My Commercial Lease in England and Wales Has Expired. Can I Remain in the Property?

If your business leases a property, and your commercial lease has expired or is about to, you may be curious about your options and whether you can continue to lease the property or what will happen if you do not leave the property. The last thing you want is uncertainty around this point, as not being prepared for what happens when your commercial lease expires could leave you out of pocket or, worse, without a place to run your business. Understanding your options can help you plan effectively and avoid unexpected disruptions.

This article will explain what your options are when your commercial lease ends, providing clarity on the steps you can take to ensure your business continues to operate smoothly. By exploring the various scenarios and legal provisions, you can be better prepared to negotiate with your landlord and protect your business interests.

Security of Tenure (the Right to Remain in the Property)

Most commercial leases in the United Kingdom fall under the Landlord and Tenant Act 1954. This law ensures that tenants have rights they can rely on concerning leases, and one of these rights is ‘security of tenure’. What this means in simple terms is that you have the right to remain in the property you have rented. In the context of a business renting a commercial property, this means that if your lease has expired, you have the right to request a new lease when your existing commercial lease ends.

What Will the Terms of My Lease Be if I Remain?

Provided you continue paying rent on time and as agreed, your tenancy will effectively continue on the same terms as your original lease. If the landlord does want to make any changes to the lease, they must tell you by serving you with a ‘Section 25’ notice. 

Section 25 Notice

If your landlord wishes to change the lease terms or wants your tenancy to end, they must serve a Section 25 notice on you. There are specific rules relating to this notice that your landlord must follow. For example, if they wish you to leave the premises, they must serve this notice on you within 6 to 12 months before they would like you to leave. Similarly, if they wish to change the lease terms, they would need to give you the same amount of notice. 

The Section 25 notice will include the date the new lease will apply or the current lease will end. You have until this date to respond. If you do not do so, then: 

• the new lease will automatically come into effect; or 
• you will need to leave the property if the landlord seeks to end the tenancy.

Section 26 Notice

Suppose it is you who wishes to enter into a revised lease. In that case, perhaps because property prices have fallen dramatically and you feel you are now paying too much rent, you can also serve a Section 26 notice on your landlord to request a new lease. 

You must do this within 6 to 12 months before the end of your tenancy, and your landlord has two months to decide whether they wish to enter into the new lease agreement you have proposed. If they wish to object, there are only limited reasons why they can do so. These include factors such as whether you have breached your lease in any way and the landlord’s plans for the property in question.

When You Do Not Have the Right to Remain in the Property

Despite the security of the tenure rule, it is vital to check your lease to ensure that it does not contain a provision that states that this right to remain in the property does not apply. Commercial leases are commercial agreements between businesses capable of negotiating with each other. Therefore, if your landlord negotiated with you that the security of tenure/right to remain in the property would not apply when you agreed on the lease, then you cannot rely on this right when your contract expires.

What Do I Do if I Do Not Have the Right to Remain in the Property?

If you wish to stay in the same property, the only option is to hope that your landlord will agree to enter into a new lease. In this case, they may feel they have greater bargaining power than you and seek to: 

• increase your rent; or 
• include other unfavourable terms in the lease. 

In this case, you would need to think carefully about whether you want to stay in the property.

What if I Have the Right to Remain in the Property but Want to Move On?

If you decide you want to move on from the property after your commercial lease has expired, that is no problem. You have the right to remain in the property, but the landlord does not have the right to make you stay in the property. If you wish to end the tenancy, you would simply need to inform your landlord that you plan to leave the property when the lease expires.

Key Takeaways

The rules around the right to remain in business premises after your commercial lease has expired are highly complex. It is essential that you understand the terms of your lease agreement and whether it contains any provisions stating that you cannot rely on the security of tenure/right to remain. If you do have the right to remain in your premises after your lease expires, you must understand your rights should your landlord decide to end your tenancy or change the lease terms in the future. Familiarise yourself with the processes involving Section 25 and Section 26 notices to safeguard your business interests.

If you need help with understanding your commercial lease or negotiating a new lease, 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. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions