RSS FeedRSS Feed

How to end a business leaseBy: Amy Rogers, Associate, Cripps Harries Hall LLP

Amy Rogers, Associate, Cripps Harries Hall

How leases of business premises may be brought to an end depends on a number of factors. Who wants to end it; whether the lease is coming to a natural end or whether it is to be terminated early; whether the tenant is in breach, and whether the lease is a true business lease afforded the protection of the Landlord and Tenant Act 1954.

Accordingly, ending a business lease raises interesting and technical points of law - excellent news for lawyers, but less so for their clients. Landlords and tenants need practical advice about the impact of the 1954 Act on their leases and the tactics that can be used to secure their desired result: be it getting rid of a troublesome tenant or continuing a business lease despite opposition from the landlord.

When is a lease a true business lease?
The first question to consider is whether the lease is a true business lease. Part II of the 1954 Act applies to any tenancy where the property comprised in the tenancy is, or includes premises, which are occupied by the tenant and are so occupied for the purposes of a business carried on by him. This may sound straightforward, but there are a number of elements that need to be satisfied.

There must be a tenancy: the 1954 Act does not apply to licences. There must be occupation by the tenant: whether the tenant enjoys sufficient occupation can raise interesting issues where he has gone out of physical occupation, although he need not occupy personally. The property must be occupied for the purposes of a business, which is widely defined and catches many recreational uses as well as traditional business uses. If the premises are mixed use they will qualify for the protection of the 1954 Act provided that the business activity is a significant purpose of the occupation. Finally, the parties may have agreed that the 1954 Act will not apply to the lease. If so, it is worth checking whether the correct procedures for contracting out have been followed.

If the 1954 Act does apply, the lease will continue automatically at the end of the fixed term until it is brought to an end in accordance with the Act’s provisions.

Terminating a business lease
The tenant does not have to accept the continuation of his tenancy: he can serve notice to quit subject to time limits, or rely on his break clause where appropriate. He also has the option of vacating before expiry of the original fixed term, bringing the lease, and his liabilities, to an end on that date. If the tenancy has continued after expiry of the fixed term and the tenant wants out, he can give their landlord three months’ notice. Other options available to the tenant are to negotiate a surrender of the lease, or to assign the lease to someone else.

If a landlord wants to end a business lease early he will also have to rely on operation of a break clause, agree a surrender with the tenant or seek to forfeit the lease owing to the tenant’s failure to fulfil his obligations under the lease. Otherwise, the landlord will have to serve a section 25 notice in accordance with the 1954 Act’s time limits, specifying a termination date after expiry of the original tenancy, and giving the statutory grounds on which the landlord opposes renewal. These grounds include the tenant’s failure to maintain or repair the premises, his persistent delays in paying rent, or the landlord’s genuine wish to demolish or rebuild.

If the tenant does nothing, the tenancy will automatically end on the date given in the landlord’s section 25 notice. If the tenant applies to court for a new tenancy, the landlord will need to oppose the application in court: the landlord also has the option of applying to court to end the tenancy, which may be attractive where the landlord needs certainty.

How a business lease may come to an end will vary depending upon the landlord and tenant’s intentions, and it is important to check whether it is a business lease at all. Every lease is different and landlords and tenants with leases of business premises should take legal advice at an early stage if they want out.

About the author

Amy Rogers is an associate at Cripps Harries Hall LLP. She specialises in property dispute resolution, assisting in commercial and residential landlord and tenant, business lease renewals, easements and restrictive covenants, trespass/adverse possession and boundary disputes.

Features January 2013

Click here for more features...

Commercial Property Events

Have you any commercial property events you'd like to tell us about? It could be networking, exhibitions, seminars, industry lunches or sporting fixtures. We will list them for free. Just email with the following details: Event name, date, time, venue, cost, booking info and a brief description of the event.

Commercial Property Jobs

To list your property job vacancies on Property News. Email:

Sign up to our free e-alerts for all your property news and views.
Follow Property News on Facebook Follow Property News on Twitter Follow Property News on Google+ Follow Property News on Linkedin Property News RSS Feed