Renewing a Business Tenancy
A guide to renewing a business tenancy for landlords and tenants
Business tenants usually have the right to renew a commercial tenancy when it comes to an end if the lease is within the Landlord and Tenant Act 1954.
Covered by the Landlord and Tenant Act 1954
Shops, warehouses, factories, offices, doctorsí and dentistsí surgeries are all covered in the Act. So too are the premises of bodies such as institutions and trade unions.
Premises partly used for businesses purposes Ė for example, if the tenant lives there as well Ė are normally covered by the Act. However, when negotiating a tenancy renewal, it may be limited to only the area of the property occupied for business purposes.
Who might not have the right to renew?
While most businesses have the right to renew their tenancy, there are some that donít.
These include farm business tenants, mining tenants, Ďservice tenantsí employed by the landlord, tenants with a fixed-term tenancy of six months or less, and tenants who have sub-let the property.
What if there is a disagreement?
In an ideal world, both landlord and tenant will agree on the new tenancy and its terms, but unfortunately things arenít always that straightforward. So what happens if there is a disagreement?
If the lease is within the 1954 Act and both parties agree there should be a new tenancy but canít agree on the terms, either of them can apply to the court for a new tenancy and the court will decide on the terms and settle the new rent.
Landlords can only refuse to renew the tenancy due to certain reasons. These tend to be associated with the tenantís conduct (e.g. if they failed to pay the rent), or the landlordís needs (e.g. if they want to redevelop the property).
Ending the tenancy
If a landlord wants to end the tenancy, they can either apply to the court or oppose the tenantís renewal application.
It will be up to the court to decide whether the landlord has a just reason for refusing the renewal. If the court decides the landlord doesnít have grounds to oppose the renewal application it can order a new tenancy.
Seeking professional advice
Because tenancy renewals can be complex, itís a good idea for landlords and tenants to seek professional advice.
It is important for potential tenants to get legal support before they take out a lease so they understand the implications of a lease being outside the 1954 Act.
We can help
Whether you are a tenant or a landlord, our commercial department solicitors can help.
We are able to advise on legal issues arising from the lease and help you come to an agreement when negotiating a business tenancy renewal.
Contact Paul Hughes and Vanessa Warren on 0121 705 7571
This article is for general information purposes only. It does not constitute technical, financial, legal advice or any other type of professional advice and is no substitute for specific advice based on your individual circumstances. We do not accept responsibility or liability for any actions taken based on the information in this article. For more information, please click here.