Business Lease Renewal: Don’t Get Caught Out by the 1954 Act

October 21, 2026

The end of a commercial lease term is a pivotal moment for any business. For a tenant, it can decide whether you stay in premises you have built your trade around. For a landlord, it shapes your income and the property’s future use. Business lease renewal in England and Wales is largely governed by Part II of the Landlord and Tenant Act 1954, and its strict procedures and deadlines can catch even experienced landlords and tenants out.

Most business tenancies benefit from statutory protection, known as security of tenure, unless the parties have validly agreed to exclude it.

In this guide, our commercial lease solicitors explain how security of tenure works, how a tenant can request a new lease using a Section 26 notice, the grounds on which a landlord can oppose renewal, what happens if you cannot agree, and how Tayntons can help.

What Is the Landlord and Tenant Act 1954?

Part II of the Landlord and Tenant Act 1954 gives tenants who occupy premises for business purposes a statutory right to a new lease when their contractual term ends. This protection, known as security of tenure, has two key features.

• Automatic continuation. A protected tenancy does not simply end on its expiry date. Under section 24, it continues on the same terms, including the same rent, until the landlord ends it in one of the ways set out in the 1954 Act.
• A right to renew. The tenant can apply for a new tenancy, and the landlord can only refuse on one of the statutory grounds set out in section 30.

This differs significantly from the residential sector, where the Renters’ Rights Act 2025 has overhauled the rules for private landlords and abolished Section 21 “no fault” evictions. That Act concerns residential lettings; it does not change the 1954 Act regime for business tenancies.

Is Your Lease Protected? Security of Tenure Explained

Not every business lease is protected. Section 23 applies where there is a tenancy (not a licence) and the tenant occupies all or part of the premises for its business. Certain tenancies are excluded by section 43, including tenancies granted for a fixed term of six months or less (unless the tenant, together with any predecessor in the business, has been in occupation for more than 12 months), agricultural holdings, farm business tenancies and mining leases.

The most common reason a lease falls outside the 1954 Act is that it has been formally “contracted out”. Under section 38A, the landlord and tenant can agree to exclude security of tenure, but only if a strict procedure is followed before the tenant enters into the lease:

• the landlord must serve a warning notice on the tenant in the prescribed form;
• the tenant must sign a declaration confirming receipt of the notice and acceptance of the consequences. A simple declaration is sufficient if the notice was served at least 14 days before the tenant enters into the lease; otherwise, a statutory declaration is required; and
• the lease must refer to the notice and declaration.

If the procedure was not followed correctly, the lease may be protected even if it states otherwise. Similarly, an arrangement described as a licence to occupy may actually be a tenancy. Landlords and tenants should check their position well before the lease term ends, because it determines whether there is any right to renew at all.

How to Renew a Business Lease Under the 1954 Act

Where a lease is protected, renewal is usually started in one of two ways. Only one route applies: once one party serves a valid notice or request, the other cannot serve their own.

• Landlord-led: the landlord serves a Section 25 notice, either proposing terms for a new lease or stating the grounds on which it opposes renewal.
• Tenant-led: the tenant serves a Section 26 notice, formally called a request for a new tenancy.

The Section 26 Notice

A Section 26 notice allows the tenant to take the initiative. It is only available where the current tenancy was granted for a fixed term of more than one year, so periodic tenancies cannot generally use this route. The key requirements are:

• Prescribed form: the request must be in Form 3 set out in the Landlord and Tenant Act 1954, Part 2 (Notices) Regulations 2004.
• Competent landlord: it must be served on the “competent landlord” under section 44. If there is a chain of leases, the recipient may not be your immediate landlord. A tenant can serve a section 40 notice to obtain information about the landlord’s interest before serving the notice.
• Proposed terms: the request must set out the tenant’s proposals for the new tenancy, including the property, the rent and the other terms.
• Start date: the request must specify a date for the new tenancy to begin that is not more than 12 months and not less than 6 months after the request is made.
• Contractual term: the new tenancy cannot begin before the date on which the current contractual term would otherwise end.

Serving a request is not always in the tenant’s best interests. Because a protected tenancy continues at the existing rent, a tenant paying below the current market rate may prefer to wait. However, the landlord can still serve its own notice or apply for an interim rent. A tenant who wants certainty, or who expects rents to fall, may benefit from acting first. The right timing depends on your circumstances, which is why early advice matters.

