What is a Section 25 Notice? My business lease is coming to an end and my landlord has served on me a Section 25 Notice.
Commercial (Business) Tenancies in England & Wales are regulated by the Landlord & Tenant Act 1954 (Part 2).
This means that when the fixed term ends (end of lease) the business tenant has statutory protection (security of tenure) under the terms of the Act. In practice the tenant has an automatic right to renew his lease on similar terms to the old one.
Not all landlords are aware that once they let a commercial property, in theory, the tenant could be there indefinitely, that’s why it’s so important to have a water-tight lease agreement. Off-the-shelf commercial lease agreements are unlikely to give sufficient protection long-term.
The landlord can challenge this right to renew if the tenant has seriously breached the terms of his lease, or on certain limited grounds such as the need to re-develop the property or if the landlord needs the property for his own use (see grounds for possession) by applying to the court. Alternatively, the landlord may use these grounds to oppose the tenant’s application to renew.
One neat way around this situation for the landlord is to “op-out” of the Act. To do this the landlord must get the tenant to agree to this prior to signing the lease agreement in the first place and a strict procedure must be followed which any commercial solicitor will advise on when preparing a lease. This then puts the agreement on a purely contractual footing, with no statutory protection for the business tenant.
The Section 25 Notice is used to inform the tenant either of proposed terms for a new lease or to oppose renewal. This notice must be served not more than 12 and not less than 6 months before the landlord wants the present tenancy to end which will be after the expiry date of the existing lease.
The Section 25 Notice cannot be served on the tenant if the tenant has pre-empted this by serving a Section 26 Notice first (see Section 26 Notice).
Where the tenant does not respond to the notice the tenancy will either continue on the proposed new terms, or where the landlord has served an opposing notice, the tenancy will end on the date specified.
Where the tenant responds to an opposing notice requiring renewal, or where the tenant has applied to the court for renewal, the landlord will need to apply to the court and convince the court that his grounds for ending the lease can be justified under the Act.
Where the court orders renewal it will oversee the granting of a new lease and settlement of terms.
Tenants do not have to respond to proposing or opposing notices but they would be wise to seek expert advice in both cases and meet any deadlines set-out in the notices, otherwise they could find themselves accepting the consequences by default.
Once a valid Section 25 Notice has been served the landlord cannot subsequently amend or withdraw it.
For More Information and Notice Templates see:
Landlord and Tenant Act 1954 www.legislation.gov.uk/ukpga/Eliz2/2-3/56/contents
Landlord and Tenant Act 1954 www.landlordzone.co.uk/information/landlord-and-tenant-act-1954
What is a Section 25 notice? www.landlordzone.co.uk/information/what-is-a-section-25-notice
What is a Section 26 Notice? www.landlordzone.co.uk/information/what-is-a-section-26-notice-2
The Landlord and Tenant Act 1954, Part 2 (Notices) Regulations 2004 – www.legislation.gov.uk/uksi/2004/1005/made
LandlordZONE® Document Downloads – www.landlordzone.co.uk/documents
By Tom Entwistle, LandlordZONE®
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©LandlordZONE All Rights Reserved – never rely totally on these general guidelines which apply primarily to England and Wales. They are not definitive statements of the law. Before taking action or not, always do your own research and/or seek professional advice with the full facts of your case and all documents to hand.