Ending a business tenancy and refusing a new one – a quick guide to Section 25 Notice

My colleague Chris Drinkall has previously produced a series of articles on Section 25 Notice and the statutory grounds of opposition. This article is a reminder of the key points that parties need to bear in mind when serving a Section 25 Notice.

A tenant has a statutory right to a new lease at the end of the contractual term if Part II of the Landlord and Tenant Act (LTA) 1954 applies to the tenancy and the lease has not been contracted out of the security of tenure provisions of the LTA 1954. The Act ensures that commercial tenants cannot, provided they honour the terms of their lease, be evicted without the landlord first having complied with the strict requirements of the Act.

If the Landlord wishes to end a business tenancy (on or following the expiration of the contractual term), then a Section 25 Notice must be served on the tenant. To be valid, a section 25 notice must comply with the statutory requirements and must be given to the tenant between 6 and 12 months before the date that the landlord wishes to end the lease. Once a valid section 25 notice has been served, it cannot be unilaterally withdrawn or amended.

The Landlord can oppose a tenancy on seven grounds (A-G), which are stated in Section 30(1) of the LTA 1954 and are set out below:

1. Tenant’s failure to repair;
2. Persistent delay in paying rent;
3. Substantial breaches of other obligations;
4. Alternative accommodation;
5. Sub-letting of part where higher rent can be obtained by single letting of whole building
6. The landlord intends to demolish or reconstruct and could not reasonably do so without obtaining possession; or
7. Landlord’s intention to occupy the holding for his own business or as a residence.

Once the landlord has served a section 25 notice the landlord can apply to court for the termination of the tenancy without renewal. It is also important to note that the tenant can apply to the court for a new tenancy and challenge the landlord's grounds for opposition.

The Tenant may wish to issue proceedings very soon after receiving the Section 25 Notice, it is therefore, very important that the landlord seeks legal advice before the Notice is issued. This is because the landlord will be required to prove their grounds of opposition at the date of the hearing.

If you have any queries arising from this article or wish to discuss a related matter, contact Chris Drinkall, Rollits’ Head of Property Dispute Resolution on 01482 337367