Renewing A Commercial Lease

What Is a Commercial Lease Renewal?

A commercial lease renewal is the legal process of continuing your occupation of a business property once the current lease term comes to an end.

In many cases, commercial tenants have a statutory right to renew their lease under the Landlord and Tenant Act 1954. This protection can give tenants the right to stay in the property and negotiate new lease terms, provided the correct procedures and notices are followed.

However, not all leases are protected — and missing deadlines or serving the wrong notice can result in the loss of valuable rights.

Is Your Commercial Property Lease Protected Under the Landlord and Tenant Act 1954?

• “Inside the Act” – meaning you may have automatic renewal rights, or
• “Contracted out of the Act” – meaning the landlord may not be required to grant a new lease.

Understanding this distinction affects:

• Your right to renew
• What terms can be negotiated
• Whether the landlord can refuse renewal
• Your ability to challenge rent increases.

Our solicitors will review your lease and clearly explain your position before you take any action.

A Step-by-Step Guide to Renewing a Commercial Property Lease (For Tenants)

If you are a commercial tenant, the lease renewal process typically involves:

1. Reviewing your existing lease
   Checking protection status, break clauses, rent review provisions, and notice deadlines.
2. Serving a Section 26 notice (if applicable)
   This formally requests a new lease and protects your renewal rights.
3. Responding to any landlord’s Section 25 notice
   Strict time limits apply — failure to respond correctly can result in losing renewal rights.
4. Negotiating new lease terms
   Including rent, lease length, repair obligations, break clauses, and service charges.
5. Agreeing or disputing the interim rent
   Rent payable while negotiations are ongoing.
6. Completing the new lease
   Ensuring the final terms reflect what was agreed and protect your business long-term.

We guide you through each stage, ensuring compliance with the law while working to secure the best possible outcome.

Advice for Commercial Tenants

Negotiating New Commercial Lease Terms

If you’ve been a good tenant and are on good terms with your landlord, this is the ideal time to renegotiate your lease terms.

A lease renewal is often the best opportunity to improve your commercial position. Depending on circumstances, you may be able to negotiate:

• A reduction in rent
• A rent-free period
• Lower or capped service charges
• More flexible break clauses
• A shorter or longer lease term to suit your business plans.

Where appropriate, we work alongside professional surveyors to ensure rent reflects current market value — particularly if you believe you have been paying above-market rates. You must, however, be aware of whether your lease is “inside” or “outside” the Landlord and Tenant Act, as this affects what you can ask for and expect the landlord to agree to. A solicitor can confirm your position by reviewing your lease.

Serving and Responding to Commercial Lease Renewal Notices

Section 26 Notices (Tenants)

If your lease is protected, serving a Section 26 notice allows you to request a new lease and propose new terms. It must be served within strict time limits and follow specific legal requirements. Serving an invalid notice could result in losing your right to renew.

Section 25 Notices (Landlords)

Landlords may serve a Section 25 notice either proposing new terms or opposing renewal on specific legal grounds.

We advise on:

• Whether notices are valid
• How to respond strategically
• Protecting your legal position if negotiations break down.

A landlord can only refuse to renew a protected lease on certain legal grounds set out in the Landlord and Tenant Act 1954, such as redevelopment or persistent breaches of the lease. If your landlord opposes renewal, you may have the right to challenge this.

Interim Rent During Lease Renewal

While renewal negotiations are ongoing, interim rent may apply. This can significantly impact cash flow, particularly if the landlord is seeking an increase.

Our team advises on:

• Whether interim rent applies
• How much should be paid
• Whether the proposed rent can be challenged.

If Your Commercial Lease Has Already Expired

If your lease has expired but you remain in occupation, your rights will depend on whether the lease was protected and what steps have been taken by either party. It is important to seek advice quickly, as your position can change rapidly.

If You Have Breached the Terms of Your Current Lease

Minor or historical breaches do not always prevent renewal, but serious or ongoing breaches may give the landlord grounds to oppose it. Legal advice can help assess risk and, where possible, resolve issues before they affect renewal.

Visit the Services for Commercial Tenants section for more information on how we can assist you.

Advice for Commercial Landlords

When a Tenant Requests a Commercial Lease Renewal

If your current tenants serve you a section 26 notice (notice to renew the lease), this could save you a great deal of time and expense finding new tenants. As a Commercial Landlord, it is important to have a good relationship with the people or businesses in your property. In these situations, it is often wise to agree to a renewed lease.

If your tenant serves a Section 26 notice, this may be an opportunity to:

• Retain a reliable tenant
• Renegotiate rent or lease terms
• Avoid void periods and re-letting costs.

However, landlords must act carefully to protect their rights and ensure compliance with statutory procedures. It is best to protect yourself and make sure you’re getting the best deal you can by speaking to a professional commercial property solicitor. 

Increasing the Rent on Lease Renewal

Rent can often be renegotiated during a commercial lease renewal. However, increases must be justifiable and may be challenged by the tenant if they exceed market value. Proper legal and valuation advice can help support your position.

If You Do Not Wish to Renew a Tenant’s Commercial Lease

A landlord can only refuse renewal of a protected lease for reasons permitted under the Landlord and Tenant Act 1954, such as redevelopment, owner-occupation, or tenant breaches. Each ground has strict legal requirements and evidence thresholds.

If you intend to redevelop or occupy the property, you may be able to oppose lease renewal on statutory grounds. This requires careful planning, evidence, and compliance with legal procedures to avoid disputes or compensation claims.

Ending a Commercial Lease 

A Section 25 notice is served by a landlord to either propose new lease terms or formally oppose a tenant’s right to renew. It must be drafted and served correctly to be legally valid and to protect the landlord’s position.

We can prepare and serve Section 25 notices, advise on opposition grounds, and manage the legal process to minimise risk and disputes.

Visit the Services for Commercial Landlords section for more information on how we can assist you.

Common Mistakes When Renewing a Commercial Lease

• Missing statutory deadlines
• Serving invalid notices
• Assuming renewal rights apply automatically
• Accepting unfavourable rent increases
• Overlooking repair and dilapidation liabilities.

Early legal advice can prevent costly mistakes and strengthen your negotiating position.

Why Use a Commercial Lease Renewal Solicitor?

Working with an experienced commercial property solicitor helps you:

• Avoid losing renewal rights
• Protect against unfair rent increases
• Ensure full legal compliance
• Reduce stress and uncertainty
• Save time and potential legal costs
• Minimise the risk of disputes or litigation.

We provide pragmatic, commercially focused advice tailored to your specific situation.