S25 Notice: Commercial Lease Renewals in the UK

If you lease commercial premises in England and Wales, the phrase “s25 notice” will come up as your lease approaches expiry. It’s part of the Landlord and Tenant Act 1954 (LTA 1954) – the main law that gives most business tenants the right to renew their lease when the term ends.

Understanding how a Section 25 Notice works (and the deadlines around it) can make the difference between smoothly renewing on fair terms, exiting on time, or accidentally losing your security of tenure. Don’t stress – once you know the moving parts, you can plan ahead and negotiate from a position of confidence.

Below, we break down what an s.25 notice is, key timelines, your options as landlord or tenant, typical negotiation points, and the risks to avoid. We also point out practical steps you can take now to protect your position.

What Is A Section 25 Notice (S25) Under The Landlord And Tenant Act 1954?

A Section 25 Notice (often called an s25 notice) is a formal written notice a landlord serves on a business tenant covered by Part II of the LTA 1954. It does two big things:

• It brings the current lease to an end on a specified “termination date”; and
• It says whether the landlord will oppose or not oppose the grant of a new lease.

In short, this is the landlord’s way of either offering renewal terms or saying “no” (with legally valid reasons). The notice must be served between 6 and 12 months before the chosen termination date, and not before the contractual end date of the lease.

There are two flavours of s25 notice:

• “Friendly” s25 notice (not opposed): the landlord is not opposing renewal and typically proposes terms for a new lease (rent, length, repairing obligations, etc.).
• “Hostile” s25 notice (opposed): the landlord is opposing renewal and must state the statutory grounds (under section 30(1) LTA 1954) for refusing a new lease.

Most business tenancies have “security of tenure” unless the parties agreed to “contract out” of the 1954 Act before the lease began. If your lease was properly contracted out, you won’t get renewal rights and the s25/s26 process won’t apply. If you’re unsure whether you have security of tenure, check your lease and the pre-lease contracting-out declarations, and get tailored advice quickly.

S25 Notice Vs S26 Request: Who Goes First And Why It Matters

The s25 notice is landlord-led. The tenant equivalent is a Section 26 Request. The sequence matters because the first valid notice “wins the race” and sets the timeline:

• If the landlord serves an s25 notice first, that notice controls the timetable for renewal or termination.
• If the tenant serves a Section 26 Request first, the tenant’s request controls the timetable and the landlord cannot then serve an s25 notice.

Both documents must give between 6 and 12 months’ lead time. If you’re a tenant who wants to retain control of timing and kickstart renewal on your terms, serving a Section 26 Request early can be a smart move. If you’re a landlord, an early s25 notice can ensure you set the agenda, especially if you plan to oppose renewal.

Key Timelines, Deadlines And Process Under Section 25

When Can A Landlord Serve An S25 Notice?

• Service window: at least 6 months and no more than 12 months before the stated termination date.
• The termination date cannot be earlier than the contractual end date in the lease.
• Use the prescribed form: the Landlord and Tenant Act 1954 (Notices) Regulations set out forms for opposed and unopposed notices. Getting the form and content wrong can invalidate the notice.

What Happens After An S25 Notice?

• Holding over: if your business has security of tenure, the tenancy continues (“holds over”) after the lease expiry until ended or a new lease is granted, provided the statutory process is followed.
• Negotiation window: parties usually negotiate lease terms (or discuss exit plans) in the 6–12 month period before the s25 termination date.
• Court protection: if terms aren’t agreed, the tenant must issue a court claim for a new lease before the s25 termination date to preserve renewal rights. Miss that deadline and you can lose security of tenure.
• Extending time by agreement: landlord and tenant can agree in writing to extend the deadline for issuing court proceedings (often done via a simple time extension agreement). Don’t rely on informal emails – get a clear written agreement.

Interim Rent And Occupation Pending Renewal

Either party can ask the court to set an “interim rent” for the holding-over period (generally linked to the market rent). This can reduce uncertainty where the market has shifted significantly since the original rent was set.

Opposing Renewals – The Statutory Grounds

If the landlord serves a hostile s25 notice, it must rely on one or more grounds under section 30(1). Common grounds include:

• Tenant’s breach (persistent delay in paying rent, substantial breaches of obligations).
• Alternative accommodation (in some cases).
• Landlord’s intention to redevelop.
• Landlord’s intention to occupy and trade from the premises.

