What is a Section 25 Notice?
The purpose of a Section 25 Notice is to inform a tenant of the landlord’s proposed terms for a new lease or to oppose renewal of the lease by the tenant. This notice is named after the section in the Landlord & Tenant Act 1954 (LTA) that sets out the information (in a notice) which a landlord needs to give the tenant in order to end a business tenancy or propose a new tenancy on different terms.
Using a s.25 notice is important whether the landlord opposes a new tenancy (i.e he wants the tenant to leave), or whether the Landlord is happy to grant a new lease and wishes to suggest terms. There are two types of Section 25 notices. The first type can be used where the Landlord proposes a new tenancy on different terms and the second type initiates termination of the tenancy.
The LTA 1954 gives security of tenure to “business tenants i.e. this means anyone who lawfully occupies premises under a lease for the purposes of their business in England and Wales(excluding Scotland). Security of tenure gives the tenant the right be offered a new tenancy at the end of the tenancy. Under the LTA 1954, if a tenant is protected i.e has security of tenure they have a right to renew their Lease. The landlord or the tenant can suggest a new tenancy. The landlord can do this by serving a Section 25 notice. The tenant can ask for a new tenancy by serving a Section 26 notice.
However, the landlord can challenge this right of renewal if the tenant has seriously breached the terms of their lease, or on certain limited grounds such as the need to re-develop the property or if the landlord needs the property for his own use. For more information in relation to the grounds for possession, click on the following link https://www.legislation.gov.uk/ukpga/1988/50/schedule/2.
Security of tenure - the right to renew a lease
The Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 came into effect on 1 June 204. The Order introduced new procedures for renewing or ending business tenancies under Part 11 of the Landlord and Tenant Act 1954 and simplified procedures for contracting out of the security of tenure provisions of Sections 24 to 28 of the Landlord and Tenant Act 1954.
There are situations where a tenant does not have security of tenure. The most common is where the tenant has agreed before signing the lease to opt out of Sections 24 to 28 of the LTA 1954. If the tenant has opted out, the tenant knows that at the end of his lease he has no right to apply for a lease renewal and the landlord knows that he will get his property back. After opt-out, the lease agreement is on a purely contractual footing, with no statutory protection for the business tenant.
However, there is nothing to stop a tenant who has opted out and whose lease has ended or is about to end, to commence negotiations for the grant of a new lease with his landlord. When this happens the usual procedure if the landlord does not want the property back at that time is for the landlord to insist that the tenant once again opt out of the security of tenure provisions of the LTA 1954 before the grant of the lease.
How to serve the Notice?
The Section 25 notice must be served not more than 12 months and not less than 6 months before the landlord wants the tenancy to end which will be after the expiry date of the existing lease. The Section 25 Notice cannot be served on the tenant if the tenant has pre-empted this by serving a Section 26 Notice first (see Section 26 Notice).
Once a valid Section 25 Notice has been served the landlord cannot subsequently amend or withdraw it.
Where the tenant responds to an opposing notice requiring renewal, or where the tenant has applied to the court for renewal, the landlord will need to apply to the court and convince the court that his grounds for ending the lease can be justified under the 1954 Act.
Where the court orders renewal it will oversee the settlement of terms and the grant of the new lease.
Tenants do not have to respond to landlords notices proposing or opposing their lease renewal but would be well-advised to do so and to seek expert advice and meet any deadlines set-out in the notices, otherwise they could lose their right to renew their lease..
Specialist Commercial Property Lawyers
How Pure Business Law can help?
The lease agreement is a key document in a lease transaction. The lease agreement is generally prepared by the Landlord’s solicitors. Landlords and tenants should ensure that they are fully advised through the process and understand their rights and obligations.
We are specialist Commercial Property Law Solicitors based in Bedford and operate nationally. Our commercial property lawyers are experienced in acting for landlords and tenants in termination of a lease, renewal of a lease or grant of a new lease.
As a landlord or tenant, it is essential that you get legal advice at the outset of the process to enable you have a clear strategy so that you can achieve the best commercial outcome for your business.
Please get in touch with our commercial property solicitors on 01234 938089 or email us at firstname.lastname@example.org and a member of our team will get in touch.