Renewing a business lease under the Landlord and Tenant Act 1954

Which business tenancies are protected?

Part II of the Landlord and Tenant Act 1954 applies where the tenant occupies at least part of the premises for the purposes of a business, which includes a trade, profession or employment and any activity carried on by a body of people, incorporated or not. Occupation by a company the tenant controls, or by a person who controls a company tenant, counts as the tenant's occupation. A protected tenancy does not end when its term expires: under section 24 it continues on the same terms, at the same rent, until it is ended in one of the ways the Act allows.

The main tenancies outside the Act are:

• leases validly contracted out before they were granted;
• fixed terms of six months or less, unless they can be renewed or extended beyond six months or the tenant and any predecessor in the business have been in occupation for more than 12 months;
• agricultural holdings, farm business tenancies, mining leases, and tenancies granted because the tenant holds an office or employment;
• fixed terms where the tenant is not in occupation when the term ends.

If your landlord's own lease of the building ends within 14 months, the renewal is dealt with by the nearest landlord above whose interest is the freehold or will last longer than 14 months.

Leases that are contracted out

A landlord and tenant can agree, before a fixed-term lease is granted, that the renewal provisions in sections 24 to 28 of the Act will not apply. The agreement is void unless the landlord served a warning notice in the statutory form before the tenant entered into the lease or became contractually bound to do so, and the tenant, or someone the tenant authorised, signed a declaration in the statutory form before that point. If the notice was served less than 14 days before, the declaration must be a statutory declaration, made in front of a solicitor or other person authorised to administer oaths. The lease must contain or be endorsed with a reference to the notice, the declaration and the agreement.

If a step was missed, for example because the notice was served after the tenant signed an agreement for lease, the lease is protected whatever it says. A validly contracted-out lease ends on its expiry date, with no statutory right to a new lease and no statutory compensation. If the tenant stays on after expiry and the landlord accepts rent, a new tenancy can arise that may be protected, so agree the basis of any occupation after expiry in writing.

The landlord's section 25 notice

A landlord ends a protected tenancy by serving a notice under section 25 in the prescribed form. The notice must give a termination date not more than 12 months and not less than 6 months after it is given, and no earlier than the date the lease would have ended under its own terms. For example, for a lease expiring on 31 December 2026, a notice giving that date can be served at any time from the start of January to the end of June 2026.

The notice must say whether the landlord opposes a new tenancy. If it does not, the notice must set out the landlord's proposals for the property, the rent and the other terms. If it does, the notice must state the grounds from section 30, and the landlord cannot rely on grounds it did not state. Section 23 of the Landlord and Tenant Act 1927 sets out how notices can be served, including personal service, leaving the notice at the recipient's last known place of abode, and registered post. If you receive a section 25 notice, diarise the termination date at once, because it is also the deadline for applying to court.

The tenant's section 26 request

A tenant whose lease was granted for a fixed term of more than one year can start the process by serving a request for a new tenancy under section 26, in the prescribed form. The request must propose a start date between 6 and 12 months after it is made, and no earlier than the date the current lease would end, with the tenant's proposals for the property, rent and other terms. The current tenancy then ends immediately before that date, unless it is continued by a court application or an agreed extension. A request cannot be made once the landlord has served a section 25 notice.

A landlord that wants to oppose renewal must serve a counter-notice stating its grounds within two months of the request being made. If it does not, it cannot oppose renewal, although the terms of the new lease can still be disputed.

Whether to serve a request often turns on the rent. The old rent continues until an interim rent is set, and interim rent can only run from the earliest date that a landlord's notice or a tenant's request could have given, so a tenant paying less than the market rent may prefer to leave the timing to the landlord. A tenant who wants to leave at the end of the lease should use section 27, described below, rather than a request.

The deadline for applying to court

Either the landlord or the tenant can apply to court for a new tenancy, and a landlord that has stated its opposition can instead apply for an order ending the tenancy. The application must be made before the end of the statutory period, which ends on the termination date in the landlord's section 25 notice or immediately before the start date in the tenant's section 26 request. If nobody applies in time and no extension has been agreed, the tenancy ends on that date and the tenant loses the right to a new lease under the Act. After a section 26 request, the tenant cannot apply until two months have passed, unless the landlord has already served its counter-notice.

Before the deadline passes, the landlord and tenant can agree to extend it, and can agree further extensions, provided each is agreed before the current deadline. An extension also moves the date on which the current tenancy ends. Record every extension in writing.

Claims are normally brought in the County Court. An unopposed claim uses the Part 8 procedure in the Civil Procedure Rules. An opposed claim uses the Part 7 procedure, and the landlord's grounds of opposition are normally tried first, as a preliminary issue. Landlord and tenant can still agree terms after a claim has been issued.

