What Are the Similarities Between a Protected Lease and a Non-Protected Lease in the UK?

As a commercial landlord or tenant entering a commercial lease, you must consider whether you want the lease to be protected or non-protected. To assist your decision, consider comparing the two types of leases and how they can benefit you. This article will consider the similarities between a protected lease and a non-protected lease in the UK.

Protected Lease  

A protected lease is a commercial lease which has security of tenure. This means that it is a commercial lease which offers protection to a commercial tenant. So, when the lease reaches its end-term date by law, it automatically renews with the same terms. Any commercial lease over six months usually enjoys protection from the security of tenure.

When you reach the end date of a protected lease, a commercial landlord can only refuse a tenant the legal right to automatic renewal on limited legal, reasonable grounds. These are:

• where a tenant repeatedly pays their rent late;
• if the landlord needs to refurbish the property;
• where the landlord wants to occupy the property;
• if the commercial tenant has not looked after the property correctly;
• if there are substantial breaches of the lease by the tenant;
• where the landlord can offer alternative accommodation of a suitable and reasonable standard; or
• where the lease in question is a lease which only covers some of the commercial property.

Non-Protected Lease  

A non-protected lease, or contracted-out lease, is a commercial lease which does not offer the protection of security of tenure. This means that the lease does not automatically renew once it reaches the end date. This is because the landlord has contracted out of the legal provisions. Therefore, the landlord is not obligated to enter into a new lease with the tenant. Equally, the tenant has no right to remain in occupation of the commercial property. 

If a commercial tenant and landlord agree to contract out of the security of tenure provisions in the Act, there is a legal procedure they need to take to ensure that it is valid. This includes inserting a clause in the commercial lease, making it clear it is non-protected.

Key Similarities

Whilst protected and unprotected leases have some key differences, they also have some similarities. A protected lease and a non-protected lease are essentially the same things – minus the protection of the security of tenure. A commercial lease is a binding agreement which provides that a business owner can occupy a commercial property as their business premises in return for paying rent. 

Although a non-protected lease will have a clause that states it does not offer the protection of security of tenure, the other provisions in the lease agreement can be the same or similar to a protected commercial lease. For example, both a protected and a non-protected lease may contain a:

• rent review provision, which allows the commercial landlord to review the amount of rent the tenant pays at specific intervals;
• repair and maintenance provisions which can require similar or the same repair and maintenance responsibilities for each party; and
• alienation provisions, such as the rights and conditions associated with subletting.

A further similarity is that there are usually the same options if a tenant wishes to bring the lease to an end before the original lease end date. For a protected lease, the lease’s end date is when it has not already reached renewal. A protected lease or unprotected lease can only end before the end term by:

• mutual surrender of the lease;
• the county court where the commercial tenant is in substantial breach of the lease; or
• the use of any break clause in the lease agreement.

Key Takeaways

A protected lease is a lease with the security of tenure. This means it legally automatically renews on the same terms once it reaches the end date. However, non-protected leases do not have the security of tenure and offer no right to remain on the premises once the end-term date arrives. This is because it contracts out of the legal provisions that provide for the security of tenure. However, there are similarities between these two types of leases. For example, both have the same options if a tenant wishes to end their lease before the original end-term date. Also, the other provisions in the lease may be the same or similar. 

If you need help understanding the similarities between a protected lease and a non-protected lease in the UK, LegalVision’s 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. So call us today on 0808 196 8584 or visit our membership page.

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