What Can I Do if My Landlord Sells My Building in the UK?

The commercial premises you run your business from is a vital part of the success of your business. You may spend substantial time choosing the right commercial property and negotiating the terms of your commercial lease agreement. So if your landlord decides to sell the building your business occupies to a new owner, you may panic and wonder where that leaves you as a commercial tenant with a lease agreement for the property. This article explores the situation and your rights as a business tenant in terms of your commercial lease when your landlord sells your building. 

How Will I Know?  

The first issue is how you will know when your commercial landlord decides to sell the building. Generally, if your landlord sells your building, they will inform you. They are likely to give you notice of the completion of the sale of your commercial premises to the new owner. This notice should state the following:

• the buyer’s name;
• contact details for the buyer; and
• the buyer’s bank details for you to make rent and other payments per your commercial lease agreement. 

Your Current Tenancy 

Your commercial lease agreement has a contractual term stating when the lease ends. Therefore, your tenancy is safe if your landlord sells the property during this timeframe. This is because your landlord sells their interest in the property during the sale. Accordingly, the buyer purchases this interest, including you as the lease’s tenant.

However, you may seek legal advice on registering your current lease with the Land Registry. Doing so will include your title and let the buyer know.

Renewing the Tenancy

Most leases are protected leases. At the end of the contractual term, it automatically continues on the same terms as the existing lease. However, a protected lease gives you the right to renew and request a new lease with new terms once the contractual term ends. Generally, your landlord will have limited reasons to refuse your request.

However, if your landlord sells their building while you still have the right to renew your lease, your new landlord may refuse. Typically, this will depend on the new owner’s plans for the property. For example, they may decline if they wish to:

• regain possession;
• demolish the building; or
• redevelop the property.

If your new landlord refuses your request for renewal of the tenancy with a new lease, the tenancy will end. First, however, they will have to carry out legal obligations to allow them to obtain vacant possession.

Landlord’s Obligations

Once your landlord sells the building, their obligations in your lease agreement remain for the entire lease period if the lease started before 1 January 1996. Notably, an exclusion clause cannot waive their obligations.

However, suppose your lease starts on or after 1 January 1996. In that case, your landlord will usually have joint and several liabilities for the obligations in your lease agreement with the person who has bought the building. However, there are situations when this will not occur, such as if:

• they waive their obligations through an agreement;
• you and your landlord negotiate your landlord’s release; or
• an existing lease clause excludes their liability in a sale situation.

If your lease agreement does have an exclusion of liability clause, you should be aware that the new landlord will inherit any:

• repair obligations;
• service provisions; and 
• any breaches of the previous landlord. 

Key Takeaways

If your landlord sells the building you occupy as commercial premises during the contractual term of your lease agreement, your lease is safe. This is because they sell their interest in the land, which includes your lease agreement. Therefore, the new owner will inherit the lease and you as a tenant. However, if your landlord sells the building, it could have implications where you wish to renew your current lease as a new lease. The new landlord’s acceptance of your wish to renew the lease will depend on their intention with the property. Also, whether your landlord remains liable for their obligations in your current lease upon the sale of the building depends on when you signed your lease. Additionally, it may factor in circumstances that have released their liability. 

If you need help understanding what happens when your landlord sells your building in the UK, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. So call us today on 0808 196 8584 or visit our membership page.

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