Interim rent during the renewal

While the tenancy continues during the renewal process, the tenant carries on paying the old rent unless an interim rent is set. Either the landlord or the tenant can apply to the court for an interim rent, but not if the other has already applied and not withdrawn, and no later than six months after the old tenancy ends.

Interim rent runs from the earliest date that could have been given as the termination date in the landlord's section 25 notice, or as the start date in the tenant's section 26 request, whatever date was actually given. For example, if the lease has already expired and the landlord serves a notice giving a termination date nine months later, interim rent can still run from six months after the notice.

Where the landlord did not oppose renewal, the tenant occupied the whole of the premises for its business, and a new lease of the whole is granted, the interim rent is normally the rent under the new lease. Either side can ask the court for a different figure if the market changed substantially between the interim rent date and the start of the new lease, or if the terms of the new lease are substantially different. For example, if the old rent is £40,000 a year and the new lease is agreed at £50,000, the tenant normally owes the extra £10,000 a year from the interim rent date. In other cases, such as where the landlord opposed renewal, the interim rent is the rent it is reasonable for the tenant to pay while the tenancy continues, based on the market rent for a yearly tenancy and taking account of the old rent.

When can the landlord refuse a new lease?

A landlord can oppose renewal only on the grounds in section 30(1) of the Act, and only on grounds stated in its section 25 notice or its counter-notice to a tenant's request:

• (a) the tenant has failed to carry out its repairing obligations;
• (b) the tenant has persistently delayed paying rent;
• (c) the tenant has committed other substantial breaches of the lease, or there are other reasons connected with its use or management of the premises;
• (d) the landlord has offered suitable alternative accommodation on reasonable terms;
• (e) the tenancy is a sublease of part, and letting the whole property together would produce substantially more rent;
• (f) the landlord intends to demolish or reconstruct the premises, or carry out substantial construction work, and could not reasonably do so without obtaining possession;
• (g) the landlord intends to occupy the premises for its own business or as its home.

Under grounds (a), (b) and (c), the court decides whether the tenant ought not to be granted a new lease because of its conduct. Under ground (f), the landlord must show a firm and settled intention to carry out the work at the date of the hearing, and that intention must not depend on the tenant's claim: the test is whether the landlord would do the same work if the tenant left voluntarily. A tenant can defeat ground (f) by agreeing to give access for the work, where the landlord could then carry it out without interfering substantially, or for a substantial time, with the tenant's business, or by taking a new lease of an economically separable part of the premises. A landlord cannot rely on ground (g) if it bought its interest, or its interest was created, within the five years before the tenancy ends, where the premises have been let to a business tenant throughout that time.

Compensation when the tenant has to leave

If the only grounds that prevent a new lease are (e), (f) or (g), the tenant is entitled to compensation on leaving. Compensation is also payable if the landlord's notice or counter-notice relied only on those grounds and the tenant does not apply to court, or applies and then withdraws.

The compensation is the rateable value of the premises at the date the landlord's notice or counter-notice was given. It is doubled if, for the whole of the 14 years before the tenancy ends, the premises have been occupied for the purposes of the business, with any change of occupier being to a successor to that business. For example, if the rateable value is £40,000 and the tenant's business has been there for nine years, the compensation is £40,000; after 14 years or more it would be £80,000.

A lease can exclude or reduce this compensation, but the exclusion is void if the premises have been occupied for the business for the whole of the five years before the tenant leaves. A validly contracted-out lease carries no statutory compensation.

The terms of the new lease

Landlord and tenant can agree the terms of the new lease, and the court decides only what they cannot agree. The court orders a lease of the premises the tenant occupies, or of the whole property if the landlord requires it, for a term it considers reasonable of up to 15 years, at the open market rent, disregarding the tenant's occupation, the goodwill of its business and certain improvements it has made. The other terms are decided having regard to the terms of the current lease and all the relevant circumstances.

A tenant that does not want the lease the court orders can apply within 14 days of the order for it to be revoked, and the current tenancy then continues long enough to give the landlord a reasonable opportunity to re-let. Otherwise the current tenancy continues until three months after the proceedings, including any appeal, are finally disposed of, and the new lease starts when it ends.

Legislation that received Royal Assent on 29 April 2026 adds to the 1954 Act a ban on upwards-only rent reviews in new and renewal business leases in England and Wales. The ban applies once regulations bring it into force, which had not happened by 17 September 2026. Separately, the Law Commission is reviewing Part II of the Act: its second consultation paper was published on 16 June 2026, the consultation closed on 16 September 2026, and no legislation has followed from the review.

Leaving at the end of the lease, and dilapidations

A tenant can leave when a fixed-term lease expires by moving out completely before the expiry date, because the tenancy does not continue if the tenant is not in occupation when the term ends. It can also give the landlord written notice, at least three months before the expiry date, that it does not want the tenancy to continue. If the lease has already expired and is continuing under the Act, the tenant can end it by giving at least three months' written notice, and can recover rent paid for any period after that date.

