5 August 2025
Lease renewals and Section 25/26 notices: what business tenants and landlords need to know
By Armanda Galvosaite, Trainee Solicitor, Hayes + Storr.
When it comes to navigating the complex world of business tenancies, Section 25 (s25) and Section 26 (s26) notices under the Landlord and Tenant Act 1954 are the unsung heroes – or potential pitfalls – of the process. Far from being mere legal formalities, these statutory notices play a critical role in determining whether a tenancy concludes or renews, making them essential tools for both landlords and tenants.
Qualifying commercial leases have protections afforded to them under the Landlord and Tenant Act 1954 (LTA 1954) regarding security of tenure, unless they have been validly excluded.
To be validly excluded, a warning notice in the prescribed form must be served on the tenant prior to their occupation, and they must swear a simple or statutory declaration acknowledging its effect.
Where a tenancy benefits from security of tenure, the tenant holds an automatic right to remain in the property after the lease expires, continuing under the same terms as the existing lease, save for the rent. If required, an interim rent may be determined while negotiations for a new lease take place.
If a landlord wishes to oppose a renewal, they are only able to do so on limited grounds, as set out in the legislation.
Where a landlord serves a Section 25 notice opposing renewal, it must satisfy one or more of the statutory grounds contained in Section 30(1) of the LTA 1954, which are as follows:
- Ground (a): The tenant has failed to comply with the repair and maintenance obligations, resulting in the premises being in disrepair.
- Ground (b): The tenant has persistently delayed paying rent.
- Ground (c): The tenant has committed other substantial breaches of their obligations under the lease or has mismanaged the property.
- Ground (d): The landlord has offered suitable alternative accommodation that meets the tenant’s requirements, including preserving goodwill.
- Ground (e): The landlord requires possession to re-let or dispose of the property as a whole, where the current tenancy was created by sub-letting part of the property.
- Ground (f): The landlord intends to demolish, reconstruct, or carry out substantial works on the premises, which cannot reasonably be done without obtaining possession.
- Ground (g): The landlord intends to occupy the premises for their own business purposes or as a residence.
What is a Section 25 notice?
A Section 25 notice allows the landlord of a commercial property to renew or end the existing tenancy, provided certain conditions are correctly met.
When must it be served?
A s25 notice must be served on the tenant no earlier than 12 months and no later than 6 months before the contractual termination of the current lease. The time limits are absolute, so it is important to ensure the notice is served correctly. The notice must terminate the entire tenancy, and any errors in its content or service may render it invalid.
Landlords wanting to renew
If you are looking to retain your current tenant, you may serve a s25 notice proposing the terms of a new lease in the hope this will begin negotiations with the tenant and lead to a new commercial tenancy.
Ending the tenancy
As a landlord, if you are seeking to end the tenancy, the s25 notice should set out the statutory ground(s) on which you intend to rely when terminating the lease.
Landlords should be aware that a s25 notice cannot be served if the tenant has already served the landlord with an s26 notice – and vice versa.
Where the tenant fails to respond, the tenancy will continue on the proposed new terms.
What is a Section 26 notice?
A Section 26 notice is served by the tenant on their competent landlord to initiate the renewal process for a protected tenancy.
Who must the notice be served on?
The competent landlord – the party entitled to serve notice on tenants – is the person with the legal estate. This is the first landlord above the tenant’s immediate landlord, if dealing with underleases.
When must it be served?
When serving the s26 notice, the tenant must specify the proposed start date for the new tenancy. This must be no earlier than the date the current tenancy would naturally end and no later than 12 months – and no less than 6 months – from the date of the notice. The notice must also detail the tenant’s proposals for any new terms, such as rent, the length of the new term, and any other requested variations.
When is it accepted?
Once served, the competent landlord has two months from the date of service to respond. The landlord can either agree to the renewal on the proposed terms, serve a counter-notice with their own terms, or refuse a renewal on one or more statutory grounds.
If the landlord and tenant aren’t in agreement?
If the landlord and tenant disagree regarding the new tenancy, the court has the authority to determine first whether the tenancy should be renewed and, if so, the terms of the new lease.
The parties should negotiate in good faith, using surveys and market rent valuations to bridge any gaps.
If terms cannot ultimately be agreed upon, either party may apply to the court, which will determine the terms of the new tenancy – including rent and duration – under the Landlord and Tenant Act 1954.
It is essential that proceedings are initiated before the expiration of either the Section 25 or Section 26 notice.
If no application has been made to the court before the notice expires, the tenant will lose the right to a new lease and will no longer be entitled to remain in the property.
Both parties can apply for an extension of time by agreement in writing, provided this is done before the deadline expires. The extension must specify a new date on which the notice will expire.
Our professional services
We understand how important it is to handle every step of this process with care to avoid potential issues. We can assist you with reviewing your lease, discussing proposals for a lease renewal, and preparing and serving the notices on your behalf. We can also represent you throughout the negotiation process and, if required, during court proceedings.
If you need assistance or have any questions, please do not hesitate to get in touch with us on 01328 863231 or email armanda.galvosaite@hayes-storr.com. Our team is ready to provide tailored advice and support to ensure everything proceeds smoothly and effectively.
This article is for general information only and does not constitute legal advice. The law may have changed since publication.
