Section 25 – Landlord’s Notice To End A Business Tenancy
Have you received a Section 25 Notice, or are you a landlord thinking of issuing one to your tenant? It’s important to understand the legal implications of this legislation: when a Section 25 can be issued, what are your rights, and what you need to do next. Read our quick guide to get the lowdown on this method of ending or altering the terms of a commercial lease.
What is a Section 25 notice?
A Section 25 notice can be issued by a landlord to end a business lease or to change the terms of an existing lease agreement, if certain circumstances provoke such measures.
Landlords can issue a Section 25 notice if:
- A breach of the terms of the contract, such as the tenant’s failure to pay rent, has taken place
- They wish to acquire the property for their own use.
It is important that the recipient of the notice fully understands the consequences and acts appropriately.
As a landlord, what do I need to know about Section 25 notices?
Commercial (Business) Tenancies in England and Wales are regulated by the Landlord & Tenant Act 1954 (Part 2). This means that at the end of a lease, the business tenant has statutory protection under the terms of the Act. The tenant has an automatic right to renew the commercial lease on similar terms to the previous lease period. Landlords are not always aware that once their commercial property is engaged in a lease, the tenant could remain indefinitely. This is why it’s vital that all lease agreements are water-tight in order to ensure long-term protection.
As a landlord, you have the right to refuse a lease renewal under Section 25 of the Act, if the tenant has seriously breached the terms or if you need the property for your own use.
Alternatively, to avoid this process altogether, you can choose to “opt out” of the Act. This would need to be agreed by the tenant before the original lease agreement is signed and means the agreement is purely contractual, with no statutory protection for the business tenant.
As a tenant, how should I deal with a Section 25 notice?
First and foremost, we recommend that you seek legal advice to determine whether the notice has been issued by the competent landlord. The competent landlord is the only person who has the authority to serve a tenant with a section 25 notice. Next, you must consider the following:
When does the notice expire? Make sure you act promptly to avoid any potential complications.
- Double check that the notice relates to your property.
- Make an application to your local county court, before the expiry of the specified date within your section 25 notice. Failure to do so will result in loss of protection under the Act, meaning the landlord will have full entitlement to possession of the property on the date stated within the notice.
- Please be mindful that once the landlord has served a Section 25 Notice, he may attempt to apply for an ‘interim rent’. This will apply until the case has been finalised by the court. Landlords sometimes take this route if the current market rent is higher than the actual rent enforced by the current tenancy agreement. This process is extremely complex therefore we strongly advise that you seek legal advice should this scenario occur.
Further information and advice
David Charles Property Consultants are experienced legal professionals who can advise landlords on issuing a Section 25 notice. Read more about our Landlord services and contact us to discuss your situation. We’ll be happy to help!
To understand more about Section 25 notices, read the legal terms of Section 25 of the Landlord and Tenant Act 1954 (Part 2).