Leaving does not end the tenant's liability for the condition of the premises. The Pre-Action Protocol for dilapidations claims expects the landlord to send a schedule of dilapidations within a reasonable time, generally within 56 days after the lease ends, followed by a quantified demand. The tenant usually has 56 days to respond, the parties should generally meet within 28 days after the response, and before issuing proceedings the landlord should show its loss through a valuation or an account of what it has actually spent.

Under section 18(1) of the Landlord and Tenant Act 1927, damages for breach of a repairing obligation cannot exceed the reduction in the value of the landlord's interest caused by the breach, and nothing is recoverable for failing to leave the premises in repair if they will be demolished, or altered so much that the repairs would be wasted, at or shortly after the end of the lease. For example, if the repairs would cost £60,000 but the disrepair reduces the value of the landlord's interest by £25,000, damages for the disrepair are limited to £25,000. A tenant can reduce the risk by commissioning its own survey well before the lease ends, doing the necessary work in good time, and photographing the premises on leaving.

If you have received a section 25 notice, or your lease ends within the next 18 months, send us the lease and any notices. We will set out the dates that apply and your options, and we agree the scope and cost of our work with you in writing before we start.

Frequently asked questions

What is a section 25 notice?

A section 25 notice is the prescribed form a landlord uses to end a business tenancy protected by the Landlord and Tenant Act 1954. It must give a termination date between 6 and 12 months after it is served, and no earlier than the lease's own expiry date, and it must say whether the landlord opposes a new tenancy. If the landlord is not opposing, the notice sets out proposed terms; if it is opposing, the notice states the grounds from section 30.

How long do I have to apply to court after a section 25 notice?

You must apply before the termination date given in the notice. If neither side applies by then, and no extension has been agreed, the tenancy ends on that date and the tenant loses the right to a new lease under the Act. The landlord and tenant can agree to extend the deadline, and extend it again, provided each agreement is made before the current deadline passes.

Can my landlord refuse to renew my business lease?

A landlord can refuse only on the grounds in section 30(1) of the Landlord and Tenant Act 1954, and only if they were stated in its section 25 notice or its counter-notice to your request. The grounds include disrepair, persistent late payment of rent, other substantial breaches, suitable alternative accommodation, redevelopment and the landlord's intention to occupy the premises. If your lease was validly contracted out, you have no statutory right to renew.

How much compensation do I get if my landlord refuses to renew?

If the landlord succeeds only on ground (e), (f) or (g), which include redevelopment and the landlord's own occupation, compensation equals the rateable value of the premises. It is twice the rateable value if the premises have been occupied for the business for the whole of the 14 years before the tenancy ends. No statutory compensation is payable if the landlord also succeeds on another ground, or if the lease was validly contracted out.

Does a business lease end automatically on its expiry date?

A lease protected by the Landlord and Tenant Act 1954 does not end on its expiry date. It continues on the same terms until it is ended under the Act, for example by a landlord's section 25 notice, a tenant's section 26 request, or the tenant's own notice. A lease that was validly contracted out ends on its expiry date, and so does a protected lease if the tenant is not in occupation when the term ends.

What is interim rent?

Interim rent is the rent a tenant pays while a protected business tenancy continues during the renewal process. Either side can apply to court for it, no later than six months after the old tenancy ends. It runs from the earliest date that could have been given in the landlord's notice or the tenant's request. Where renewal is unopposed and a new lease of the whole is granted, it is normally the same as the rent under the new lease.

Can I leave at the end of my lease without serving a notice?

You can, if you have fully moved out before the expiry date of a fixed-term lease, because the tenancy does not continue under the 1954 Act when the tenant is not in occupation at the end of the term. You can also give written notice at least three months before the expiry date. If the lease has already expired and is continuing, you need to give at least three months' written notice. Leaving does not end your liability for dilapidations.

Sources & further reading

• legislation.gov.uk — Landlord and Tenant Act 1954, Part II
• legislation.gov.uk — Regulatory Reform (Business Tenancies) (England and Wales) Order 2003, Schedule 2
• legislation.gov.uk — Landlord and Tenant Act 1954 (Appropriate Multiplier) Order 1990
• Justice UK — Civil Procedure Rules Part 56
• Justice UK — Practice Direction 56
• Justice UK — Pre-Action Protocol for dilapidations claims
• Law Commission — Business tenancies: the right to renew
• legislation.gov.uk — English Devolution and Community Empowerment Act 2026, Schedule 37

This article is general information, not legal advice. The law changes and depends on your circumstances — always take advice on your specific situation before acting. Last reviewed 17 September 2026. Buzz Solicitors is a trading name of AD Solicitors Limited, a recognised body regulated by the SRA (no. 8011228).