A tenant of business premises, eg a shop or a restaurant, usually has a statutory right at the end of a tenancy to remain in their premises and to renew their tenancy.
However, the tenant can agree with the landlord before the start of the tenancy that the business tenancy will not be “protected” by the above statutory right. This is known as an “excluded tenancy”. Very short tenancies are also not protected.
The law in this area is a minefield and a potential trap for the unwary. Major changes to the law were made in 2004 with the aim of making the process more flexible, eg the process of agreeing an excluded tenancy (where the tenant does not have a statutory right to review) was made easier.
Whilst these have largely been beneficial, the changes have also created new areas of uncertainty and a different set of potential traps and deadlines. The downside for the tenant is that if he does not adhere strictly to the procedure he could lose his statutory rights and could have to move out of his premises. This could have a disastrous impact on the tenant’s business.
The renewal process is started by either the landlord or tenant firstly serving a formal notice. Upon the notice period expiring, either party can apply to the Court, although usually the parties agree to extend the deadline. The parties have a free hand in negotiating the terms of the new lease, eg the rent or duration, but ultimately if they are unable to reach agreement the terms will have to be decided by a Court which has less freedom of manoeuvre. Both landlord and tenant should engage a surveyor/valuer to advise on the level of the new rent.
Landlords have a limited right to oppose renewal in certain circumstances. In some cases this will require the landlord paying compensation to the tenant which is assessed by a statutory formula.
We have extensive experience and expertise in dealing with business tenancy renewals and have the ability and expertise to move quickly, draft the necessary documentation and achieve a quick, decisive and positive result.