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14/7/25 8:13 pm
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This article is about Section 25 and 26 notices for commercial tenancies under the Landlord & Tenant Act 1954 and it explains why expert lease drafting matters.
Commercial leases are not just pieces of paper; they are long-term commitments that can shape the future of a property investment and a tenant’s business. They are also contractual in basis and they will therefore be enforceable to the letter through strict interpretation in a court of law.
This article applies primarily to England & Wales and is not a full interpretation of the law. Always seek professional advice before making or not making decisions. Use this guide as the starting point for your research, not an endpoint.
When it comes to lease renewals, the Landlord & Tenant Act 1954 (Part II) sets the rules. The legislation gives business tenants the right to renew their leases in most circumstances, creating a framework of “security of tenure” that protects tenants but restricts landlords’ rights.
Two key notices are at the heart of this framework: the Section 25 notice (landlord’s notice) and the Section 26 request to renew (tenant’s notice). Both are heavily regulated to strict timelines, both must be served correctly, and both can determine whether a lease continues, renews, or ends.
For landlords and tenants alike, the importance of a well-drawn lease – drafted at the outset by an expert – cannot be overstated. A lease that anticipates renewal and incorporates clear terms will save the parties thousands in legal fees, it protects asset values, avoiding future disputes. A poorly drawn lease does the opposite.
The central principles of the 1954 Act are contractual during the lease term but security of tenure when the lease term ends. In other words, during the lease term the agreement must be complied with by both parties, but when a business lease expires, the tenant is entitled to remain in occupation and request a new lease on similar terms, unless the landlord can prove one of several statutory grounds for opposition.
For tenants, this protection is important. It allows them to invest in premises, to build up a business’s goodwill, and to know they won’t be arbitrarily evicted at the end of the term. This continuity of occupation will underpin many businesses’ long-term plans.
For commercial landlords on the other hand, it means they cannot assume that vacant possession will automatically be achieved at the lease expiry. If they want the tenant out, they must qualify under legitimate grounds under the Act and follow the strict procedures set out in statute to re-gain possession.
Of course, in most cases commercial landlords don’t want to regain possession and wish a rent paying tenant to stay as long as possible as void periods can be long and expensive for commercial landlords.
It is important to stress that this protection only applies if the lease has not been “contracted out” of the Act. If the parties agree to opt out – using the prescribed procedure – the tenant has no right to renewal. We will come back to this below.
A Section 25 notice is the landlord’s mechanism for controlling the renewal process. It can do one of two things:
The timing is critical. The notice must be served no less than six months and no more than twelve months before the lease expiry date. If the landlord should miss this window, they lose control of the process.
If the landlord wants the tenant out, it must rely on one of the statutory grounds in Schedule 2 of the Act, which include:
These grounds must be genuine and provable. A landlord who serves a Section 25 notice claiming redevelopment, for example, will be expected to demonstrate concrete plans and funding. Courts will be quick to see through speculative claims.
As with all the lease clauses, the technical requirements of the notices are strictly enforced by the courts. A simple error in the form, content, or service of the notice can invalidate it entirely. It would mean leaving the landlord stuck with a tenant it wanted out. Therefore, careful drafting and service are essential.
This notice is the tenant’s counter to the section 25 notice. Where the landlord has not taken the initiative, the tenant may serve a Section 26 request. This is a formal application for a new lease on specified terms, again within the six-to-twelve-month window before lease expiry.
Once a Section 26 request is served, the landlord must respond if it intends to oppose renewal. If it does not, the tenant’s position will be significantly strengthened.
Many tenants use Section 26 tactically. It forces the landlord’s hand; either negotiate new terms or set out grounds for opposition. A tenant might seek to secure a longer term, lower rent, or more favourable repairing obligations by initiating the process.
As with Section 25, accuracy is vital. A mistake in that drafting or service can render the request invalid. Landlords must be alert to Section 26 requests arriving and respond promptly through their solicitors.
Disputes at renewal are really disputes about the lease that was signed in the first place; hence a well-drawn lease minimises this risk and uncertainty.
For example:
Leases that are cobbled together or lifted from off-the-shelf templates often contain gaping holes or ambiguities that become battlegrounds later. Landlords who skimp on professional fees for lease drafting at the outset often regret it bitterly at renewal time. Tenants too can suffer if clauses they agreed to without advice or failure to insist on a survey and schedule of condition at the outset come back to bite them when seeking security of tenure.
Not every lease comes within the protection of the Act. Landlords and tenants can agree to contract out of the lease at the outset – that is, opt out of the security of tenure rights*.
For landlords, this offers flexibility. At lease expiry, they can regain possession without having to prove statutory grounds. This is particularly attractive in investment scenarios where redevelopment or sale is planned.
Tenants might decide to trade off security, to opt out in exchange for other benefits – perhaps a shorter lease term, a rent-free period, or break clause. For some tenants, the flexibility is just as valuable as security of tenure.
But this opt-out process is very strict. The landlord must serve a warning notice before the lease is entered into, and the tenant must sign a declaration (often a statutory declaration) confirming that it understands the rights it is giving up. If these steps are not followed precisely, the lease will still give security of tenure to the tenant regardless of what it says.
Shortcutting this procedure is risky. Many landlords have found themselves unintendedly stuck with a protected tenant because the contracting-out process was breached.
If the landlord and tenant cannot agree to terms at renewal or cannot agree whether renewal should happen at all, either party can apply to the court.
The court will determine whether the landlord’s grounds for opposition are valid. If renewal is ordered, the court will settle the terms, including the new rent.
This process can be slow and expensive and should therefore be avoided if at all possible. It is another reason why landlords and tenants should be thinking ahead, why they should focus on getting the lease right at the outset and handling notices with great care. Litigation is always the last resort for an experienced landlord.
Section 25 and 26 notices may sound like tedious bits of bureaucracy, but in reality, they are anything but. They are vital processes that decide whether businesses can stay or must go, whether landlords can regain possession or must grant a new lease, and on what terms.
For both parties, the starting point should always be the lease itself. A well-drawn lease, drafted with foresight by an expert solicitor, protects landlords’ investments and secures tenants’ businesses. A poorly drafted lease creates uncertainty and invites expensive disputes.
The message is simple, don’t cut corners. If you are a commercial landlord or tenant, make sure you have a good understanding of the 1954 Act. Take good professional advice and handle notices with care. In commercial property, the minor details matter – and nowhere more so than when it comes to leases and Section 25 and 26 notices.
The prescribed form Section 25 & 26 notices are available in Schedule 1 to the Landlord & Tenant Act 1954 (Part 2) here
* The Law Commission is currently undertaking reforms for commercial leases, specifically focusing on updating the Landlord and Tenant Act 1954. The provisional conclusion is to maintain the current "contracting-out" model for renewal rights but with a consideration of increasing the threshold for short-term tenancy exclusions from the Act from six months to two years.
[Main image credit: Tima Miroshnichenko]
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