How do I end a protected business tenancy using a section 25 notice? Commercial Property

A protected business tenancy is an agreement that offers security of tenure to the tenant. It means that the tenant’s lease will continue after expiry of the term until formal procedures are followed to bring it to an end and even then, the tenant is entitled to a new lease when it expires. Whilst this provides the tenant with a larger degree of security and certainty, it does limit the circumstances in which a landlord can end a tenancy and recover possession of the premises.

There are two different ways to end a protected business tenancy, both requiring a section 25 notice to be served on the tenant.

A commercial lease can be ‘contracted-out’ or ‘protected’. If the lease is contracted out, it will not automatically continue after the expiry of its term and there is no right to a new lease. If a lease is protected, the Landlord and Tenant Act provides security of tenure ensuring the tenancy cannot come to an end until it is formally terminated.

What is a Section 25?

A section 25 notice is a section in the Landlord & Tenant Act 1954 (LTA) which details the information required, should the landlord need to end the business tenancy. Ending this type of lease can be either ‘hostile’ or ‘non-hostile’ but must be served in a prescribed form and within a prescribed timescale stipulated by the Act, not more than 12 months, or less than six months before the termination date specified in the notice. Clear and concise language must be used when terminating this agreement and it must be drafted carefully.

Hostile Notice

This type of notice is served where the landlord opposes the grant of a new lease. For such a notice to be valid, the landlord must set out within the notice any one of the following grounds of opposition:

• premises are in disrepair,
• arrears of rent,
• other breaches of covenant,
• landlord to provide suitable alternative accommodation,
• tenancy was created by a sub-letting,
• landlord’s intention to redevelop, or
• landlord’s intention to occupy.

Non-Hostile Notice

A non-hostile notice has the effect of ending a business tenancy and at the same time proposing terms for a new one. The proposed rent and other terms of the new lease must be included in the notice. The notice must also state that if the parties cannot agree on all the terms of the new tenancy, then either party may ask the court to order the grant of a new tenancy and settle the outstanding terms.

We’re here to help with ending your protected business tenancy

It is important that a section 25 notice is validly served and that any grounds for opposition have been considered in detail as to their validity. Always seek legal advice. Speak to one of our experts below, who will be able to offer guidance and advice on ending a business tenancy. Contact us today for further information.