What Happens When the Landlord Agrees?

Once a Section 26 notice is served, the landlord has two months to serve a counter-notice if it intends to oppose renewal (section 26(6)). If the landlord does not serve a counter-notice within that period, it loses the right to oppose the grant of a new lease on any of the statutory grounds.

If the landlord does not oppose, the parties negotiate the terms of the new lease, typically the rent, the term length, and any changes to the existing lease. Most renewals are agreed in this way. If the parties cannot agree on terms, either party can apply to the court, which will decide the outstanding points and order a new tenancy. In doing so, the court will:

• set the rent at the open market rent, disregarding certain matters such as the tenant’s occupation, goodwill and qualifying improvements (section 34);
• grant a term of up to 15 years (section 33); and
• determine the other terms having regard to the terms of the current tenancy (section 35).

While negotiations or proceedings continue, either party can apply to the court for an interim rent under section 24A. The application must be made no later than six months after the current tenancy ends.

Landlord and Tenant Act 1954: Grounds for Possession

Strictly, the 1954 Act refers to “grounds of opposition” rather than grounds for possession. A landlord who wants to oppose renewal must rely on at least one of the seven grounds in section 30(1), stated in its Section 25 notice or its counter-notice to a Section 26 request:

Some important qualifications apply:

• The five-year rule. A landlord cannot rely on ground (g) if it acquired its interest within the five years before the current tenancy ends and the premises have been let to a protected business tenant throughout that time (section 30(2)).
• Genuine intention. For grounds (f) and (g), the landlord must prove a firm and settled intention at the date of the hearing. In S. Franses Limited v The Cavendish Hotel (London) Limited [2018] UKSC 62, the Supreme Court held that the intention must not be conditional on the tenant’s claim for a new lease. The test is whether the landlord would still carry out its plans if the tenant left voluntarily.
• Compensation for disturbance. Where renewal is refused on grounds (e), (f) or (g) only, the tenant is usually entitled to compensation under section 37. This is the rateable value of the premises, or twice the rateable value if the tenant and any predecessor in the same business have occupied for business purposes for the previous 14 years. A lease can exclude compensation, but not where the tenant has been in business occupation for five years or more (section 38).

If the landlord successfully opposes renewal, or the tenant’s application fails, the court will not order a new tenancy, and the existing tenancy will end.

What Happens If Parties Can’t Agree? Court Applications and Time Limits

The court deadlines in the 1954 Act are strict, and missing one can mean losing the right to renew altogether. This is one of the most significant risks for tenants.

• The statutory period. You must apply to the court before the end of the “statutory period” (section 29A). Where the tenant has served a Section 26 notice, this ends immediately before the start date specified in the request. Where the landlord has served a Section 25 notice, it ends on the termination date specified in the notice.
• The two-month wait. After serving a Section 26 notice, the tenant cannot apply to the court until two months have passed, unless the landlord has already served its counter-notice.
• Extending the deadline. The landlord and tenant can agree in writing to extend the statutory period, provided they do so before it expires (section 29B). They can agree to further extensions, which is common while negotiations continue.
• Landlord’s termination application. A landlord opposing renewal can apply to the court for an order ending the tenancy without a new lease (section 29(2)).

Where proceedings are issued, the existing tenancy continues until three months after the proceedings are finally disposed of (section 64). If the court orders a new tenancy, that lease replaces the existing tenancy on the agreed or court-ordered terms. A tenant who does not want the new lease on the ordered terms can apply to have the order revoked within 14 days (section 36(2)). Our team also advises on commercial property disputes where renewal negotiations break down.

If a tenant does not want to renew, it can simply cease business occupation and vacate the premises by the end of the contractual term. Alternatively, the tenant may serve a notice under section 27; this can be either at least three months before the expiry of the contractual term (to terminate the tenancy at the end of the contractual term) or at any time thereafter on at least three months’ notice where the tenancy is continuing under section 24.

How Often Can a Landlord Inspect a Commercial Property?

No fixed statutory frequency governs inspections of business premises. A landlord’s right to enter depends on the lease terms. Many commercial leases allow the landlord to enter on reasonable prior notice to inspect the condition of the premises, carry out repairs or prepare a schedule of dilapidations, with immediate access permitted in an emergency.

