Renewing a Business Lease

If the term of your business lease is coming to an end, then the general rule under the Landlord and Tenant Act 1954 (the “Act”)), is that the landlord must grant you a new lease on similar terms. However, this can be a good opportunity to re-visit the existing terms and negotiate them for the new lease.

It is open for both the tenant and the landlord to negotiate the terms of the lease, but if an agreement cannot be reached between the parties, then you can refer the matter to the court. The courts have jurisdiction under the same Act to help decide the terms of the lease. The courts have a wide discretion to order any term it considers reasonable in all the circumstances. However, the court is limited to setting the duration of the lease to a maximum of 15 years and it must set the rent at the open market rate.

For the terms of the lease that deal with service charges, all new leases should comply with the RICS Code on Service Charges 2007. This Code recommends that service charge provisions should be fully modernised at renewal. The object of the Code is 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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