For businesses, securing premises is not just about finding the right location – it is also about ensuring stability. Commercial tenants need confidence that they can continue operating from the same premises when their lease ends. This is where security of tenure comes in. Provided by the Landlord and Tenant Act 1954, it gives qualifying tenants the right to remain in occupation after their lease has expired, offering valuable protection and continuity.
What is security of tenure?
Security of tenure refers to the statutory rights granted to business tenants under Part II of the Landlord and Tenant Act 1954. These rights mean that when a protected lease comes to an end, the tenant can remain in the property and request a new lease, rather than being forced out. The landlord can only refuse renewal on limited statutory grounds, such as redevelopment or tenant breach.
This protection applies automatically unless the lease has been “contracted out” of the Act through a formal legal process. Contracting out requires both landlord and tenant to agree before the lease is signed, with strict notice and declaration requirements.
Related: How Long Before a Tenant Becomes a Sitting Tenant?
When and how does it apply?
Security of tenure only applies in certain circumstances. The tenant must occupy the premises for business purposes, and the arrangement must be a lease rather than a licence. Provided these conditions are met and the lease has not been contracted out, the tenant can rely on the Act.
When the lease expires, the tenant may continue occupying the property under the same terms, a position known as “holding over.” The tenant can then negotiate renewal with the landlord, or if necessary, apply to the court to grant a new lease.
Related: Commercial Release Expired But Still Paying Rent?
Grounds for landlords to oppose renewal
Although security of tenure offers strong protection, landlords are not obliged to grant a new lease in every case. The Landlord and Tenant Act 1954 allows them to oppose renewal on specific statutory grounds. These include:
- Persistent delays in rent payment or significant breaches of lease terms.
- Availability of suitable alternative accommodation for the tenant.
- Plans to redevelop or demolish the premises.
- An intention to occupy the property themselves for business purposes.
These grounds are strictly interpreted by the courts. In some cases, such as landlord redevelopment or occupation, tenants may be entitled to statutory compensation if they lose their lease.
Contracting out of security of tenure
Landlords and tenants can agree to exclude security of tenure rights, but only by following a strict legal procedure. The landlord must serve a formal warning notice on the tenant, who must then sign a declaration acknowledging they understand the rights being waived. This process must take place before the lease is completed.
If the procedure is not followed correctly, the exclusion is invalid and the tenant automatically benefits from statutory protection. Both landlords and tenants therefore need to ensure the process is properly carried out.
Get expert advice on security of tenure matters
Security of tenure provides commercial tenants with continuity and reassurance, while landlords face restrictions on their flexibility. Whether you are a tenant considering your rights at the end of a lease, or a landlord seeking to contract out of these provisions, it is crucial to understand the rules.
At Osbourne Pinner Solicitors, our commercial property team advises both landlords and tenants on lease negotiations, renewals and disputes under the Landlord and Tenant Act 1954. With the right legal support, you can protect your business interests and avoid costly mistakes.
To get the ball rolling, we offer a free 30-minute consultation at our offices or remotely. You can meet us in Harrow, Canary Wharf, Piccadilly Circus or Manchester – or chat with our team on a video call. To arrange your consultation, simply call 0203 983 5080, email [email protected] or complete our simple form.
