Security of tenure is the statutory right that lets most commercial tenants in England and Wales stay in their premises after the contractual lease ends and ask for a new lease on fresh terms. It comes from Part II of the Landlord and Tenant Act 1954, and it applies automatically to qualifying business tenancies unless the landlord and tenant formally agreed to exclude it before the lease began. In practice it means a business that has built a customer base and invested in a location cannot be turned out the moment the term runs out: the landlord has to follow a prescribed procedure, and can only refuse renewal on one of seven specific grounds.
What the Protection Actually Gives You
A protected lease does not end when the contractual term runs out. Section 24 of the Act says the tenancy continues on the same terms until it is terminated through one of the statutory routes: the landlord serves a Section 25 notice, the tenant serves a Section 26 request, or the tenant surrenders or gives notice to quit.1Legislation.gov.uk. Landlord and Tenant Act 1954 – Section 24 This “continuation tenancy” runs on the same rent and the same conditions as the expired lease. You are not a trespasser. You are not a holdover. You are not there on goodwill. You are there by statutory right.
This catches landlords off guard. If a five-year lease expires and neither party does anything, the tenant stays put on the old terms indefinitely. The landlord cannot change the locks or demand the tenant leave. Ending the arrangement requires the formal notice procedure.
Whether Your Tenancy Qualifies
Three conditions all have to be met.
First, you need a tenancy rather than a licence. A tenancy grants exclusive possession of the premises; a licence only gives permission to use space, and licences carry no renewal rights. Courts look at the substance of the arrangement, not the label the parties put on it, so an agreement called a “licence” can still be a tenancy if the occupier actually has exclusive possession.
Second, you have to occupy the premises for business purposes. “Business” is defined broadly to include any trade, profession, or employment, and any activity carried on by a body of persons.2Legislation.gov.uk. Landlord and Tenant Act 1954 – Section 23 Charities, clubs, and non-profits qualify, not just profit-driven enterprises. Occupation through an employee or agent counts, and mixed-use premises qualify as long as business use is significant.
Third, the occupation has to be genuine and ongoing. A tenant who sublets the whole building and never sets foot inside is not occupying for the purposes of the Act. Token presence is not enough.3Legislation.gov.uk. Landlord and Tenant Act 1954 – Part II
Tenancies the Act Excludes
Even where the three conditions are satisfied, some categories are carved out entirely:
- Tenancies granted for six months or less, unless the lease allows renewal or extension beyond six months, or the tenant (counting any business predecessor) has been in occupation for more than twelve months through successive short grants. That twelve-month backstop stops landlords stringing together rolling short leases to avoid the Act.4Legislation.gov.uk. Landlord and Tenant Act 1954 – Section 43
- Agricultural holdings and farm business tenancies, which have their own legislation.
- Mining leases.
- Service tenancies granted because the tenant held an office or employment with the landlord, provided the lease states this purpose in writing.4Legislation.gov.uk. Landlord and Tenant Act 1954 – Section 43
- Tenancies whose primary purpose is granting rights under the electronic communications code.
Tenancies at will also fall outside the Act. These are open-ended arrangements either party can end at any moment, and they sometimes arise informally when a tenant stays on while a new lease is negotiated. A tenant in that position has no statutory renewal right.
Leases Where Protection Was Removed in Advance
Landlords and tenants can agree before the lease starts that security of tenure will not apply. This is “contracting out,” and it is common in shorter commercial leases where the landlord wants certainty of getting the property back. The procedure was set by the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 and has to be followed to the letter.
The landlord serves a prescribed warning notice on the tenant explaining that there will be no right to renew. That notice has to be served at least fourteen days before the tenant becomes contractually bound to take the lease. The tenant then signs a simple declaration confirming they received the warning and accept the consequences. If the parties want to move faster than fourteen days, the tenant has to make a statutory declaration before an independent solicitor instead. The lease itself must reference both the notice and the declaration.5Legislation.gov.uk. The Regulatory Reform (Business Tenancies) (England and Wales) Order 2003
Getting any step wrong invalidates the whole process, and the tenant ends up with full security of tenure whether the landlord intended it or not. If you are a tenant who thinks you contracted out, it is worth checking that the paperwork was done properly, because a defective contracting-out leaves you with the full statutory protection.
How the Lease Gets Renewed or Ended
Either party can start the formal process, but only one notice can be in play at a time. Once the landlord has served a Section 25 notice, the tenant cannot serve a Section 26 request, and vice versa.6Legislation.gov.uk. Landlord and Tenant Act 1954 – Section 26
Landlord’s Section 25 Notice
The landlord serves a notice in prescribed form stating the date the tenancy will end. The notice has to be given between six and twelve months before that date. It must state whether the landlord opposes a new tenancy. If the landlord opposes, it has to specify which of the statutory grounds are being relied on. If the landlord does not oppose, it has to set out proposals for the new lease: the property included, the rent, and the other terms.7Legislation.gov.uk. Landlord and Tenant Act 1954 – Section 25 A notice that omits the required content is void.
