Specialists in Commercial Property
A tenant of a business lease usually has a legal right to renew the lease at the end of the term. However, a landlord can oppose a tenant’s legal right to a lease renewal on any of the seven grounds set out in section 30 of the Landlord and Tenant Act 1954.
A landlord must notify the tenant of its opposition by a formal written notice (or counter-notice). The notice must:
- state that the landlord opposes the grant of a new lease and specify the ground(s) for opposition to the lease being renewed;
- specify a termination date no less than six months or more than 12 months after the notice is served, and no earlier than the expiry date of the lease.
- In a counter-notice in response to a tenant’s request for a new tenancy. The counter-notice must be served within two months of receiving the tenant’s request for a new tenancy.
Grounds of opposition
A landlord can oppose the tenant’s right to renewal on any of the following grounds:
- Premises are in disrepair (Ground (a)).
- Arrears of rent (Ground (b)).
- Other breaches of the lease (Ground(c)).
- Suitable alternative accommodation (Ground (d)).
- Tenancy was created by a sub-letting (Ground (e)).
- Landlord’s intention to redevelop (Ground (f)).
- Landlord’s intention to occupy (Ground (g)).
A landlord may specify more than one ground of opposition. Once a ground of opposition has been specified it cannot be changed for an alternative ground and further grounds of opposition cannot be raised at a later date.
If more than one ground is specified, the landlord may choose at a later date not to pursue one or more or any of the grounds. However, if court proceedings have been started, the landlord may be liable for the costs incurred by the tenant in challenging the landlord’s opposition.
Grounds (a), (b), (c) and (e) confer discretion on the court, enabling it to order that a new lease be granted to the tenant even if the landlord is successful.
Tenant’s right to compensation
A tenant is entitled to compensation if it does not obtain a new lease solely because the landlord establishes one of the “no fault” grounds of opposition: Grounds (e), (f) or (g). It is therefore in the landlord’s interest to succeed on a “fault ground”: Grounds (a), (b), (c) or (d). If the landlord successfully opposes the lease renewal on any of the “fault grounds”, the tenant will not be entitled to compensation.
For further information on this or any other commercial property matter please call 01708 745183 to speak to a member of our Team.