Law guide: Property

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Renewing a commercial lease

Renewing a commercial lease

There is no statutory right to renew a commercial lease (save for shop tenancies in respect of which specific legal advice should be taken).

However, if neither party receives notice from the other 40 days before the end of the term of the lease, then the lease will continue.

In the case of leases where the original term was for more than one year, the lease will continue for another year. If, 40 days before the end of that additional year, notice is not received by either party the lease will continue for another year and so on.

If the original lease was for less than a year and the required 40 days' notice was not served, the lease will continue for the length of the original term, e.g. a six month lease would continue for another six months. Again, if, 40 days before the end of that extended term, notice is not received by either party a further extension of the same length will take place.

A landlord would not usually want this situation to continue as the continuing lease would probably not be subject to a reviewed rent and the landlord is likely to want a rent increase. The landlord should therefore ensure it serves notice timeously before the end of the term. The landlord would then have the option to enter into new terms for a new lease if the tenant wished to remain at the premises.

Where any notice is to be served under the lease, the parties must comply with the notice provisions in the Lease. The following are common provisions:

  • Notices are usually to be sent by recorded delivery
  • The parties should ensure they have the current address for the other party (if either/any of the parties is a company, check Companies House for up-to-date registered office addresses)
  • Most leases work on the basis that a notice is deemed to be received 2 business days after it is sent. Unless the lease provides otherwise, the parties must remember to allow 2 business days for receipt of its notice by the other party.

In the context of serving notice to terminate, if the lease does provide that a notice served by first class recorded delivery is deemed to be received 2 business days after posting, the party serving the notice to terminate should post the notice a minimum of 43 days before the end of the term of the lease.