Tenant’s Section 26 Request
The tenant can take the initiative with a Section 26 request for a new tenancy. This option is only available where the current tenancy was granted for a fixed term exceeding one year, or a fixed term followed by a yearly periodic tenancy. The request specifies the date the new tenancy would start, which has to fall between six and twelve months after the request and no earlier than the contractual expiry.6Legislation.gov.uk. Landlord and Tenant Act 1954 – Section 26 The request has to include proposals for the new lease. The landlord then has two months to serve a counter-notice if they intend to oppose, stating their grounds.
The Court Deadline That Can End Your Rights
If the parties cannot agree terms, either side has to apply to the court before the statutory deadline. That deadline is the termination date in a Section 25 notice, or the day before the start date proposed in a Section 26 request. A tenant who misses this deadline without a written extension loses the right to renewal entirely and becomes a trespasser. The parties can extend the deadline by written agreement, and often do so repeatedly while negotiations continue, but each extension has to be agreed before the current deadline passes.
What Rent You Pay During the Continuation
While the tenancy continues under Section 24, the old contractual rent keeps running. Either party can apply to the court for an interim rent that better reflects current market conditions. The court sets a reasonable amount, taking into account the rent under the existing tenancy and open-market rental values.8Legislation.gov.uk. Landlord and Tenant Act 1954 – Section 24D In most cases the interim rent will be close to what the court would set for a new tenancy, which can be considerably higher or lower than the passing rent depending on how the market has moved.
What a Court-Set Renewal Lease Looks Like
If renewal goes ahead but the parties cannot agree the terms, the court steps in. The two key terms are the rent and the duration.
Rent is set at open-market value, as if the property were being let by a willing landlord on the proposed terms. The court disregards the sitting tenant’s occupation history, any goodwill attached to the business at that location, and the value of improvements the tenant made during the current lease.9Legislation.gov.uk. Landlord and Tenant Act 1954 – Section 34 Those disregards stop a tenant being penalised for their own success or investment. A tenant who spent heavily fitting out the premises will not see that reflected in a higher renewal rent.
The other terms are determined by the court having regard to the existing lease and all relevant circumstances. The new lease commonly mirrors the existing terms unless there is good reason to change them.
When the Landlord Can Refuse
A landlord who wants to refuse a new tenancy has to rely on one or more of seven specific grounds set out in Section 30(1). No other reasons will do, however commercially reasonable they might seem. The grounds split into fault-based and no-fault categories.
Fault-Based Grounds
- Disrepair (ground a): The tenant has failed to meet repair and maintenance obligations under the lease, and the state of the premises makes renewal inappropriate.10Legislation.gov.uk. Landlord and Tenant Act 1954 – Section 30
- Persistent rent arrears (ground b): A pattern of paying rent late. Occasional lateness is not enough; “persistent” does real work here.
- Other substantial breaches (ground c): Serious breach of other lease obligations, or some other reason connected with the tenant’s use or management of the premises that makes renewal inappropriate.
These three grounds are discretionary. Even if the landlord proves the facts, the court can still grant a new tenancy, weighing the breach against the tenant’s wider conduct.
No-Fault Grounds
- Alternative accommodation (ground d): The landlord has offered suitable alternative premises on reasonable terms, taking account of the tenant’s business needs and goodwill.
- Uneconomic sub-letting (ground e): Where the current tenancy is a sub-lease of part of a larger property and letting the parts separately produces substantially less rent than letting the whole.
- Demolition or reconstruction (ground f): The landlord genuinely intends to demolish, reconstruct, or carry out substantial construction work and cannot reasonably do so without vacant possession.
- Own occupation (ground g): The landlord intends to occupy the premises for their own business or as a residence. A landlord who purchased the property within the last five years cannot use this ground.10Legislation.gov.uk. Landlord and Tenant Act 1954 – Section 30
Grounds (f) and (g) are the ones landlords rely on most often, and they are mandatory: if the landlord proves the required intention, the court must refuse renewal. “Intention” is taken seriously. A vague aspiration is not enough. Courts expect concrete evidence such as planning permissions, contractor quotes, or board resolutions showing a settled plan.
Compensation If You’re Forced Out
Where the court refuses a new tenancy solely on grounds (e), (f), or (g), the tenant is entitled to statutory compensation for being displaced through no fault of their own. The amount is a multiplier set by the Secretary of State applied to the rateable value of the premises.11Legislation.gov.uk. Landlord and Tenant Act 1954 – Section 37
If the tenant (or a business predecessor) has occupied the premises for the whole fourteen years immediately before the tenancy ends, the compensation doubles: it becomes the multiplier times twice the rateable value. Long-standing tenants get the enhanced rate because their disruption is greater, with deeper roots in the location and more goodwill to lose.
The compensation entitlement cannot be contracted out of entirely. The parties can agree to exclude it by a joint declaration in the lease, but only where the tenant has occupied for fewer than five years at the point of leaving. For any tenancy of meaningful length, compensation is an unavoidable cost for a landlord pursuing possession on no-fault grounds.