Renewal of Business Tenancies by the Landlord under s.25 of LTA 1954
A business tenancy protected by the LTA 1954 will not come to an end automatically at the end of the contractual term. It will continue under the same terms until it is terminated by either the landlord or the tenant in a specified manner under the Act.
However, before the Lease comes to an end it is in the landlord’s best interest to ensure that a new tenancy is in place with some variation of the terms of the old tenancy such as increased rent or a proposal to contract out of LTA 1954 Act in the new Lease.
The landlord can end an existing business tenancy and propose a new one by serving a valid S.25 Notice. The S.25 Notice should be on a prescribed form and the legal representative acting for the landlord must ensure the following:
1. The Notice is served by the competent landlord. A competent landlord is someone who has either a freehold interest; or a leasehold interest that will not come to an end within 14 months from the date of notice.
2. The Notice must be validly served.
3. The Notice must be served not more than 12 months, nor less than 6 months before the termination date specified in the notice. The termination date specified in the Notice cannot be before the contractual expiry date of the current Lease.
The landlord’s proposal for the new tenancy should be included in the notice which can range from the proposed rent, length of the term and other variation of the existing Lease.
It is important that the Notice is prepared correctly and served properly on the right tenant. This is because once a Section 25 Notice has been served, it cannot be unilaterally withdrawn or amended by the landlord. If there is doubt about the validity of a Section 25 Notice, it is best that the landlord serves a second Section 25 Notice, without prejudice to the validity of the original notice.
Where renewal of the Lease is initiated by the Landlord under S.25 of LTA 1954, and the parties cannot agree on the terms of the new Lease, either party can apply to the Court as soon as the notice for a grant of a new tenancy is served.
By Alireza Nurbakhsh