When the lease runs out: renewal, and who controls the timing

A protected business tenancy does not end on the date written in the lease. It ends when somebody serves the right notice — and the side that serves first controls the timetable, the terms and, usually, the rent.

Problems, in order · Part of Outsourced General Counsel

The lease says it expires on 24 June. Diaries get marked, and everybody assumes something happens on that date. Usually nothing does.

Most leases of premises occupied for the purposes of a business are protected by Part II of the Landlord and Tenant Act 1954. A protected tenancy does not end when the contractual term runs out. It continues on the same terms until it is brought to an end in one of the ways the Act provides. That single fact changes the shape of the negotiation — and it is the fact most often missed by whichever side has the weaker adviser.

First, find out whether you have protection at all

Before anything else, read the front of the lease and the documents signed alongside it. A tenancy can be taken outside the renewal provisions before it is granted, using the warning notice and declaration procedure in section 38A. It is done routinely. If it was done to you, there is no right to renew and the date in the lease is real.

This is a five-minute check that decides everything after it. Businesses find out far too late with striking regularity — usually after spending money on fit-out for a second term they were never entitled to.

Whoever serves first sets the timetable

If the tenancy is protected, either side can start the clock.

The landlord serves a notice under section 25. It must specify the date on which the tenancy is to come to an end — not less than six nor more than twelve months ahead — and must say whether the landlord opposes a new tenancy and, if so, on what grounds.

The tenant can go first instead, with a request for a new tenancy under section 26, proposing a commencement date within the same six-to-twelve-month window and setting out the terms it wants.

The tactical point is simple, and expensive to get wrong. Whoever serves controls when the negotiation happens and what the opening position looks like. A tenant sitting quietly on a rent well below market is buying time cheaply. A tenant sitting quietly on a rent above market is paying for the privilege, month after month. A landlord with a redevelopment plan needs its notice out early enough for that plan to be credible.

Timing here is not administrative. It is most of the commercial value.

What a landlord can actually refuse on

A landlord cannot simply decline to renew. Opposition has to rest on one or more of the grounds set out in section 30 of the Act — among them persistent delay in paying rent, substantial breaches of obligation, the offer of suitable alternative accommodation, an intention to demolish or reconstruct the premises, and an intention to occupy the premises for the landlord's own business.

Two of those do most of the work in practice. Redevelopment and own occupation both turn on intention, and intention has to be proved: a settled plan, the means to carry it out, and evidence that it is genuine rather than constructed for the hearing. Both also carry a compensation consequence for a tenant whose tenancy ends on those grounds without fault on its side.

For an occupier, the case is won or lost here, long before anyone reaches a courtroom. The question is never "can they refuse?" It is "can they evidence what they say they intend to do, on the timetable they say they will do it?"

The rent is a valuation argument, not a legal one

The other half of a renewal is money: the rent for the new term, and the interim rent covering the gap between the old term ending and the new one beginning.

That is a valuation exercise. It turns on comparable evidence, on the assumptions and disregards the Act applies, and on the quality of the analysis each surveyor brings. A well-argued renewal is almost always a well-evidenced one — a proper schedule of comparables, an honest read of the building's limitations, and a clear view of what the market would pay for this unit, on these terms, today.

The legal work sets the frame. The evidence decides the number.

The terms are negotiable, and almost nobody negotiates them

Renewal gets treated as a rent conversation, with everything else copied across from the old lease. That is a missed opportunity in both directions.

The length of the new term. Whether there is a break, and when. The repairing obligation, and the schedule of condition that limits it. Service charge caps. Alienation and permitted use. Whether the new tenancy is itself contracted out. All of it is on the table.

For an occupier with a growing or shrinking footprint, a break clause is often worth more than a rent reduction — and costs the landlord less to give, which is exactly why it is worth asking for.

Where a specialist is needed

Applications to the court to determine a new tenancy, and any contested proceedings, are conducted by instructed solicitors and counsel. Valuation evidence comes from a chartered surveyor. Where a renewal touches stamp duty land tax, or the treatment of an inducement, that sits with chartered tax advisers.

Dinmore Bell holds the commercial position across the estate: the dates and the notices, the negotiating strategy, the terms of the new lease, and the instruction and control of the surveyor and the solicitor against one scope and one budget. For a business with more than one site, that is the difference between a portfolio run as a portfolio and five separate conversations moving at five different speeds.

What to do eighteen months out

Pull the lease and establish whether it is protected or contracted out. Write the answer down somewhere the whole business can see it.

Put the contractual expiry date, and the earliest and latest service dates around it, into one calendar with a name against them.

Decide what you actually want — a full new term, flexibility, or an exit — and work backwards from that answer to which notice you should serve, and when.

Then gather the evidence before you need it: comparables, a schedule of condition, the trading numbers that support your position.

Renewals are not won by argument. They are won by the side that turned up with the paperwork.

Dinmore Bell provides an outsourced General Counsel function for founder-led businesses, owning work of this kind end to end rather than advising on it and handing it back.