Understanding Section 25 Notices Under the Landlord and Tenant Act 1954 for Commercial Leases

If you’re renewing or ending a commercial property lease in England or Wales, there’s a good chance you’ll hear about a “Section 25 notice.” Whether you’re a landlord wanting to end a business tenancy or a tenant seeking to renew your lease, understanding the rules around Section 25 of the Landlord and Tenant Act 1954 is crucial.

But what does a Section 25 notice actually mean for your business? When is it required? And how can you protect your commercial interests as the lease expiry approaches?

In this comprehensive guide, we’ll break down in plain English exactly what a section 25 notice is, how it affects commercial leases, and what both landlords and tenants need to know to stay on the right side of the law. If you want to avoid nasty surprises and make sure your business stays protected from day one, keep reading.

What Is a Section 25 Notice and When Is It Needed?

First up, let’s tackle the basics: what is a Section 25 notice?

A Section 25 notice (sometimes called an s25 notice or s.25 notice) is a formal, written notice that a landlord must serve on a tenant if they want to end a business tenancy covered by the Landlord and Tenant Act 1954. This notice can either:

• Offer the tenant a new lease (possibly with new terms); or
• State that the landlord does not intend to grant a new lease (and, if so, explain the legal grounds for refusal)

Under the Landlord and Tenant Act 1954, qualifying business tenants have a legal right to renew their lease once the fixed term ends - unless a landlord can successfully oppose renewal using one of the limited statutory grounds.

So, if you’re a landlord wishing to regain possession of your property, or simply update the terms of a new lease, you will almost always need to serve a valid Section 25 notice at the end of the lease.

Which Leases Does a Section 25 Notice Apply To?

Section 25 notices apply to “protected” business tenancies - these are commercial premises in England and Wales that fall within the scope of the Landlord and Tenant Act 1954.

A business lease is covered if all the following apply:

• The tenant occupies the property for business purposes only
• The lease is not “contracted out” of the Act (i.e., it does not expressly exclude the 1954 Act renewal rights)
• The lease is not otherwise excluded (e.g., it’s not less than six months with no option to extend)

If your lease qualifies, the law protects a tenant’s right to renew unless a landlord can prove one of the permitted grounds to refuse renewal (such as redevelopment, landlord’s own occupation, or breach by the tenant).

Many commercial leases for shops, offices, restaurants, or other business premises will be covered by the Act - unless you have specifically agreed in your contract to “contract out” of these rules.

If you’re unsure whether your commercial lease is “protected” (and therefore needs a Section 25 notice), it’s wise to review your agreement or check with a legal expert before taking action.

What Should a Section 25 Notice Include?

A Section 25 notice is a statutory form - it must include certain information and must be served correctly for it to be legally valid.

The notice must:

• Be in writing
• Clearly state it is served under Section 25 of the Landlord and Tenant Act 1954
• Identify the property and parties (landlord and tenant)
• Specify the date on which the landlord proposes the tenancy should end (this must be at least 6 months and not more than 12 months after the date of service)
• State if a new lease is offered - and if so, on what principal terms (for example, new rent, term, break clauses, etc.)
• If the landlord opposes renewal, state the statutory ground(s) for opposition (for example, if the landlord intends to redevelop the premises)
• Be served by the landlord or their authorised agent

Inaccurate or improperly served notices can be challenged and may be considered invalid, so getting the wording and timing right is essential.

We always recommend that landlords get tailored legal advice before preparing a Section 25 notice. If you do it wrong, you could face costly delays or lose your right to oppose renewal.

When Should a Section 25 Notice Be Served?

Timing is critical in the process.

• A landlord must serve a Section 25 notice no less than six months and no more than 12 months before the date when they want the tenancy to end.
• The notice cannot specify an end date earlier than the expiry date of the current lease.

That means, if your lease is coming up for expiry, it’s smart to plan ahead and serve your notice within the proper window. Missing these deadlines can weaken your position - in some cases, the lease will continue automatically on the same terms (“holding over”), and you could lose your opportunity to regain possession.

Types of Section 25 Notice: Renewal or Termination

Section 25 Notice Proposing a New Lease

Sometimes, landlords want to keep their tenant but update the lease terms. In this case, a Section 25 notice is still needed. The notice will:

• Offer a new lease, usually with details like new rent, term, or conditions
• Begin a negotiation process where the parties can agree on terms - if not, a court can settle the disagreements

If the tenant wants to accept, they will need to respond (often via a counter-notice known as a Section 26 request, or through negotiation). If they can’t agree terms, an application can be made to court to decide the lease terms.

