Commercial Lease Expiry
Lease expiry is a deadline with several separate clocks running at once — renewal rights, dilapidations liability, reinstatement of alterations, and any yielding-up obligations. Handled early, expiry is an opportunity to reset cost. Handled late, it is a bill.
Twelve months out
Establish whether the tenancy is protected, review the alterations licences and any schedule of condition, and take a view on whether you want to stay. Get a budget figure for terminal dilapidations at this point — it is often the deciding factor between renewal and relocation.
Six months out
Notices should be in play by now. If you are leaving, start the reinstatement programme; landlords routinely price works far above what a competent contractor charges, and doing the work yourself in your own time is nearly always cheaper than paying damages.
Holding over
If the tenancy is protected and no notice has been served, it continues automatically under Section 24 on the same terms. That can be useful breathing space, but the landlord can apply for an interim rent, so it is not free.
Common questions
- What happens if I stay after my lease expires?
- With a protected tenancy you hold over under Section 24 on the existing terms until the tenancy is ended under the Act. With a contracted-out lease, staying without agreement risks a tenancy at will or trespass.
- Do I have to reinstate my fit-out?
- Only where the lease or licence for alterations requires it, and only if the landlord serves a valid notice where one is needed. Check the licences before assuming the worst.
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Chris McGarrigle MRICS, chartered since 1989, acting for occupiers across England, Scotland, Northern Ireland and Ireland.
chris@mcgarrigle.comRelated guides
- Commercial Dilapidations Surveyor
Dilapidations claims challenged and settled for tenants: interim and terminal schedules, Section 18 cap, diminution valuation and Protocol compliance.
- Commercial Lease Renewal
How commercial lease renewal works for business tenants: protected and contracted-out tenancies, notices, new rent, new terms and interim rent.
- Section 25 Notice
Received a Section 25 notice? What it means, the difference between friendly and hostile notices, the deadlines that bind you and how to respond.