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17/12/25 3:30 pm
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Business tenancy renewals under the Landlord and Tenant Act 1954 involve complex procedures that can significantly impact your property investment returns. Understanding how to use Section 25 and 26 notices strategically gives landlords considerable leverage in negotiations and helps protect long-term interests.
The Landlord and Tenant Act 1954 Part II governs business tenancy renewals, providing tenants with security of tenure unless specific statutory grounds are met. Two key mechanisms control this process:
Section 25 notices allow landlords to terminate tenancies and either propose renewal terms or oppose renewal entirely. Section 26 requests enable tenants to initiate renewal discussions and force landlords to declare their intentions.
Only one notice can be served per tenancy. If a tenant serves a Section 26 request first, it takes precedence over any subsequent Section 25 notice from the landlord.
The notice system creates tactical opportunities that experienced landlords can use to their advantage:
Control the renewal process: By serving a Section 25 notice, landlords set the agenda for negotiations rather than waiting for tenant action.
Flush out tenant intentions: A Section 25 notice forces tenants to either commit to renewal through court application or vacate, preventing indefinite uncertainty.
Maintain negotiating position: Even when not opposing renewal, including multiple statutory grounds in your notice creates a level playing field and may encourage settlement.
The interim rent provisions under Section 24A mean tenants can no longer use Section 26 requests to delay paying market rent, as interim rent starts from the earliest possible termination date. Find more on this in government guidance.
Both Section 25 and 26 notices must comply with strict statutory requirements:
Simple errors in notice wording can invalidate the entire procedure, making professional advice essential for complex cases.
Landlords can only oppose renewal on seven specific statutory grounds under Section 30(1). A full list is set out on the UK legislation page:
Tenant-related grounds:
Landlord requirement grounds:
Opposition on grounds (e), (f), or (g) may trigger statutory compensation payments to tenants, calculated at one or two times the rateable value depending on occupation duration. See compensation guidance.
When not opposing renewal: Include detailed proposals in your Section 25 notice (see Section 25 on legislation.gov.uk), but remember these don't have to be negotiable. You're not obliged to negotiate until court proceedings commence.
When opposing renewal: Consider including multiple grounds even if not all are provable, as this maintains tactical advantage and highlights potential court costs to tenants.
Cost implications: Court proceedings can cost around £25,000 plus VAT and disbursements for straightforward cases. This figure often encourages settlement during negotiations.
Professional support: Given the complexity and potential costs involved, professional advice from experienced commercial property solicitors and surveyors is typically worthwhile except for very low-rent premises.
Check tenancy status: Verify whether the tenancy is inside or outside the 1954 Act. Contracted-out tenancies don't require statutory notices (Landlord and Tenant Act 1954).
Review lease terms: Understand current rent, repair obligations, and any break clauses that might affect your strategy.
Assess market conditions: Consider current rental values and demand for your property type when deciding whether to oppose renewal.
Plan timing carefully: Serve notices at optimal times considering your business plans and market conditions.
Keep detailed records: Document any tenant breaches or issues that might support opposition grounds.
Consider Total Landlord's legal expenses cover: Professional legal support can help navigate complex renewal procedures while protecting your interests (Total Landlord's legal expenses and rent protection cover).
Understanding the practical implications of business tenancy law helps landlords make informed decisions about their commercial property investments.
No, only one notice can be served per tenancy. If your tenant serves a Section 26 request first, it takes precedence. However, you can serve a counter-notice within two months if you wish to oppose their renewal request.
You must include proposals for the new tenancy terms in your notice. These proposals don't have to be negotiable, and you're not obliged to negotiate until court proceedings begin. The tenant must still apply to court to protect their renewal rights.
Compensation is only payable if you oppose renewal solely on grounds (e), (f), or (g) under Section 30(1). The amount is either one or two times the rateable value, depending on whether the tenant has occupied the premises for business purposes for 14 years or more (Gov.uk compensation guide).
No, once validly served, a Section 25 notice cannot be withdrawn except by mutual agreement with your tenant. This is why careful consideration before serving is essential.
If your tenant doesn't apply to court before the stated end date and doesn't vacate, they become a trespasser with no legal right to remain. However, if you've accepted rent after the end date, this might create a new tenancy. See official legislation advice.
The forms must be "substantially to the same effect" as the prescribed versions. Minor variations may be acceptable, but significant changes risk invalidating the notice. Professional advice is recommended for any modifications.
The existing lease terms continue during holding-over, but you can apply for interim rent under Section 24A. This typically reflects market rent and starts from the earliest date the tenancy could have ended (legislation reference).
The tenant can challenge your opposition in court. You must prove your grounds are genuine and that you can satisfy the legal tests. Unsuccessful opposition may result in you paying the tenant's legal costs.
Court proceedings can take 12–18 months or longer, depending on complexity and court availability. Most cases settle before reaching trial, often during the court's case management process. Contact Landlord Action for more information.
Yes, break clauses can be included in renewal leases, but the court will consider whether they're reasonable. Break clauses with onerous conditions may be modified or rejected by the court.
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