Is your Lease Coming to an End?

If you occupy commercial premises, your tenancy will fall into one of the three following categories.  Each category has different rights and obligations and it is important that you know which tenancy you have so that you can plan your business more effectively.

The three categories are: -

1. An unwritten agreement, or a written lease, that has security of tenure.  This means that provided you have complied with the terms of your lease then you should have a statutory right to apply to the court to renew it on essentially the same terms as before, but at an up-to-date market rent.  If your landlord can establish one of the statutory grounds to defeat your claim, you will have to vacate the premises although you may be entitled to receive nominal compensation (usually a sum of one times the rateable value of your premises). Your landlord may serve what is called a ‘section 25 Notice’ (either confirming that it will agree to a new lease or setting out its grounds to refuse your claim). If you receive such a notice you must apply to the court before the termination date specified in the notice or obtain the landlord’s consent to an extension within that time limit – failure to do so will mean that you will lose your right to apply to the court for a new lease.
2. A lease that has been contracted out of the security of tenure provisions.  In these circumstances, you will have to vacate the premises at the end of the term (unless you can agree and complete a new lease with the landlord).
3. A lease that contains a right to renew at the end of the term.  Such a right to renew is quite unusual and, in some cases, may also have required registration at the Land Registry or Central Land Charges Department to remain effective.  

Although the terms of your own lease will determine what obligations you have to perform before your tenancy ends, most leases contain a number of standard requirements. These include:

• Yielding up the premises with vacant possession
• Complying with the repairing and decorating covenants in the lease
• Removing any signs and tenant’s fixtures and fittings (making good any damage caused) and
• Re-instating any alterations

If the premises are not handed back to the landlord as required by the lease, the landlord will be able to recover the cost of carrying out any necessary works (and possibly the rent for the period during which it carries them out).

If your lease is coming to end, it is important you consult a solicitor to check which category it belongs to, what steps you should take and what obligations you may have to perform before the end of the term.

This information is for guidance and should not be regarded as a substitute for taking full legal advice.