If you take a business lease, you may have a legal right to have it extended when it comes to an end.
This right is provided by a piece of legislation in 1954, called the Landlord and Tenant Act 1954. What this says, in very general terms, is that if you are a tenant in occupation of premises for the purpose of your business, when the original lease term ends, you can require the landlord to extend it, by giving you a new lease. When a lease has these protections, it’s said to be “inside the act”.
However, you will not have the right to have the term renewed for another five years if, at the very start, you agreed that you wouldn’t. That would happen by you signing some specific paperwork (when you sign the lease) saying that you give up your right to renew the lease when the term comes to an end. The lease is then said to be “outside the act”. If the lease is “outside the act”, the term ends on the date specified in the lease. If the lease says that the term is five years from 24 March 2020, then it ends at midnight on 24 March 2025. From that point on, you are trespassing.
If your lease doesn’t include such an arrangement, then your lease is said to be “inside the act”. That means you have all the rights that the act gives to tenants. The rest of this page assumes you have an “inside the act” lease.
The way the 1954 Act operates is that, even though your lease has a precise date for the end of its life, the lease terms doesn’t in fact end until either the landlord or the tenant serves a notice bringing it to an end a few months hence.
Then procedures set out in the 1954 Act come into play; new terms are negotiated and a new lease granted. If the parties can’t agree, the court imposes the terms. (This is a short generalisation.)
Tenants’ rights to renew their lease is not guaranteed for every situation. There are occasions when the landlord can legitimately end a lease and get the premises back. There are three main reasons which work:
(1) The landlord wants to redevelop the premises or the building it’s in. So, if you have a shop in a parade and the landlord wants to knock it all down and build a new shopping centre, he can force you to give the premises back once your contractual lease runs out.
(2) The landlord wants to combine your premises with some other premises and let them as a larger single unit. So if you have a small shop in a parade and the landlord wants to combine your shop with the one next door and let it as a bigger unit, he can get your premises back from you.
(3) The landlord wants to occupy the premises himself. If you have got an office in a building, and the landlord has his own business in the building and wants to expand by incorporating your office space in his own, he can do that. There is one limitation: a landlord can’t do this unless he’s owned the property for more than five years. Someone can’t just buy a building and then start kicking tenants out so that he can occupy it himself.
(4) The landlord offers to provide other, suitable premises
(5) You have been persistently behind in paying the rent.