wales, a business tenancy within Part II of the Landlord and Tenant Act 1954 continues until ended in the way the Act requires, giving most business tenants a genuine right to a new tenancy unless the landlord can prove one of seven specific grounds, or the tenancy was validly excluded from protection at the outset. The section 25 and section 26 notice procedures carry fixed time limits that leave little room for error. This article is general information, not legal advice on a specific lease; a solicitor specialising in commercial property should be consulted before a notice is served or a deadline is missed.