Business Lease Extension Agreement (Longer Term)
This Business Lease Extension Agreement (Longer Term) is for use by a Landlord and Tenant who have agreed to enter into a new lease on the same terms as their previous lease, except for the term, the rent and other specified variations.
This Extension Agreement creates a new lease by incorporating the terms of the previous lease and specifying a new term and rent. Other new terms can be included too if desired. The Agreement contains the Land Registry’s prescribed clauses, making it suitable for any length of term.
For a simpler agreement, designed for extensions of 3 years or less with no variations to the lease provisions, please see our standard Lease Extension Agreement template.
Many Landlords take the opportunity at lease renewal time to move the tenant over to a newer form of lease. Landlords who wish to undertake such a modernisation exercise should consider using one of our lease templates instead of an Extension Agreement.
This Lease has Land Registry Prescribed Clauses at the beginning. If the Lease has a term of more than 7 years these clauses must be completed otherwise the Tenant will encounter problems when it tries to register the Lease at the Land Registry. Leases with terms of more than 7 years are subject to compulsory registration at the Land Registry.
The Prescribed Clauses are not strictly necessary for a lease with a term 7 years or less but it is advisable to use them as they helpfully record the main terms.
Prescribed Clause LR3 includes a field for an optional Surety (also known as a guarantor). If there is no Surety, this field can be left blank and the Surety’s execution clause can be deleted later on in the document. The Surety field should only be completed if there was a Surety under the Old Lease who is continuing as guarantor under the new Lease.
Prescribed Clause LR4 makes reference to a plan. A lease with a term of 7 years or less does not necessarily need to include a plan but it is strongly recommended that a plan is included so that the extent of the property is clear. (If the Old Lease contained a plan this can be referred to in Clause LR4; a fresh copy of the plan does not need to be attached.)
A lease with a term of more than 7 years must contain a plan (or refer to the plan attached to the Old Lease) unless the letting is of the whole of the property comprised in the title number(s) referred to in Prescribed Clause LR2.
In Clause 1 the Landlord grants the Lease to the Tenant.
Clause 2 incorporates the terms of the Old Lease into the new Lease. There is optional wording allowing the parties to vary one or more of the Lease terms (the Schedule contains the variations).
Clause 3 is an optional clause dealing with exclusion of security of tenure. If the Old Lease was “excluded”, the new Lease should be excluded too. Reference should be made to our Guidance on Excluding Security of Tenure and the associated forms.
Clauses 4 and 5 contain optional break clauses (termination rights) for the Landlord and Tenant. These clauses should be amended or deleted as appropriate. The Tenant’s break option is conditional on rent have been paid up to date, the Tenant giving up possession of the property (i.e. vacating) and the Tenant not leaving any underleases in place. If these conditions are not satisfied, the Tenant’s break will not be effective and the lease will continue. If the Tenant is in breach of other terms of the lease, e.g. necessary repairs have not been carried out, the break will be effective but the Landlord will retain the right to sue the Tenant for any breaches of the lease.
Clause 6 deals with Land Registry requirements.
Schedule 1 contains optional clauses varying the terms of the Old Lease.
Schedule 2 contains optional rent review provisions. The provide for a rent review to take place at specified intervals and (optionally) on the last day of the term. The definition of Open Market Rent has two formulations for the length of the hypothetical term. The Landlord’s surveyor should advise on which formulation is appropriate in the current market.
The Extension Agreement should be executed as a deed. Various types of execution clauses are included and the parties should choose the appropriate clauses.
Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.
This Business Lease Extension Agreement (Longer Form) is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.
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