Once a commercial lease comes to an end, a tenant has two options:
- To renew the lease and remain in the property
- To vacate the property
Tenants can renew by negotiating with their landlords, or they may benefit from a legal right often called security of tenure or LTA rights. This entitles the tenant to stay in the property and to request a new lease.
If the tenant benefits from security of tenure, they can serve a s26 notice on the landlord. This sets out the tenant’s suggestions for the new lease with a proposed start date, and needs to comply with the required time limits.
The landlord does have some limited options for refusing to renew the lease if they receive a s26 notice, but provided the criteria is satisfied, the landlord can refuse to renew. That said, the landlord cannot be forced to renew the lease of a ‘bad’ tenant, if for example, the tenant fails to pay rent. The landlord has 2 months to respond to the service of a s26 notice, if they wish to oppose it and a tenant can withdraw a s26 notice, if the lease has not yet expired.
There are strict criteria for who, when and how notices for renewals can be served and an opportunity can be missed if these are not compiled with. So, if you’re a commercial tenant looking to extend; it’s best to contact a solicitor for assistance with this.
If you’re a landlord and you’re unhappy with your tenant, you may want to speak to a solicitor to discuss the grounds for lease renewal refusal.
At Frettens, we can discuss your specific circumstances with you.
01202 499255 | pwhitford@frettens.co.uk | www.frettens.co.uk
This article is featured in the November issue of the Dorset Business Focus magazine. Read on the online version here.