HomeCommercial PropertyContinuation of the Lease

Continuation of the Lease

Business Leases are protected by statute, unless the statutory protection is excluded. The statutory protection can only be excluded in certain circumstances and then only with the consent of both parties, and after the required notice and declaration procedure is satisfied.

The protection afforded by the legislation has two significant effects:

  1. The Lease continues, following the expiry of the contractual term, until the Lease is ended in accordance with statutory procedure.  The legislation requires either the Landlord and/or Tenant to serve a termination notice on the other to end the Lease;
  2. The Tenant is afforded an automatic right to a renewal Lease, unless the Landlord can substantiate one of the specified ‘grounds’ for refusing to grant the renewal Lease.  Those grounds do provide for the Tenant to be given compensation in such circumstances, except where the ground relied upon is one of those relating to the Tenant’s default.

For the Tenant to retain the Statutory protection she/he will need to comply with the statutory requirements, including making an application to the Court for a new Lease within a prescribed timetable, following the service of the Landlord’s termination notice.

A potential Tenant who is considering foregoing the statutory protection should consider the implications.  These may include:-

  1. the loss of the goodwill at the Property; and/or
  2. the Landlord alternatively only be willing to grant a new Lease at a much higher rent.  The rent may be higher as a consequence of the Landlord rentalising the goodwill that the Tenant may have built up at the Property or any improvements that the Tenant may have carried out or simply because the Landlord can hold the Tenant to ransome.


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