Commercial tenant or landlord, we can provide you with expert guidance on how best to renew your lease. Our hassle-free service handles every step of the process and more, if you need it. For example, we also deal with issues such as managing interim rent payments and serving notice.
What happens when my Lease comes to an end?
If you occupy the premises of a business that continues to trade, you should have the right to renew your tenancy when it comes to an end. There are, however, a number of exceptions.
The Landlord and Tenant Act 1954 allows a Tenant in this situation to renew his Lease at the market rent, or on terms agreed by both parties. The maximum new term he is entitled to is 15 years, although longer periods can be agreed with the Landlord.
What does “contracted out” of the1954 Act mean, and does it apply to me?
Sometimes Landlords and Tenants agree (before entering into a commercial Lease) that the Tenant will have no right to renew when it comes to an end. Until relatively recently such an agreement had to be approved by the court.
If a Lease is “contracted out” there should be a clause in it to confirm it, as well as the date of the court order. The court order itself is usually kept with the Lease.
If your Lease is contracted out you have no right to renew; in this instance, it comes down to the agreement you are able to make with the Landlord.
What are my options if my Lease is not contracted out of the Act?
If you wish to renew your Lease, you can issue a Section 26 Request to your Landlord. Please note: you must give at least six but no more than 12 months’ notice to do this.
Can the Landlord take any action to prevent me serving a Section 26 Request?
Yes – the Landlord can serve a Section 25 Notice on you terminating your Lease with a minimum of six months and a maximum of 12 months’ notice.
I sublet part of the premises in my Lease. Will this stop me renewing it?
You must occupy a premises to have the right to renew your Lease, which means you have no right to renew sub-let parts while they are still being sub-let. You can, however, serve a Section 26 Request for the parts you do occupy.
If the sub-tenancy comes to an end before your own Lease expires, you can serve a Section 26 Request for the whole of the premises in the Lease.
Even if you are only in a position to serve a Section 26 Request for part of the premises, your Landlord could make you sign a new Lease for the entire premises. Alternatively, the Landlord could deal directly with your sub-tenant regarding the parts you don’t occupy – it’s their choice. The same considerations apply to a Landlord serving a Section 25 Notice.
I live above my business. Can I renew my Lease under the 1954 Act?
The Act applies to any tenancy where the Tenant runs a business occupying some or all of the property.
The fact that you live in part of the premises does not therefore prevent you from being able to renew your tenancy.
However, there is a limit to the protection afforded by the Act and if your business use is merely incidental to your living in the premises then the Landlord may well challenge your right to renew. It is a matter of fact and degree in each case.
Can a landlord stop me renewing my Lease if I have entitlement?
There are a number of grounds on which a landlord can oppose your application for a new tenancy.
These include:
- Redevelopment
- Own occupation by the Landlord
- A history of breaches of the Lease terms
The most common ground of opposition is redevelopment. In order to successfully oppose the renewal of a tenancy on this ground the Landlord must prove that they intend to demolish, reconstruct, or carry out substantial work to the premises. This proof could come in the form of planning permission, secured finance, etc.
If a Landlord serves a “hostile” Section 25 Notice (or Counter Notice to a Tenant’s Section 26 Request) we recommend asking the Landlord for evidence of his intention straight away. This will enable you to make an early decision about whether you want to challenge the Notice or make other arrangements.
How do I protect my right to renew?
To protect your right to renew you must apply to the court for a new tenancy by the termination date stated in the notice. If you do not, you will only be able to stay in the premises if the Landlord agrees.
Can I extend the deadline for renewal?
Yes, but it will have to be agreed by your landlord in writing.
What happens if my application for renewal is unsuccessful?
If the Landlord succeeds in demonstrating that it has legal grounds to reject your application for renewal, the Lease will usually come to an end three months aer the court hearing, unless some other arrangement is agreed with the Landlord. If, on the other hand, the Landlord fails to prove sufficient intention to redevelop, the new tenancy application will then proceed.
What happens if the terms of a new Lease cannot be agreed between the parties?
If the terms of the new Lease cannot be agreed between the parties the court will determine them at a hearing.
You will gather from this that the whole process of renewal, especially if it is opposed by the Landlord, can be quite protracted and costly. It is far better to try and agree terms amicably with your landlord. Please note: always be mindful of your rights and ensure that you protect yourself from a legal perspective (e.g., ensure you have agreements in writing).
What happens after I serve a Section 26 Request?
A Landlord has two months to serve a Counter Notice, in which he/she must set out the grounds of the opposition and the counter proposals for the terms of a new Lease.
If this happens, you have until the start date quoted in your Section 26 Notice to apply to the court. Again, the date for this can be extended by agreement in writing between Landlord and Tenant.
If I do have to leave a premises on the grounds of redevelopment or own occupation, am I entitled to compensation?
