A beginner’s guide to renting commercial property

The Landlord and Tenant Act 1954 gives a business tenant the right to renew their lease when it expires. Charlotte McMurchie, partner and head of our real estate dispute resolution team, explains more.

Right of renewal

If a commercial property is being occupied by a tenant for the purposes of its business, then the tenant will generally have a right of renewal when its lease comes to an end.

It is possible, however, for the landlord and the tenant to agree to remove that automatic renewal right for the tenant and “contract out” of the legislative provisions which create that automatic right.

The Landlord and Tenant Act 1954 (and supplementary legislation) provides tenants with renewal rights and creates a system of notices and deadlines, court applications, and prescribed grounds of opposition for a landlord to any renewal.

It also provides for the “contracting out” of the tenant's renewal rights by the landlord and the tenant. Again, this is a system of notices and deadlines to remove the automatic right of renewal.

Understanding your rights

Understanding what rights a tenant and a landlord have in respect of the renewal or otherwise of a tenancy at the outset is fundamental to each party’s business planning for the years to come.

It is vital that each party properly considers its needs regarding the property to be leased and factors those into its lease negotiations.

The Government has consulted with the sector as to the continued fitness for purpose of this legislation and we are awaiting its report on the responses following the closure of the consultation in February this year.

For the moment, this septuagenarian legislation remains in force and as such it is of prime importance that any commercial landlord or tenant is aware of its procedures and quirks.

For legal advice to get your business premises fit for your purpose, contact Charlotte using [email protected] or 0191 211 7979.