Some grounds (like redevelopment or landlord occupation) can trigger statutory compensation for the tenant if renewal is refused. The amount is typically based on rateable value and whether the tenant has been in occupation for 14 years or more (often “double” compensation in long occupation cases). Evidence of genuine intention is crucial – bare assertions won’t suffice.

Commercial Strategy: Landlord And Tenant Playbooks Around S25

For Tenants (Small Businesses In Occupation)

• Diary the dates: mark the contractual expiry date at least 12 months ahead. Decide if you’ll serve a Section 26 Request or wait for an s25 notice.
• Get market data early: understand market rent and incentives in your area. This anchors your negotiation strategy and any interim rent arguments.
• Resolve breaches: clear arrears and remedy breaches to avoid giving the landlord easy ammunition for opposition.
• Plan alternatives: assess other premises, consider assigning a lease if your business plan is changing, or negotiating a shorter renewal if you need flexibility.
• Protect continuity: if negotiations drag, consider agreeing to extend the court deadline in writing, or issue the claim in time to preserve your rights.

For Landlords (Property Owners And SME Investors)

• Identify your goal: renewal on updated terms, vacant possession for redevelopment, or taking the space back for your own use.
• Choose the right notice: serve “friendly” or “hostile” s25 as early as is sensible, with the correct form and grounds if opposing.
• Evidence and timing: if relying on redevelopment or own occupation, line up planning, funding, and credible evidence of intention.
• Keep leverage: ensure rent and repairing covenants are monitored – serious tenant breaches can strengthen your position.
• Manage cashflow: consider interim rent if there’s a significant gap between passing rent and market rent.

Typical Negotiation Points In A Section 25 Renewal

Whether you’re discussing terms after a friendly s25 notice or following a tenant’s Section 26 Request, the commercial battleground is largely the same:

• Term and break options: balancing certainty with flexibility. Rolling arrangements can create uncertainty – if that’s on the table, make sure you understand rolling contract notice periods and how they’ll work in practice.
• Rent and review mechanism: open market rent, index-linked or stepped rent. Think ahead about how rent increases can be handled fairly over the term.
• Repairing and dilapidations: defining repair obligations and whether a schedule of condition is appropriate to cap exposure.
• User clause and alterations: clarity on permitted use and fit-out/consents.
• Alienation: assignment, subletting and sharing space with group companies or licensees.
• Security of tenure: whether the new lease is protected by the 1954 Act or contracted out (if the business strategy has changed).
• Incentives: rent-free periods, contributions to fit-out, stepped rents.

If you operate in a sector with specific fit-out and compliance needs (for example, hospitality), it’s worth pressure-testing repairs, services and hours of access against your day-to-day operations – a helpful reference point is our guide to a cafe or restaurant lease, which flags common pitfalls for food businesses.

Risks And Pitfalls To Avoid With Section 25 Notices

1) Missing The Court Deadline

The most serious risk for tenants is missing the deadline to issue court proceedings for a new lease. If you haven’t agreed terms and you don’t issue your claim before the s25 termination date (or any agreed extension), your renewal rights can fall away. If in doubt, preserve your position and keep negotiating while the claim is on foot.

2) Relying On Informal Emails

Both parties should be careful about relying on email chains to extend deadlines or settle key terms. Put extensions and heads of terms in clear, signed documents. When agreements are close, keep the legal position protected and consider a sensible strategy for deals approaching expiry so you don’t find yourself out of time.

3) Getting The Notice Wrong

There are prescribed forms and content requirements. Serving on the wrong entity, using the wrong form, or failing to state grounds correctly (for a hostile notice) can invalidate an s25 notice. Double-check names, addresses for service, company numbers and the tenancy details before sending anything out.

4) Letting A “Handshake” Hold-Over Drift

Holding over can protect continuity, but indefinite limbo is risky. If you drift without a new lease, you’ll still be bound by core terms, but ambiguity can creep into break rights, rent review and notice mechanics. If you find yourself in a long holding-over period, read up on tenant rights without a formal lease and actively move towards documented terms.

