Jo Vipond, real estate legal executive at The Wilkes Partnership looks at the options available for a tenant and landlord when their lease is due to expire.
The options available to both landlords and tenants will depend upon whether the lease is excluded from the Landlord and Tenant Act.
If the tenant made a Statuary Declaration before the lease was granted to exclude their rights under the Landlord and Tenant Act, they must vacate the premises on the expiry date set out in the lease. For the tenant to continue in occupation, a new lease will need to be agreed before the expiry date.
Jo comments: “Landlords are increasingly excluding leases from the Landlord and Tenant Act to enable them to obtain possession of the property upon expiry of the lease.
“It is important that tenants diarise their expiry date, so if they do want to renew the lease they can approach the landlord well before this date. It is also important for landlords to ensure that the tenant vacates the property on the expiry date. If the tenant remains in occupation after the expiry date and the landlord accepts rent after this date, there is a risk this will create an implied periodic tenancy which will be protected by the Act. However, this will depend on the facts in each case.”
If the lease is protected by the Landlord and Tenant Act, the tenant and landlord can negotiate a new lease.
In the event that the tenant and landlord are unable to reach an agreement, the tenant or the landlord may apply to the court who will grant a lease on similar terms to the existing lease. The landlord is able to object to the lease, but he can only do this on very strict grounds. For example, if he intends to demolish the building. If the tenant does not comply with the strict time limits, he may lose his right to a new lease.
Jo comments: “It is common for parties to delay negotiations. For example, the term of the lease could be a sticking point if the tenant’s business is not performing well. The tenant may be reluctant to commit to a five year lease.
“The tenant is not obliged to make an application to court. Some tenants will prefer to hold over if they feel the rent will be higher under a new lease. In this current financial climate, tenants are under increasing financial pressure and it is common for landlords during the term of the lease to reduce rents informally.”
Victoria Khandker, associate in the property litigation department at Wilkes can advise on serving the above notices. Please contact her on 0121 710 5843.
Once the terms of the new lease have been agreed, our real estate department can draft and complete the new lease on a landlord’s behalf.
To renew your lease or enquire about lease renewals, please contact Jo Vipond on 0121 710 5812.