Do I really need a solicitor to renew a commercial lease?

Under the Landlord and Tenant Act 1954, most business tenants (with some specific exceptions) have the legal right to renew their commercial lease. This right is only forfeited if you are in breach of the terms set out in your lease, your landlord wants to take the premises back for their own use, or in other specific circumstances. It can also be refused if you have previously agreed with your landlord to forfeit your ‘security of tenure’ under the 1954 Act through the inclusion of a clause in your current lease.

There are a few ways to go about renewing your lease. You can either enter into informal negotiations with your landlord or you can follow the statutory process set out in the Landlord and Tenant Act.

How do I renew my lease?

As mentioned above, you can initiate informal negotiations with your landlord, or you can kick off the formal process by serving a statutory Section 26 notice on your landlord setting out the date on which you wish to renew your tenancy and the proposed terms of the new lease. Your landlord must respond to this notice within two months.

The lease renewal process is an excellent time to negotiate new, more favourable terms for your lease. You might wish to ask for lower rent, a reduction in service charge or a break clause to enable you to terminate the lease prior to the official end date. However, it can be a complex process that could see you lose out without expert legal advice.

Do I really need a solicitor even if nothing is changing?

You might wonder whether solicitors’ fees are an unnecessary expense if all you want to do is renew your lease on broadly similar terms to your previous one. For example, if all that is changing is the lease duration and your rent, it doesn’t make sense to pay out – right?

Wrong.

There are many reasons why you might want a solicitor on board when you’re renewing a lease. For example:

• The current lease might require modernisation due to changes in legislation, case law or accepted practices.  
• It might require updating due to works that the tenant, landlord, or both have carried out during the term. This might include updates to the repairing, decorating, insuring and yielding up provisions.
• You may need to update dates of rent review or break clauses.
• The current lease may contain errors that need correcting.
• You may have made agreements with your landlord/tenant during your current term that you want to formalise in your new lease.
• If the lease is contracted out of the Landlord and Tenant Act 1954 (i.e., the tenant will not have the right to a new lease at the end of the current lease term), all legal proceedings relating to the contracting out process must be followed before the new lease is entered into.
• You may have to pay Stamp Duty Land Tax on the new lease (or during the lease term such as on rent review), for which you may require legal advice.
• If the new lease term is over seven years, then you will need to register this lease at the Land Registry. If the new lease term is between three and seven years, then we would recommend that the new lease be noted on the freehold (or headlease) title.

As you can see, there is a lot more to the lease renewal process than meets the eye; an experienced solicitor with years of experience in this complex area of the law will be able to tell you what you are signing up to and help you steer clear of any stumbling blocks you may otherwise run into. They will be able to translate the contents of your lease from complicated and archaic legalese into plain English, to ensure you fully understand what it contains, that you are getting the very best terms for your circumstances, and that any changes to your circumstances are fully reflected in your new lease.

Getting the best results for your business

At Attwaters Jameson Hill, our Commercial Property team is on hand throughout your lease renewal and beyond to ensure that you are getting the best outcome for your business’s future. We can ensure that all the formalities are properly observed and that your lease reflects everything you and your landlord have agreed.

To get in touch with our solicitors, please call our Commercial Property team on 0203 871 0049 or email adam.perin@attwaters.co.uk.