My Lease Has Ended – What Should I Do?

Commercial leases will generally be granted for a certain term and will expire on the date specified in the lease. What should you do when the lease has come or is coming to an end?

The advice will differ depending on various factors:

• Are you the tenant or the landlord?
• Does your lease enjoy renewal rights, or security of tenure, or were they excluded upon the grant of the lease?
• Is the current rent beneficial?
• Is certainty of future use and occupation of the property required?

Tenant

If a tenant no longer wishes to occupy the property, it may simply leave by the end of the contractual term of the lease, ensuring it properly vacates in accordance with the terms of the lease and returns keys to the landlord.

If, however, a tenant wishes to continue to use and occupy the property, it has a few options:

1. Carry on occupying and paying the rents required by the lease. If the lease enjoys security of tenure, the term will continue until terminated by way of service of notice, new lease or surrender. If the lease excludes security of tenure and the landlord has not served notice to terminate, demanded possession of the property upon expiry of the lease or required a new lease to be entered into, a tenant’s holding over under the terms of its original lease could give rise to a new periodic tenancy.
   
   Be wary if your lease includes a rent review at the end of the term as the landlord may be entitled to implement that at any time and claim any rent increase, plus interest, backdated to the rent review date.
   
   
2. Request a new lease from the landlord, either by serving the correct prescribed form of notice on the landlord in the case of a lease which enjoys security of tenure, or by entering into negotiations with the landlord regarding terms if the lease excluded security of tenure.

Landlord

The landlord may wish to bring the current lease to an end and either grant a new lease at a current market rent or oppose a new lease. In either case, if the tenant has the benefit of security of tenure, the landlord should serve the correct prescribed form of notice on the tenant, giving at least six months’ but no more than 12 months’ notice of termination of the existing lease.

A landlord may only oppose renewal of a protected lease on certain limited grounds. Unless and until such a notice is served, a protected tenant will have the right to continue to occupy the property on the terms of its current lease.

If the tenant’s lease was excluded from the protection offered to business tenants by the Landlord and Tenant Act 1954 and a landlord allows a tenant to remain in occupation after the lease has expired, it risks the tenant then gaining a protected tenancy that will be harder to terminate.