Search

How can we help?

Icon

What happens when a business tenant remains in occupation after the expiry of its lease?

Difficulties can arise when a business tenant remains in occupation of a property when its right to do so has come to an end. This may be because the tenant has a lease that does not carry security of tenure under the Landlord and Tenant Act 1954 (“the Act”) and the lease has expired. Alternatively the lease may be protected by the Act, but, following service by the landlord or tenant of notices under section 25 or section 26 of the Act, the tenant has not taken any steps to issue a claim for a new lease or extend time for doing so.

Often when a tenant remains in occupation it is because negotiations for a new lease are ongoing, and usually in this case the tenant will have a tenancy at will – a type of unprotected tenancy which can be ended at any time.

However, there is a risk that, if the situation is not resolved promptly, the parties can find themselves with an implied periodic tenancy. The legal status of the tenant will always depend on the specific circumstances of each case, but the key factors the courts will look at are whether rent is being paid and accepted, and whether the parties are actively engaged in negotiations for a new lease.

Often when a tenant remains in occupation it is because negotiations for a new lease are ongoing.

It is often landlords who will want to avoid a periodic tenancy arising, as any such tenancy will be protected by the Act (even if the expired lease was itself outside the Act). This means that the tenant will have security of tenure, and the landlord’s ability to terminate the lease will be significantly restricted. Sometimes, though, an implied periodic tenancy could disadvantage the tenant, if the tenant in fact decides that it no longer wants a new tenancy and wants to vacate the premises – the tenant may find itself liable for rent and service charges for a lengthy notice period.

Given the uncertainty in this area and the risks for both landlords and tenants if a periodic tenancy arises, parties should not allow the situation to drift after the expiry of a lease or section 25/section 26 notice. Landlords should ensure that they do not demand or accept rent, and should consider putting written tenancies at will in place if negotiations for a new lease are ongoing. If negotiations stall, immediate action should be taken to regain possession of the premises.

If you have any queries on any of these points please contact our landlord and tenant solicitors.

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

Author profile

About this article

Read, listen and watch our latest insights

Pub
  • 04 August 2026
  • Employment

From Opportunity to Employment: Building Inclusive Workplaces Together | Hosted by Breakthrough Supported Employment

Join Breakthrough Supported Employment for a live seminar on building inclusive workplaces at Malmaison Reading. Clarkslegal’s Lucy White will speak alongside industry experts, sharing insights on fostering diversity and creating equitable opportunities.

art
  • 04 August 2026
  • Litigation and dispute resolution

Advantages of arbitration over litigation

Arbitration is a method of resolving disputes outside the court system, with the dispute being determined by an independent arbitrator or tribunal rather than a judge. Whether a dispute is best resolved through arbitration or litigation will ultimately depend on the particular facts and circumstances of the case.

art
  • 04 August 2026
  • Immigration

Home Office revokes EU Settlement Scheme Status ‘Granted in Error’ – What does This Mean for EU Citizens?

Recent reports that the Home Office has begun revoking the immigration status of some EU nationals on the basis that it was originally “granted in error” have caused understandable concern among immigration practitioners and those with status under the EU Settlement Scheme (EUSS).

art
  • 03 August 2026
  • Corporate and M&A

Shareholders’ Agreements FAQ Guide – SHA Series Part 1 of 5

Shareholders’ agreements are a crucial but often overlooked tool for companies with multiple owners. While many rely solely on standard articles of association, this can leave significant gaps in governance and protection.

art
  • 29 July 2026
  • Employment

Employment Rights Act 2025: Key takeaways from the Consultation for Zero Hour Reforms

The government published its consultation on reform of zero hour, low hour and agency worker contracts on 2nd June 2026. The consultation closes on 25 August 2026 and so there is still time to get responses in to help shape the operation of the new provisions in the Employment Rights Act 2025 (the “Act”).

art
  • 27 July 2026
  • Commercial Real Estate

What every business should know about commercial leases

Understand the key commercial lease clauses that can affect your business, including break clauses, security of tenure, repairs, alterations, rent reviews and assignment rights. Learn what tenants and landlords should consider when negotiating lease terms.