Commercial lease renewal

[Output Flange]

Morning all.

My commercial lease was for a 12 month term that expired at the end of May. It’s a protected lease, and so it has continued since then under the existing terms.

I’ve just had a letter from the landlord stating that it will automatically renew on a 3 year term at a new rate from the 1st June 2024, with payment at the new rate from 1st November.

I’m expecting to exit the business before 1st November so don’t expect this to be a problem in reality, but surely they need to issue a new lease and I need to sign it for any renewal to actually take effect?!

[Mr Overheads]

Output Flange said:

Morning all.

My commercial lease was for a 12 month term that expired at the end of May. It’s a protected lease, and so it has continued since then under the existing terms.

I’ve just had a letter from the landlord stating that it will automatically renew on a 3 year term at a new rate from the 1st June 2024, with payment at the new rate from 1st November.

I’m expecting to exit the business before 1st November so don’t expect this to be a problem in reality, but surely they need to issue a new lease and I need to sign it for any renewal to actually take effect?!

Clarification:
Do you mean 1st June 24 i.e. backdated?
Do you mean you personally are leaving the company as an employee? Or is the business leaving the premises? Or is someone buying the business so this will be their problem, or something else?
What does the lease say about changing terms, backdating, renewal etc?
What does the letter say will happen if you don't accept the new terms?

[Output Flange]

Mr Overheads said:

Clarification:
Do you mean 1st June 24 i.e. backdated? Yes
Do you mean you personally are leaving the company as an employee? Or is the business leaving the premises? Or is someone buying the business so this will be their problem, or something else? Someone is buying the business, hopefully on the 31st Oct, and will negotiate a new lease
What does the lease say about changing terms, backdating, renewal etc? Nothing
What does the letter say will happen if you don't accept the new terms? It doesn’t

Clarifications above.

[soxboy]

Output Flange said:

Morning all.

My commercial lease was for a 12 month term that expired at the end of May. It’s a protected lease, and so it has continued since then under the existing terms.

I’ve just had a letter from the landlord stating that it will automatically renew on a 3 year term at a new rate from the 1st June 2024, with payment at the new rate from 1st November.

I’m expecting to exit the business before 1st November so don’t expect this to be a problem in reality, but surely they need to issue a new lease and I need to sign it for any renewal to actually take effect?!

If the current lease is not contracted out of the Landlord and Tenant Act 1954 then the correct procedure is that the landlord needs to serve a notice to bring the lease to end (‘section 25’ notice) and put forward proposals for a new lease for you to agree to. If you agree then the old lease comes to an end when the new one is completed (in a nutshell).

I imagine your landlord has just thought that the above is a faff and he’ll just send out a new lease in the expectation that you will agree to it.

[Steve H]

Output Flange said:

I’m expecting to exit the business before 1st November so don’t expect this to be a problem in reality, but surely they need to issue a new lease and I need to sign it for any renewal to actually take effect?!

Correct.

As soxboy says, there is a formal procedure that isn’t strictly necessary but the alternative is usually a conversation, just telling you what is happening isn’t going to work unless there is something odd in the existing lease.

I would talk to your buyer first and then contact the landlord and tell him the situation with the sale of the business and put the two of them together. It’s a bit surprising that your buyer hasn’t already wanted to talk to the landlord given that you are out of contract.

[Rufus Stone]

Just talk to your landlord and be honest about your future proposals. They will want the property let so should work with you and the new business owner.

[Googie]

You are holding over under a Statutory Tenancy which LL can only bring to an end by serving a S25 Notice. If no new lease is agreed and you continue to hold over, 3 months notice must be given to the LL to determine your Statutory Tenancy unless both parties agree otherwise.

[surveyor]

You should also look at the alienation clause in the lease and make sure you can assign the lease, whether it requires LL consent (hopefully not to be unreasonably withheld), and whether there is a requirement for you to enter into an Authorised Guarantee Agreement.

[Chrisgr31]

surveyor said:

You should also look at the alienation clause in the lease and make sure you can assign the lease, whether it requires LL consent (hopefully not to be unreasonably withheld), and whether there is a requirement for you to enter into an Authorised Guarantee Agreement.

If the business is the tenant and the business is being sold this bit wont be an issue.

[surveyor]

Chrisgr31 said:

surveyor said:

You should also look at the alienation clause in the lease and make sure you can assign the lease, whether it requires LL consent (hopefully not to be unreasonably withheld), and whether there is a requirement for you to enter into an Authorised Guarantee Agreement.

If the business is the tenant and the business is being sold this bit wont be an issue.

True enough.