To have a commercial lease renewal, you need to inform your landlord 6-12 months prior to the lease’s expiry date that you wish to renew. Make sure you state the terms of the lease, such as the amount of rent paid and the duration of the new lease in the renewal notice.
Your landlord will have two months to dispute the granting of a new lease on one of the grounds listed below.
Landlords Grounds for objection to the renewal of a lease
Under the Act, a landlord can only refuse to grant a new lease in the following circumstances:
- The tenant has breached their obligations, i.e. failed to keep the premises in good repair, or has regularly been late in paying rent
- The landlord offers to provide other, suitable premises
- Where a sub-tenant who is occupying part of the building wishes to renew their lease, but the landlord wants to rent the premises as a whole
- The landlord wants to demolish or rebuild the premises
- The landlord wishes to occupy the premises themselves
If the landlord decides not to renew a tenancy protected by security of tenure on one of the above grounds, they must issue a Section 25 notice to the tenant. A failure to respond to a Section 25 notice means the business tenancy will end on the date specified.
If the landlord decides to end the tenancy on one of the grounds that does not involve ‘fault’ on the part of the tenant, i.e. they wish to re-occupy the building themselves, the tenant may be entitled to compensation; however, the court will not order the lease to be renewed.
Tenancies outside the Act
A tenant that does not have security of tenure under the Act will have to leave at the end of its lease. Unless it can agree terms for a new lease with its landlord or its lease contains a right to renew. In any event, it will be important to ensure that any deal for a new lease is agreed well in advance, so that there is plenty of time to find alternative premises if the landlord pulls out.
Finally, tenants that wish to remain in occupation for short periods after the expiry of their leases will usually negotiate short leases or licences with their landlords.
Recommended action points
In order to avoid being caught out, we recommend that you:
- check the expiry dates for your leases;
- review whether you have rights under the Act; and
- consider your renewal strategy at least 12 to 24 months in advance of the expiry date.
To ensure you do not encounter a stressful dispute when renewing your lease, it is recommended you seek professional advice prior to applying for renewal.