End of Lease: Tenants Without Security of Tenure
It is important that landlords and their agents handle the situation carefully when a business lease is nearing the end of its term. We have added new letters to our Property folder to help landlords manage the expiry of leases where the tenant does not have security of tenure (also referred to as “excluded leases”).
Where the tenant has security of tenure
If the tenant has security of tenure (i.e. the lease has not been excluded from the protection of the Landlord and Tenant Act 1954) the landlord will need to consider whether and when to serve a Section 25 Notice to bring the tenancy to an end.
In our Commercial Property Management portfolio we have template Section 25 Notices for the scenario where the landlord is happy for a new lease to be granted and for the situation where the landlord is opposed to the grant of a new lease.
Where the tenant does not have security of tenure
If the tenant does not have security of tenure the situation is in many ways simpler. The tenant has no right to remain in the premises after the contractual term of the lease has expired.
However, in many cases the landlord will be happy for the tenant to remain in the premises. It is important for landlords to ensure that any continued occupation is properly documented. If the tenant remains in occupation and nothing has been said about the basis on which it is to remain, there is a risk that the tenant will acquire security of tenure and that the landlord will struggle to remove the tenant from the property in the future.
In the run-up to the expiry date, the landlord needs to make contact with the tenant to ascertain the tenant’s plans. If the tenant wishes to stay, and the landlord is happy to allow this, a new lease needs to be put in place. If the tenant is to leave, the landlord needs to make sure that this happens on or before the expiry date and that the “yielding up” provisions in the lease are complied with.
If the tenant ends up staying in the premises beyond the lease expiry date, without a new lease having been signed (perhaps because lease negotiations are ongoing), it needs to be made clear to the tenant that this occupation is temporary and is on the basis of a “tenancy at will”.
We have added a selection of template letters to help landlords deal with the expiry of an excluded lease. There are two versions of a Letter to Tenant on Expiry of Excluded Lease, one proposing a renewal and the other requiring the tenant to vacate. The third letter is a Tenancy at Will Letter to send to the tenant if it is to remain in occupation after the lease expiry date. It protects the landlord’s position by confirming that the tenant is now a tenant at will.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.