Ifath Khan of Goodman Grant Solicitors talks us through the finer points of business lease renewal
As a dentist, if you are a tenant you will have a business lease, as provided for in the Landlord and Tenant Act 1954 (LTA 1954). This offers you a certain amount of protection: if a tenancy is protected by LTA 1954, it will not end automatically at the end of the term. It can only be terminated by the methods as set out in the LTA 1954.
Once you come to the end of your lease term, however, the question of how you renew your business lease arises.
If you, as a tenant, meet the criteria set out in section 23 of the LTA 1954, you can request a new business tenancy by serving a valid 26 notice on the landlord. This is something to think very carefully about, as it will start the process of a lease renewal, leading to discussions relating to rent increase and a possibility that the landlord could have legitimate grounds to refuse an application. Further, it brings the current lease to an end.
A tenant must serve their landlord with a section 26 notice in the prescribed form not more than 12-months nor less than 6-months before the proposed commencement date. This date cannot be earlier than the contractual expiry date of the current lease.
If the landlord wishes to propose a grant of a new tenancy or propose different terms, they must respond by serving a counter notice within two months after the section 26 notice is served. This must specify the grounds in section 30 of the LTA 1954 on which the landlord is opposing the application. If the landlord does not serve a counter notice within this time frame, they cannot oppose the tenant’s application and a new lease must be granted.
Alternatively, the landlord can seek to end a business tenancy and propose a new tenancy by serving a valid section 25 notice on the tenant. This must be served not more than 12 months nor less than 6 months before the termination date specified, which cannot be before the contractual expiry date of the current lease.
If the parties are unable to agree on the terms of a new lease, either can apply to Court for an order for the grant of a new tenancy. In the absence of agreement, the Court will order a lease taking into account and having regard to the existing terms.
Where the landlord initiates renewal, either party can apply to the Court as soon as the section 25 notice has been served. When the tenant initiates renewal, neither party can apply to the Court until the landlord has served a valid counter notice. It is important to remember that any Court application must be made within the prescribed time limits, or the tenant will lose their right to a new lease.
The parties can agree in writing to extend the date for making an application provided that they do so before the deadline expires.
As a dentist, you need your premises to carry out your work, and need the security of knowing your lease is in place in the long-term, and based on terms that are acceptable to you. When navigating the complexities of renewing your business lease, we recommend that you seek legal advice from a reputable, specialist firm, to help ensure the process runs smoothly.