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.

About this article

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.

About this article

Read, listen and watch our latest insights

art
  • 01 June 2023
  • Employment

Facts employees should know about their personal data

We previously published an article on facts an employer should know about holding personal data, so it is only fair that we also write about the other side of the coin – facts employees should know as individuals whose personal data is held by their employer.

art
  • 01 June 2023
  • Immigration

What is the Immigration Skills Charge (ISC) and how much do you have to pay?

The Immigration Skills Charge (ISC) is a levy on companies who sponsor migrant workers. This levy was imposed on 6 April 2017. The Government states that the charge has been levied to contribute towards addressing the skills gap in the local economy.

art
  • 26 May 2023
  • Employment

Avoiding discrimination in flexible working requests

The right to request flexible working is currently available to employees with at least 26 weeks’ service and is set to be extended further under new Government reforms.

art
  • 25 May 2023
  • Corporate and M&A

Management Buyout – Top 5 things to consider

A management buyout is a financial transaction in which a member of the management team purchases the company from its registered owner. MBO’s usually occur in private companies in an effort to enhance profitability and simplify strategies.

art
  • 25 May 2023
  • Employment

Carer’s Leave Bill set to become law

On 19 May 2023, the Carer’s Leave Bill had its third reading in the House of Lords, and upon receiving Royal Assent, will become law. There is not yet a date for the implementation of this bill, however it is likely that this will happen relatively quickly upon receiving Royal Assent, so is definitely one to keep an eye on.

art
  • 18 May 2023
  • Immigration

Navigating SOC Codes

When it comes to UK immigration, understanding the intricacies of the system is vital. One significant aspect of the process revolves around Standard Occupational Classification (SOC) codes. SOC codes play a crucial role in determining the eligibility for an individual to apply for a work visa, assessing skill levels, and matching individuals to appropriate job roles.