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David Ashton

Partner – Head of Commercial Property Department - Uckfield

8th January 2021

Commercial Lease Expiry: Protected tenancies and key landlord considerations

During this commercial lease expiry blog series, we have touched on contracted out leases from both a landlord and tenant perspective as well as key tenant considerations relating to protected leases. In this final blog of the series, we turn our attention to protected tenancies and landlord considerations when (a) initiating the lease renewal process; or (b) opposing a tenant’s new lease.

As previously discussed, where a lease benefits from security of tenure and is therefore protected, the lease renewal process can be initiated by either the tenant serving a section 26 request (the “Request”), or the competent landlord (the “Landlord”) serving a section 25 notice (the “Notice”).

Despite both parties having the ability to initiate this process, it is important to note that if the tenant serves a Request on the Landlord first, then a Notice can no longer be served by the Landlord. Instead, the Landlord can either agree to the Request, or oppose it by serving a counter-notice (often referred to as a “hostile” section 25 notice), in writing, within two months after the Request is served, stating one or more of the seven statutory grounds for opposition:

  • The property is in a state of disrepair;
  • There has been a persistent delay in paying the rent;
  • Other substantial breaches by the tenant;
  • Suitable alternative accommodation is offered;
  • The tenancy was created by a sub-letting;
  • The Landlord intends to redevelop the property;
  • The Landlord intends to occupy the property.

Although ground (f) is the most commonly used, Landlord’s should be aware that where any of grounds (e)-(g) are cited (i.e. the “no fault” grounds”) then the tenant may be entitled to compensation when vacating the property.  It is therefore of benefit to a Landlord if grounds (a) – (d) can be established.

If, however, neither party serves a Request or Notice before the lease expires, then the lease will be held over and continue as before until either party takes steps to end or renew the lease.

Where the Landlord wishes to initiate the renewal process and serve the Notice, it is crucial that this complies with the statutory and procedural requirements in order to be considered valid. A further point of note is that once served, the Notice cannot be unilaterally withdrawn or amended, meaning that further grounds of opposition cannot be raised at a later date. The key landlord considerations for Landlord’s when serving the Notice, are largely the same as those previously stated for tenant’s serving the Request:

  • How soon before the end of the current lease must a Notice be served?
  • What information needs to be included as part of a Notice?
  • If no agreement can be reached, can an application be made to the court for a new lease to be granted? If so, when does this application need to be made?

Contact our commercial property lawyers in Brighton & Hove, Uckfield, Sevenoaks and Ashford

Due to the importance of serving a valid Notice, it is crucial that Landlord’s obtain legal advice as early as possible to ensure that the legislation is complied with in good time. If you have any queries or need advice on renewing your protected lease, please contact David Ashton e., t. 01825 745366 in Rix & Kay’s dedicated Commercial Property Team based in Brighton & Hove, Uckfield, Sevenoaks and Ashford.

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