The law usually gives security of tenure to
business tenants (there are exceptions). But if you want a new lease there
are vital steps you must take quickly. Delays can be fatal - you might find
you've lost your premises.
Remember, it's never too early to plan
ahead, begin at least 18 months before the end of your lease.
What should I do first?
Think about your business objectives and prepare
a plan of your property needs - short and long term. Ask yourself some key
- Are your present premises too big or too small?
- Are they an asset to the business or a burden?
- Do you want the security of a long lease or the flexibility
of a shorter one?
- Would it make sense to move to another building?
- Would you face a big bill for repairs if you did so?
Your chartered surveyor will be able to help you in working
out your property strategy.
What are my rights as an existing tenant?
Most business tenancies in England and Wales are protected
by the Landlord & Tenant Act 1954. The Act provides 'security of tenure'. As
long as the business remains in the premises and follows all the correct
legal procedures, you have a right to apply to a court for a new tenancy.
The landlord is allowed to oppose your application in some circumstances. If
you cannot agree with the landlord, the court will decide whether you should
be offered a new lease and on what terms.
Can the landlord refuse to grant a new
The usual justifications for refusing a new lease are:
What are the legal procedures for a new lease?
- The tenant is not in the premises for the purposes of their
- The tenant does not follow the correct legal procedures.
- The court upholds the landlord's objection to a new lease,
usually because the landlord wants the property for their own use to
redevelop it (so you might be entitled to compensation for disturbance).
- The tenant has seriously breached the terms of the current
- A court order agreed at the start of the lease that there
would be no security of tenure.
Mistakes or delays can be costly. If you have security of tenure, and wish to protect it, you
must serve certain formal notices and respond to others within stated time
limits. Don't go it alone. Talk to your solicitor and bring in a chartered
surveyor when it comes to getting a new lease on terms that suit you.
It's important to know that lease renewal involves two
separate processes, which work in tandem: Application to the court to
protect your legal right to security of tenure and application to (and
negotiation with) your landlord to secure a new lease.
You must apply to the court whether or not you think your
landlord will be happy to grant you a new lease on acceptable terms. This
protects your legal position. If you then negotiate a lease that suits you
with your landlord, the court does not need to get involved. But if things
go wrong the court has the power to make the landlord grant you a new lease
and to set the terms. It may also set the terms where the landlord offers a
new lease but you cannot agree the detail.
The notices to be served to protect your position - and
their timing - vary from case to case. So call in the professionals as soon
How are the terms of the new lease
Usually by negotiation between you and your landlord, or
your respective chartered surveyors. You chartered surveyor will advise you
on your options and the terms you might realistically achieve. If any term
cannot be agreed and you need to go to court, it will usually look at the
terms of the old lease (apart from the figure for the rent payable) unless
either party can show good reason to make a change.
When should I agree to give up
security of tenure?
Only when you have no realistic choice, and only after
taking professional advice. If your existing tenancy is not protected by the
Act, you are in a weak position to argue for the new tenancy. Landlords may
also be reluctant to give security of tenure for a sub-lease or where the
lease involves only part of a property.
How is the new rent set?
The rent will usually be agreed at the current open market
level for properties of a similar type in your area. Your chartered surveyor
will advise on the likely level that can be agreed. As a general rule your
landlord is not allowed to take into account any improvements to the
premises you have made during the term of the lease or any extra value that
might come from your trading from the premises.
What happens if there's no agreement
before the old lease ends?
If your old lease is not protected by the Act (in other
words, if you don't have security of tenure) your landlord can ask you to
leave the premises. So negotiate a new lease as soon as possible. If you
have security of tenure, following the end of your lease, you keep that
building. This remains the position and would only be lost if a court
decides your landlord has grounds for regaining possession.
What is the courts process?
If you have to go to court to resolve the dispute, both you
and your landlord will usually appoint barristers to argue your case. An
expert witness (usually your chartered surveyor) provides evidence of rental
values. Resolving the dispute in court can be lengthy and expensive, so get
advice from your solicitor and chartered surveyor on the likely costs and
Are there alternatives to the court
for resolving disputes?
You can always refer your rent dispute to RICS'
dispute resolution service. The dispute is then overseen by either an
'arbitrator', 'independent expert' or 'mediator'.
If you and your landlord agree that a new lease is the way
forward, but cannot agree the terms or a new rent, then there is the PACT
scheme. This scheme provides an opportunity to have lease terms and rent
decided by an arbitrator or independent expert appointed by RICS or the Law
Society, rather than a judge in court. You can get more details of the PACT
scheme from the RICS Dispute Resolution Service.
The new lease is agreed, now what?
Your solicitors will draw up a new lease setting out all the
details. Ask your chartered surveyor to read the lease to make sure it
properly reflects the agreement. Read the lease yourself too and ask your
solicitor or chartered surveyor to explain any terms you don't understand or
are not happy with. Do not sign before you fully understand and accept the
Can I still change my mind?
You're not tied into the new lease until you sign it. If you
are unhappy with the terms, or if you simply change your mind, you can leave
the premises by asking your solicitors to give written notice to your