Re-negotiating a business Lease on renewal

If you have a business lease subject to the Landlord and Tenant Act 1954 (the “Act”), and it is coming to an end, then the general rule is that the landlord must grant you a new lease on similar terms. However, you may want to consider if you have any room for negotiating the terms of the new lease.

Both the tenant and the landlord are able to negotiate all the terms of the lease. However, if an end agreement cannot be reached between the parties, then you can refer the matter to the court. The courts have jurisdiction under the Act to decide the terms of the lease and in doing so, the courts has a wide discretion to order any term it considers reasonable in all the circumstances. However, the court is limited to setting the terms to a maximum of 15 years and the rent is set at the open market rate.

It is important to note that all new leases should comply with the RICS Code on Service Charges 2007. This Code states that service charge provisions should be fully modernised at renewal. The Code aims to achieve fairness, transparency and accounting on a not for gain or loss basis and on what is fair and reasonable in all the circumstances.

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