If your business rents its premises in England or Wales, the lease expiry date is rarely a clean finishing line. For most business tenancies, the Landlord and Tenant Act 1954 gives the tenant the right to stay on and ask for a new lease on broadly similar terms. That right runs on a tight timetable of notices and deadlines, and small mistakes can cost a lot.
What follows covers how the process works in practice for business leases, what tenants can do, and when a landlord is entitled to take the premises back. It does not apply to residential tenancies or agricultural holdings, which are governed by separate rules.
The tenant's right to stay
Part II of the 1954 Act applies where a tenant occupies premises for the purposes of a business. Where it bites, the tenancy does not simply end when the contractual term runs out. It carries on automatically on the same terms until one of the procedures in the Act is used to close it down or replace it with a new lease.
This is what lawyers call security of tenure. In plain terms, it means the tenant can stay in occupation and ask for a new lease, and the landlord can only block renewal on one of the grounds listed in section 30(1).
Not every business tenancy is protected. A landlord and tenant can agree to contract out of the renewal rights before the lease is granted, but only if the right procedure is followed. The landlord must serve a warning notice, and the tenant must sign a declaration accepting what is being given up. If there is less than 14 days between the warning notice and the lease being granted, the tenant has to sign a statutory declaration instead, which is a formal declaration made in front of an independent solicitor or commissioner for oaths.
If that process was done properly, there is no right to renew and the tenant has to leave at the end of the term. If it was not, the tenant usually keeps the full protection of the Act even if the lease wording suggests otherwise. It is worth digging out the lease and any section 38A declaration you signed before it started.
Section 25 notices and Section 26 requests
A Section 25 notice is the landlord's formal way of starting the end-of-lease process. It can either propose a new lease or oppose renewal outright. The notice has to be in the prescribed form and served between six and twelve months before the date it specifies, which cannot be earlier than the contractual end of the lease.
There are two types:
- Renewal proposal: the landlord is willing to grant a new lease and sets out proposed terms, including rent, length and any changes to the current lease.
- Renewal opposition: the landlord opposes renewal and identifies which ground under section 30(1) is being relied on.
A renewal proposal is a starting point for negotiation, not a binding offer. If the parties cannot agree, either can take the matter to court.
The tenant does not have to sit and wait. If the lease is close to expiry and the tenant wants to pin the landlord down, a Section 26 request can be served proposing the terms of a new tenancy. It must be in the prescribed form and set a start date between six and twelve months ahead, and not before the contractual expiry.
Once a Section 26 request is served, the landlord has two months to respond with a counter-notice opposing renewal and stating the ground relied on. Miss that, and the right to oppose is gone.
A tenant who might want to leave should think twice before serving a Section 26 request. It commits to pursuing a new tenancy and can shorten the time left on the current terms.
How notices are served matters. Many leases still require service by post or personal delivery to a particular address, and email service is not automatically valid unless the lease or a separate agreement allows it. Check the notices clause before you send or accept anything electronically.
Grounds of opposition
Section 30(1) sets out seven grounds. In practice, two come up most often:
- Ground (f) redevelopment: the landlord intends to demolish or reconstruct the premises, or carry out substantial works, and could not reasonably do so with the tenant still there. There must be a settled, genuine intention. The courts scrutinise this carefully, and landlords are typically expected to produce planning permission, evidence of funding and a realistic programme of works. Works triggered by the Building Safety Act 2022, such as cladding replacement or structural remediation on higher-risk buildings, may feature here where they genuinely need vacant possession.
- Ground (g) own occupation: the landlord intends to occupy the premises for its own business or as a residence. This ground is generally not available where the landlord bought its interest in the property within the five years before the termination date in the notice. Again, the court will look hard at whether the stated intention is genuine and workable.
The other grounds cover persistent late payment of rent, other substantial breaches of the lease such as disrepair, unauthorised alterations or unlawful sub-letting, the availability of suitable alternative premises offered by the landlord, and certain sub-letting situations. Some grounds are discretionary, so the court weighs everything up. Others are mandatory once proved.
