When you entered into your commercial lease, your solicitor likely informed you whether the landlord granted the lease inside or outside the Landlord and Tenant Act 1954 (LTA 1954). This distinction holds significant importance for commercial tenants as it determines their rights to continue occupying the property after the lease term ends. If the lease falls within the scope of LTA 1954, you enjoy what is known as ‘security of tenure,’ which grants you the right to a renewal lease if you are using the property for business purposes upon the expiration of the contractual term. A , landlord can only oppose a renewal of such a lease if it can demonstrate one of the following seven specified grounds.
(a) the tenant has obligations in relation to repair and maintenance under the current lease and the property is in disrepair;
(b) there has been a persistent delay in the payment of rent;
(c) the tenant has been, or is, in breach of other terms of the existing lease;
(d) the landlord is able to provide suitable alternative accommodation;
(e) the tenancy was created by a sub-letting;
(f) the landlord intends to demolish or reconstruct the property and it is not possible without the landlord recovering possession;
(g) the landlord intends to occupy the property or part of the property for the purposes of its own business or as its residence.
What is a section 25 notice?
A Section 25 notice is a formal communication issued by a landlord to trigger lease renewal or termination. This noticeis issued by landlords or tenants to express their intentions regarding the existing lease. Landlords may use it to terminate the tenancy, propose new lease terms, or initiate negotiations. A tenant may also serve an equivalent notice known as a Section 26 notice. A Section 25 notice served by a landlord or a Section 26 notice served by a tenant may only be served no greater than 12 months ahead of lease renewal and no later than six months ahead of lease renewal.
What can I do if I receive a section 25 notice?
If you find yourself on the receiving end of a Section 25 notice from your landlord, it is crucial to seek legal advice promptly to establish whether the landlord is opposing a new tenancy or proposing a new tenancy on revised terms. If a landlord is opposing a new tenancy, depending upon which ground the landlord seeks to rely, you might be eligible for compensation.
In the event that your landlord does not oppose the grant of a new lease and you intend to proceed with a renewal lease, careful consideration of the proposed terms is necessary. Engaging the expertise of a qualified surveyor to advise on matters like rent can be invaluable.
To retain the protection afforded by the 1954 Act, it is vital to take appropriate action before the expiration date specified in the Section 25 notice. This may involve formally completing the renewal lease, obtaining a written agreement from your landlord to extend the date, or making an application to the local county court. Failure to do so would result in the loss of your statutory protection, and the landlord would be entitled to seek possession of the property.
If you would like advice on whether your lease is granted inside or outside of the LTA 1954 or you have received a section 25 notice, please contact a member of the Commercial Property Team at Jacksons Law Firm who will be happy to speak to you.
