Commercial landlords and tenants: lease renewals
As lockdown restrictions are slowly eased, and businesses start to re-open, landlords and tenants will start to discuss lease renewals.
Protected v Unprotected Leases
Protected leases grant tenants the benefit of what is called ‘security of tenure’ under the Landlord and Tenant Act 1954 (the Act), allowing them the statutory right to remain in occupation on the same terms and conditions as set out in the original lease when their existing lease expires, and giving them the option of renewing their existing lease.
Meanwhile, unprotected leases are those which have been ‘contracted out’ of the Act, thereby rescinding tenants’ right to renew their existing leases. In such circumstances, should tenants wish to renew their existing lease, the lease terms would need to be negotiated with their landlord prior to the expiry of their existing lease.
What procedures do parties need to follow in renewing Protected Leases?
Firstly, both parties should have an informal discussion to negotiate the terms of the new lease. If a decision cannot be reached, a more formal process ensues.
Tenants may request a renewal lease by serving a S.26 notice on the landlord specifying the terms upon which the tenant wishes to take a lease. Alternatively, landlords may serve a S.25 notice of the tenant confirming that they will not oppose the grant of a new lease and specifying the terms of their proposed lease OR confirm that they do not wish to grant a new lease and stating the statutory grounds (contained within the Act) upon which they are relying upon.
If parties cannot reach an agreement by the end of the relevant notice period involvement by the Court is necessary in determining the terms of the new lease.
If you would like more information on any of the above, please email or call us on 0113 207 0000 today.