5) Not Planning For Exit Scenarios

If you might relocate or downsize, build flexibility into renewal terms (break clauses, alienation rights), or actively plan a clean exit. If a dispute flares – for instance, about disrepair or rent arrears – a clear, professional letter before action can reset the conversation and protect your position.

FAQs: Practical Questions We Hear From Small Businesses

Is There A Standard Form For S25 Notices?

Yes – prescribed forms exist for opposed and unopposed notices. Using the right form, stating the correct details, and serving it properly (on each tenant and any guarantor where appropriate) is crucial. Small wording errors can cause big headaches.

Can We Just Extend Our Current Lease Instead?

Sometimes parties agree a short extension or holding arrangement while negotiating. That can work, but be clear on notice periods and break mechanics so you’re not trapped or exposed. If discussions are pushing past expiry, be careful not to slide into an uncertain monthly rolling arrangement without understanding the consequences for both sides.

What If The Landlord Wants Us Out For Redevelopment?

They can oppose renewal on redevelopment grounds, but they’ll need to show a genuine, settled intention and a reasonable prospect of being able to carry it out. If renewal is refused on certain grounds, you may be entitled to statutory compensation based on the property’s rateable value and your length of occupation.

What Happens If We Agree Heads Of Terms But Run Out Of Time?

Issue a protective court claim (or agree a written extension to the court deadline) to keep your rights alive while the lawyers finalise the new lease. Don’t rely on an informal “we’ll sort it” email.

Can We Negotiate Different Renewal Terms Than Our Current Lease?

Yes – the court will set terms for a renewed lease broadly reflecting a modern market lease for the premises and the business needs, but you’re free to agree commercial variations. Common changes include updated rent, length, break options, repairs and alienation.

Step-By-Step: What To Do Next If A Section 25 Notice Is On The Horizon

1) Check Security Of Tenure

Confirm whether your current lease is protected by the LTA 1954 or was contracted out. If contracted out, plan a negotiated exit or a brand-new lease on agreed terms, as the s25 framework won’t apply.

2) Calendar The Dates

Get the 6–12 month service window in your diary and, for tenants, set your own internal deadline for a possible Section 26 Request. Build in time to gather market data and agree heads of terms.

3) Prepare Your Evidence And Wish-List

For tenants: plan your ideal term, rent and incentives, and put your house in order (resolve any breaches). For landlords: collect evidence if opposing renewal and prepare a realistic offer if not opposing.

4) Negotiate Realistically

Use comparable evidence on rent and typical terms for your sector. Be clear on red lines and flex points. If assignment or subletting matters to your growth plan, make sure assignment rights and conditions are workable.

5) Protect Your Position Legally

Get the right notice served correctly. If needed, agree written time extensions to the court deadline. If negotiations stall, file in time to preserve your renewal rights. Don’t let the clock run down.

6) Document The Deal Properly

Once agreed, make sure the new lease captures all key points clearly (including any rent-free, works, schedules of condition and incentive mechanics). If you’re approaching expiry on other contracts tied to the premises (e.g. service providers), have a plan for documenting end-of-contract steps to avoid knock-on issues at move-in or move-out.

Key Takeaways

• A Section 25 Notice is the landlord’s formal step under the LTA 1954 to end the current lease and either propose renewal terms or oppose renewal on statutory grounds.
• Timing is critical: s25 and s26 must give 6–12 months’ notice. Tenants must issue a court claim before the s25 termination date (or any agreed extension) if terms aren’t agreed, or risk losing renewal rights.
• Hostile s25 notices must state valid grounds (such as redevelopment or landlord occupation). Some refusals can trigger statutory compensation for the tenant.
• Negotiations typically focus on term, rent and reviews, repairs, user, alterations and alienation. Build in flexibility if you may expand, relocate or assign in future.
• Avoid pitfalls: don’t rely on informal emails, don’t miss court deadlines, and don’t let holding-over drift indefinitely without a clear plan and documentation.
• If you’re unsure how rolling arrangements, rent increases or assignment rights will work in practice, read up on rolling tenancy notice periods, rent increases in commercial leases and assigning a lease – then get tailored advice for your situation.

If you’d like help reviewing or serving a Section 25 Notice, negotiating renewal terms or planning your exit strategy, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.