If a hostile Notice is served on the grounds of redevelopment or own occupation, the Landlord must pay compensation when you leave the premises.
If you have been a Tenant for fewer than 14 years, you are entitled to the rateable value in compensation. If you have been a tenant for more than 14 years, you are entitled to double the rateable value.
I want to renew my Lease. Should I go ahead and serve a Section 26 Request now or wait and see whether the Landlord serves a Section 25 Notice?
The longer the Landlord leaves it to serve a Section 25 the more the potential advantage there is for you by serving a Section 26 Request. If, say, the Landlord has not served a Section 25 Notice several months after he could first have done so you can serve a Section 26 Request giving the maximum 12 months’ notice to expire following the end date stated in your lease. The advantage here is that you will have the certainty of another year’s occupation, and this will be at the current rent. The later you serve a Section 26 Request the longer this rent advantage will apply.
Will the rent stay the same after the Section 25 Notice or Section 26 Request has expired?
The rent will stay the same unless either Landlord or Tenant has applied to court for an interim rent to be fixed. The earliest date when interim rent will apply is immediately following the expiry date in the Section 25 Notice or Section 26 Request. Interim rent will take effect from whenever an application for it is made but is not usually determined until the court deals with the main application for a new tenancy. It is usually fixed somewhere between the old and new rents, on a sliding basis. If the market rent is likely to be more that the current passing rent it is the Landlord who will wish to apply for an interim rent. The reverse applies if the market rent is likely to be lower than the current passing rent.
To find out more, get in touch.
Possession proceedings can often be fraught with complications. If you’re caught up in them, it’s vital that you have someone on your team who can translate the law and guide you on how best to proceed.
Here at Bolt Burdon, we approach possession proceedings pragmatically, with the aim of sheltering you from as much complication as possible.
Our commercial mindset ensures that our approach is cost effective, whilst still providing you with all the guidance you need to navigate the proceedings calmly and effectively.
To find out more, get in touch.
We have specialist expertise in Rights of Light matters and have helped many homeowners recover considerable compensation when a neighbouring development has (or will) reduced the light they previously enjoyed.
Our team can help you:
- Obtain compensation
- Negotiate with developers – often we act for several homeowners living in the same block
- Agree settlement terms
- Take court action, where necessary (like in cases where you want to prevent a new building from being developed)
- Find the expert surveyors you’ll need to assess and value a claim – very often developers will pay for you to see a solicitor
What is a Right of Light?
A Right of Light is a right (‘easement’) to enjoy the natural light that passes across another person’s land, and into the existing ‘apertures’ (windows, skylights, etc.) in your property.
This right arises either through mention your title deeds, or under the legal principle called ‘prescription’, which means it happens over time.
Typically, for this right to arise by prescription you and any previous owner(s) of your property have to have continuously enjoyed said light—without interruption—for a period of at least 20 years.
What should I do if I am contacted by a developer?
If you are contacted by a developer regarding your Right of Light, we highly recommend you seek legal advice on your options.
Adjoining owners can often negotiate favourable settlement payments from developers who would prefer to pay to settle a claim than incur the costs, delays and risks associated with court proceedings. In such cases, developers will—in addition to paying compensation—usually cover your legal and professional fees in return for you giving up your Right of Light.
However, bear in mind that most major development companies are well aware of the Right of Light, and the serious impact it can have on their project. Often, they will take active steps to avoid litigation so it’s vital you understand your options early.
For more information on how our team of expert lawyers can help you negotiate the terms of your settlement, or find a surveyor to value your claim, get in touch.
How is loss of light measured?
The law surrounding the Right of Light is reliant on a historical measurement involving ‘lumens’, which is the illumination given by the flame of a one-foot candle over a square foot.
Typically, courts will rule that your Right of Light has been infringed if a room is le with less than half of its area receiving one lumen. This is known as the 50/50 rule.
This means that a Right of Light does not necessarily entitle you to the same amount of natural light you received before the interference. However, if a light expert does find that your light has been reduced below the 50/50 minimum, you’ll have a strong case for compensation.
How much compensation is payable for loss of light?
Compensation is case specific. It can range from a few thousand pounds to tens of thousands of pounds, depending on the level of light infringement. It’s important to remember that these payments are taxed. If you want tax advice before agreeing to/receiving compensation, Bolt Burdon’s tax expert can help.
What remedies do you have to prevent interference with your rights?
While the majority of cases we deal with result in a successful settlement, in a few cases a settlement cannot be reached, and development works are commenced.
If, following a review of the title deeds and obtaining a light expert’s opinion, it is found that a right to light does exist, the courts can order the removal of the development or part of the development if built (even if constructed with planning permission), or prevent the obstruction if not built. This usually only happens in cases of severe loss of light.
Alternatively, and often more likely, a person may receive financial compensation in the form of damages in lieu of removal.
To find out more, get in touch.