Access requests often increase towards the end of the term and during renewal, when landlords may want valuers or surveyors to attend. Entering without a right under the lease could amount to trespass or a breach of the tenant’s right to quiet enjoyment, so both parties should check the lease and seek advice if the position is unclear.

Where Can I Get Expert Advice on Evicting a Problem Tenant?

Opposing a renewal is different from removing a tenant during the lease term. A landlord dealing with a problem tenant may have several options, each with its own risks:

• Where the lease contains a forfeiture clause, the landlord may be able to end the lease for breach. For breaches other than non-payment of rent, the landlord must usually first serve notice under section 146 of the Law of Property Act 1925. The tenant may apply to the court for relief from forfeiture, and a landlord can lose the right to forfeit by acting in a way that recognises the lease continues, such as accepting rent after learning of the breach.
• Commercial Rent Arrears Recovery (CRAR). Under Part 3 of the Tribunals, Courts and Enforcement Act 2007, a landlord of commercial premises can use an enforcement agent to take control of the tenant’s goods to recover unpaid rent, after giving notice. Strict rules apply.
• Debt recovery. You can pursue arrears as a debt, including against any guarantor. Our debt recovery service can help.
• Opposing renewal. At the end of the term, a history of disrepair, late payment or other breaches may support grounds (a), (b) or (c) above.

Taking the wrong step, or taking the right step in the wrong order, can leave a landlord exposed to a damages claim or lead to a waiver of its rights. Our landlord and tenant solicitors can advise on the right approach for your situation.

What Does a Commercial Lease Solicitor Do for a Business Tenant?

A specialist solicitor can protect your position at every stage of a business lease renewal, including:

• confirming whether the 1954 Act protects your lease;
• advising on whether and when to serve a Section 26 notice, or how to respond to a Section 25 notice;
• preparing and serving valid notices on the correct party;
• managing and tracking every statutory deadline, and agreeing extensions where needed;
• negotiating rent, term length, break clauses and other lease terms;
• assessing whether a landlord’s grounds of opposition are genuine, and whether compensation is payable; and
• representing you in court proceedings if agreement cannot be reached.

Your renewal terms can also affect the value of your business if you are preparing to sell, since a buyer will want security over the premises. Landlords also benefit from early advice, particularly when deciding whether to oppose renewal and on which grounds. Speak to our commercial lease solicitors at the outset, rather than when a deadline is approaching.

Business Lease Renewal: Key Deadlines at a Glance

Frequently Asked Questions

How do I renew a business lease under the 1954 Act?

If your lease is protected, you can serve a Section 26 notice on your competent landlord in the prescribed form, proposing terms and a start date between 6 and 12 months ahead. Alternatively, your landlord may start the process with a Section 25 notice. If the parties cannot agree on terms, either can apply to the court before the statutory deadline.

What grounds for possession exist under the Landlord and Tenant Act 1954?

The 1954 Act calls them grounds of opposition. There are seven, set out in section 30(1): disrepair, persistent delay in paying rent, other substantial breaches, suitable alternative accommodation, subletting of part, redevelopment, and the landlord’s intention to occupy.

How often can a landlord inspect a commercial property?

There is no statutory limit. The landlord’s right to enter depends on the lease, which usually requires reasonable prior notice except in an emergency.

What does a commercial lease solicitor do for a business tenant?

A commercial lease solicitor checks whether the lease is protected, serves and responds to notices, manages statutory deadlines, negotiates the new lease and represents the tenant in court if needed.

Where can I get expert advice on evicting a problem tenant?

Speak to a solicitor experienced in commercial landlord and tenant law before taking any action. Forfeiture, CRAR and opposing renewal each carry legal risks if handled incorrectly. Tayntons advises landlords across Gloucestershire.

Get in Touch with Our Commercial Lease Solicitors in Gloucester

Whether you are a landlord or a tenant, business lease renewal under the 1954 Act involves strict procedures, deadlines, and strategic decisions that you should not navigate alone. Missing a deadline or serving an invalid notice can cost a tenant their premises, or a landlord the chance to recover them.

Tayntons supports landlords and tenants across Gloucester, Cheltenham, Stroud and the Forest of Dean with every aspect of commercial property, from new leases to renewals and disputes. Our clients rate us “Excellent” on ReviewSolicitors with over 480+ client reviews.

If you need advice from a Gloucester solicitor on a lease renewal, contact Tayntons today by calling 01452 522 047, emailing info@tayntons.co.uk, or requesting a call back.