Advice regarding terminating a commercial lease

In addition to Section 25 of the Landlord and Tenant Act 1954 (Act) being used in the context of commercial lease renewals, it can also be used as a tool to terminate a protected business tenancy in certain prescribed circumstances.

Lease terminations by serving an opposed Section 25 Notice

Where a commercial landlord wishes to terminate a business tenancy (on or following the expiration of the contractual term) in circumstances where they oppose the grant of a new tenancy to the tenant, they can serve a special form of Section 25 Notice to bring the tenancy to an end and set out their grounds of opposition for renewal.

The ground of opposition are limited and are set out within the Act. The most common grounds used include:

  • Persistent delay on the part of the tenant in paying their rent;
  • That there are other “substantial breaches” on the part of the tenant in respect of complying with their lease obligations;
  • That upon the termination of the current tenancy the landlord intends to demolish and/or re-construct the premises; and/or
  • That upon the termination of the current tenancy the landlord intends to occupy the premises themselves for the purposes of a business.

It is important to note that the tenant may challenge the grounds of opposition put forward by the landlord and apply to the Court for a new tenancy.

Tactically, the tenant may wish to issue proceedings very soon after receiving the Section 25 Notice, so it is essential that the landlord receives the correct advice before the Notice is issued. This is because the landlord must be able to prove that their grounds of opposition are made out at the date of the hearing.

Depending on the ground relied upon, the landlord will obviously have to prove different things but, using the demolition/re-development ground as an example, they should be able prepared, as a minimum, to prove at the hearing that:

  1. They have an intention (and an ability, particularly in terms of having funding available) to undertake the proposed works; and
  2. The proposed works are due to commence within a reasonable time (i.e. “not too long”) after the hearing date.

It is also important to note that where a landlord relies on a “no-fault” ground of opposition, the tenant will be entitled to statutory compensation from the landlord. Redevelopment is an example of a no-fault ground and so, upon vacation (either by agreement or Court order), the tenant will be entitled to compensation of:

  • An amount equal 1x the rateable value of the property if they have been in occupation of the premises for less than 14 years; and
  • If the tenant has been in situ for longer than 14 years, an amount equal to 2 x the rateable value of the premises.

How our solicitors can help with lease terminations using opposed Section 25 Notices

At Nelsons, our team of property dispute solicitors in Derby, Leicester and Nottingham are specialists in all aspects of commercial tenancies and provide straight forward and realistic advice to landlords and tenants on ending a business tenancy using a Section 25 Notice which opposes the grant of a new tenancy to a tenant.

Our team, which is recommended by the independently-researched, Legal 500, are highly experienced in drafting and serving notices that comply with the requirements of the Act. Likewise, we are experienced in identifying defects in such notices which can provide a tactical advantage during lease termination negotiations.

Once you have got in touch with us, we can have an initial discussion with you regarding your circumstances to see how we may able to assist you.

For further information on how our expert team of property dispute solicitors can assist with lease terminations, please contact us on 0800 024 1976 or via our online enquiry form.

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