Business lease renewal: sections 25 and 26 LTA 1954

Protection follows occupation, and continuation is the default

Section 23 applies Part II where the premises are occupied by the tenant for the purposes of a business carried on by it. Occupation by a company in which the tenant has a controlling interest, or by a person with a controlling interest in a corporate tenant, counts as the tenant’s own. A term certain of six months or less is excluded unless it provides for renewal or extension, or occupation exceeds twelve months (section 43(3)).

Section 24 then continues the tenancy past its term date until it is ended under Part II. A tenant wanting out gives written notice at least three months before the term date under section 27, or three months’ notice once the tenancy is continuing. A fixed term is not continued at all if the tenant is out of occupation when it expires.

The notice and the request share a window and exclude each other

A landlord’s notice under section 25 must be in the prescribed form and given not more than twelve nor less than six months before the termination date it specifies (section 25(3) adjusts this for some periodic tenancies). For a fixed term, that date cannot precede contractual expiry. The notice must state whether the landlord opposes a new tenancy. If it opposes, it must specify one or more section 30(1) grounds. If it does not, it must set out proposals for the property, the rent and the other terms. The ordinary forms are Form 1 (unopposed) and Form 2 (opposed) under the 2004 Notices Regulations.

A tenant’s request under section 26 (Form 3) is available only where the tenancy was granted for a term certain exceeding one year, or a term certain and thereafter from year to year. It must specify a start date for the new tenancy not more than twelve nor less than six months after the request, and not earlier than the contractual expiry. It is barred once a section 25 notice, a notice to quit or a section 27 notice has been given, and bars them in turn. A landlord who opposes has two months from the request to serve a counter-notice stating its section 30 grounds (section 26(6)).

The court deadline is fixed by the paperwork

Under section 29A the court will not entertain an application for a new tenancy, or a landlord’s termination application under section 29(2), made after the end of the statutory period. That period ends on the date specified in a section 25 notice, or immediately before the date specified in a section 26 request. A tenant who has made a request cannot apply within two months of making it unless the landlord has already served its counter-notice.

The parties can extend the period by agreement, which must be in writing (section 69(2)), under section 29B, but only if the agreement is made before the statutory period ends, and any further extension must be agreed before the current one expires. Where an application is made, section 64 keeps the tenancy alive until three months after the application is finally disposed of. Under CPR 56.3 an unopposed claim proceeds under Part 8 and an opposed claim under Part 7.

Grounds, the five-year bar and compensation

A landlord can rely only on the grounds stated in its section 25 notice or section 26(6) counter-notice. The grounds in section 30(1) are:

• (a) disrepair resulting from the tenant’s breach of its repairing obligations;
• (b) persistent delay in paying rent;
• (c) other substantial breaches, or any other reason connected with the tenant’s use or management of the holding;
• (d) suitable alternative accommodation offered on reasonable terms;
• (e) on a sub-letting of part, where the landlord owns the reversion on the superior tenancy, that the whole would let for substantially more than the parts;
• (f) an intention to demolish or reconstruct, or carry out substantial construction work, which could not reasonably be done without possession;
• (g) an intention to occupy the holding for the landlord’s own business or as its residence.

Ground (g) is barred if the landlord’s interest was purchased or created within the five years ending with termination and the holding has been let on protected tenancies throughout (section 30(2)).

Compensation under section 37 arises only where the tenant loses on grounds (e), (f) or (g) and no other, including where the notice relies on those grounds alone and no claim is made or it is withdrawn. It is the rateable value times the appropriate multiplier, currently 1 in the ordinary case under the 1990 Order, doubled where there has been business occupation for the whole fourteen years before termination, any change of occupier being a successor to the business. An agreement excluding or reducing it is void after five years’ business occupation (section 38(2)). Interim rent under section 24A cannot be sought more than six months after the tenancy ends.

Contracting out turns on a fourteen-day clock

Section 38A allows the parties to a term certain to exclude sections 24 to 28, but the agreement is void unless the landlord serves the Schedule 1 warning notice and the requirements of Schedule 2 to the 2003 Order are met. Notice served at least 14 days before the tenant enters into the tenancy or, if earlier, becomes contractually bound needs only a simple declaration; otherwise a statutory declaration is required. Either must precede commitment, and the lease must refer to the notice, the declaration and the agreement. The trap is the agreement for lease: the clock runs to contract, not completion. Agreed surrenders under section 38A(2) follow the same structure under Schedules 3 and 4.

Two changes are in view. The Law Commission closed its second consultation on 16 September 2026 and has said it will publish a final report in due course. Separately, section 54A and new Schedules 7A and 7B on rent reviews and renewal rent terms were inserted by the English Devolution and Community Empowerment Act 2026 but are so far in force only for specified purposes.