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Renewals & Termination at the end of the Lease
Unless specifically excluded, a commercial lease will usually have an automatic statutory right to renew at the end of the initial contractual term, subject to satisfying the following criteria:
- There must be a Tenancy of six months or more (as opposed to a licence or other right of occupation);
- The Tenancy must include premises occupied by the tenant for the purposes of carrying out a business;
- The Tenancy must not wholly consist of home business property
The right to renew may be excluded by following a specific procedure prior to the Tenancy being entered into and a Landlord or Tenant should always seek specialist advice in order to avoid unwanted consequences.
If a right to renew exists either party can request or deny a request for a new lease upon giving the correct form of notice, before seeking to agree the terms of the new lease. This would ordinarily be on similar terms to the existing lease, subject to any amendments the parties wish to make. If agreement cannot be reached the parties can ask the Court to set the terms. The same applies to termination with the court having the last say as to the Tenant’s continued rights of occupation.
Should a Tenant not wish to continue the Lease past the end of the contractual term, they should check whether there are any requirements where a statutory right to renew exists: which unless otherwise agreed would usually include a three month notice period.
These rights of renewal can be passed onto any subtenant or anyone taking an assignment of the lease. When considering taking on either a new or transferred tenancy both landlord and tenant should check the proposed tenancy carefully and take legal advice so as to ensure they understand their rights and obligations to renew, allow or refuse a new or extended tenancy at the end of the initial term.
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