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Are You Signing Away Your Right to Renew Your Business Lease?

on Wednesday, 11 September 2019.

If you are a business tenant, you may have a right to renew your lease at the end of the term. This is called security of tenure. But could you be signing away your right without realising it?

What Is Security of Tenure Exactly?

Security of tenure is meant to protect business tenants in two ways. Firstly, the lease will continue after the end of the term unless it is terminated under a statutory procedure. Secondly, when the lease is brought to an end, the tenant will be entitled to a new lease.

The landlord and tenant may agree that security of tenure will not apply to a lease. For example, pop-ups at shopping centres like Intu Watford are temporary lettings so we would not expect the parties to agree a right to renew.

Why Is Security of Tenure Important?

As a tenant, excluding a lease from security of tenure means:

  • You lose your right to remain in the property at the end of the lease, unless the landlord offers a new one.
  • You will not be entitled to compensation for loss of business premises.
  • You cannot ask the court to fix the rent on a new lease.

What Should I Do Then?

Before you sign a lease, look out for the following which may indicate that it is excluded from security of tenure:

  • The lease refers to an agreement to contract out of the provisions of sections 24-28 of the Landlord and Tenant Act 1954.
  • The landlord will serve a warning notice stating that you are being offered a lease without security of tenure.
  • You are requested to sign a declaration confirming that you understand the contents of the warning notice.

For more information, please contact Madeleine Wakeley in our Commercial Property team on, 01923 919 315, or complete the form below.

 

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