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If the parties cannot agree on renewal, an application to the County Court (or occasionally the High Court) is needed to keep things alive. Either side can issue, but the tenant has more to lose. If no application is made and no written extension has been agreed, the tenant loses the right to a new lease and the tenancy ends on the date specified.
Unopposed and opposed claims follow different procedural tracks and use different court forms, so it is important to identify at the outset which category the case falls into. Unopposed claims, where the only dispute is about the terms of the new lease, tend to be straightforward. Opposed claims, where the landlord is running a section 30(1) ground, are more involved and often require witness evidence and expert input.
The deadline is the date in the Section 25 notice or Section 26 request. The application must be made before that date unless the parties have agreed in writing to extend time. Extensions can be rolled over more than once, which is common where negotiations are going somewhere.
Court fees change from time to time and should be checked on GOV.UK before issuing. The real cost usually lies in solicitors' fees and, where rent is in dispute, a surveyor's input.
Your situation may be slightly different. ask a question below ↓ and our editorial team will reply with our advice.
Interim rent
While renewal is being thrashed out, the old rent generally keeps running by default. Either party can apply for an interim rent under section 24A at any point once a Section 25 notice or Section 26 request has been served. Timing matters, because the earliest date from which interim rent can run depends on when the application is made. In a rising market, a landlord who delays loses money. In a falling market, a tenant who delays pays more than they need to.
Where the landlord is not opposing renewal and the tenant takes a new lease, interim rent is usually set at the same level as the new rent, with limited scope for adjustment. That reflects the idea that the tenant has been occupying under what is effectively the new deal while negotiations were going on. Where renewal is opposed, or the tenant does not end up taking a new lease, the court sets a rent it considers reasonable, which can be noticeably different from the new lease figure. Negotiations often run for many months, so the gap between passing rent and market rent can mount up.
In practice, interim rent is often resolved as part of the wider negotiation rather than fought out in court. Keep an eye on local market rents throughout the process so you know where you stand.
Compensation where the landlord succeeds on a no-fault ground
If the landlord succeeds in opposing renewal on grounds (e), (f) or (g), none of which involve any fault by the tenant, the tenant is entitled to statutory compensation on leaving. The amount is fixed by statute rather than negotiated, which gives tenants some certainty when planning a move. It is calculated using the rateable value of the premises, with a higher multiplier where the business has been in occupation for 14 years or more. The multipliers are set by statutory instrument, and the rateable value used is the one on the rating list at the date of the Section 25 notice or counter-notice. Check the current figures on GOV.UK or ask a chartered surveyor before budgeting.
There is no compensation where the landlord relies on fault-based grounds such as rent arrears or breach of covenant, even if those arguments fail and a new lease is granted.
Practical points
- Diary the lease expiry date well in advance, ideally around 18 months ahead, so you have time to work out whether you want to stay.
- Check whether the lease was contracted out before doing anything else.
- Read any notice carefully to see whether it proposes renewal or opposes it, and check the dates on its face.
- Get a solicitor and a chartered surveyor involved early. Rent, term, break clauses and repair obligations are all negotiable.
- Do not let the court deadline slip. If talks are ongoing, get an extension in writing or issue protective proceedings.
- Check the notices clause in your lease before serving or accepting anything by email.
The cases that fall apart are almost always the ones where a notice was ignored, a deadline was missed, or the contracting-out position was never properly understood. The timetable is strict, and when things go wrong it is usually the tenant who pays the price.
The last 17 years have been without a contract as landlord never made contact but kept taking the rent. The rent was £32800 , I have a secured tenure. Now the property has been inherited by the daughter and she is requesting a rent rise to £55000 which is not affordable for the business to survive. What rights do I have.
When a lease renewal is completed, the new lease will usually need to be registered at HM Land Registry, particularly if it's granted for more than seven years. The old lease title will be closed and a new title number issued for the renewal. Your solicitor will typically handle the registration, submit the relevant forms, and ensure any superior landlord's title is properly noted.
There can also be implications for any existing charges, guarantees, or subleases sitting behind the headlease, so it's worth checking these early on.
Maybe speak to a property solicitor who can review your specific circumstances and make sure everything is correctly registered and protected. It's an area where getting the paperwork right really can matter down the line.
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