Section 25 Notice Opposing Renewal

If a landlord wants to end the lease and regain possession, they must specify their grounds for objection under Section 25. These allowed reasons include:

• Tenant’s substantial breach of lease terms (e.g., non-payment or repair defaults)
• Landlord intends to occupy the premises themselves
• Premises are to be demolished or redeveloped and vacant possession is needed
• Alternative statutory grounds (as listed in the Act)

Bear in mind these grounds are tightly defined in law. If a landlord can’t prove the ground(s) stated in the Section 25 notice, a court may still order a renewal lease for the tenant.

For a full breakdown of commercial lease law and tips on ending contracts, see our special guide on how to terminate a business contract in the UK.

How Should a Section 25 Notice Be Served?

To be valid, a section 25 notice must be properly “served” on the tenant. This means:

• Serving it at the tenant’s last known address, or the address of the property itself
• Hand-delivery, recorded delivery, or other demonstrable service
• Allowing enough time for the notice to be received and acted on (minimum six months’ notice)

Errors in the serving process can allow tenants to challenge the notice - making it crucial to follow the correct statutory service methods. Save any proof of posting or delivery as evidence.

What Happens After a Section 25 Notice Is Served?

After the landlord serves a Section 25 notice, several things can happen:

• Lease negotiations: The landlord and tenant can negotiate terms for a new lease, if offered.
• Tenant challenge: The tenant may contest the landlord’s grounds for refusing renewal, and can apply to court for a new lease up until the termination date in the notice.
• Lease ends: If the tenant accepts non-renewal, the premises must be vacated at the end of the notice period or as otherwise agreed.

It’s important to note that after issuing a Section 25 notice, neither party can “change their mind” about the expiry date or the grounds for opposing renewal - unless both sides agree in writing.

Key Risks for Landlords and Tenants With Section 25 Notices

Risks for Landlords

• Serving a defective or out-of-time notice can invalidate your position and delay possession
• If you claim a statutory ground for opposing renewal (like redevelopment) but can’t prove your intention, a court may order you to renew on the tenant’s terms
• Refusing a lease renewal without legal grounds could result in a compensation claim

Risks for Tenants

• Missing deadlines for applying to Court will mean you lose your right to a renewal lease
• If you receive a notice opposing renewal, you may need to act quickly to dispute the grounds or seek compensation
• Not understanding your rights could mean losing valuable premises or being forced onto less favourable terms

Both parties should take a proactive approach and seek legal advice early to avoid these pitfalls. A missed step or misunderstood deadline could impact your business for years.

How to Respond to or Challenge a Section 25 Notice

For tenants, receiving a Section 25 notice is a critical event. Here are some practical steps:

1. Read the notice carefully: Note the stated end date, whether a new lease is offered, and any grounds for opposing renewal.
2. Check contractual and statutory rights: Is your lease “contracted out”? Are the landlord’s statutory grounds valid?
3. Start negotiations or prepare a counter-notice (Section 26): If you want to stay, respond quickly and propose new lease terms.
4. Apply to Court (if necessary): If terms can’t be agreed, apply for a new lease before the notice expiry date. Otherwise, you may lose your rights by default.

For landlords, ensure your notice is drafted and served correctly, and gather evidence of any claimed statutory ground for opposing renewal. With the risks involved, having professional support is a must.

If you’re involved in a commercial lease dispute or want expert help drafting or reviewing legal documents, our guide to commercial lease agreements is a great starting point.

Other Important Lease-Ending Steps and Documents

The Section 25 notice process is just one part of managing a commercial lease ending. Consider these additional essentials:

• Ensure you understand any key clauses in your commercial lease (repair obligations, break options, rent review)
• If you need to end the contract lawfully, see our tips in ending contracts lawfully: what UK companies should know
• If you are negotiating new terms, make sure you have a properly drafted lease in place compliant with the Act

Don’t risk using off-the-shelf templates for your next lease - every property, business, and situation is unique, and a shaky contract is a recipe for unnecessary disputes.

Key Takeaways

• A Section 25 notice is essential for landlords seeking to terminate or renew a business tenancy under the Landlord and Tenant Act 1954.
• Section 25 applies to most commercial leases in England and Wales unless they’re “contracted out” of the Act.
• The notice must specify whether a new lease is offered or set out the legal grounds for opposing renewal. It has strict timing and service requirements.
• Getting the process wrong can be costly for landlords (delays, forced renewal) and tenants (loss of premises or rights).
• Both parties should seek legal advice early and ensure they understand their next steps (negotiation, counter-notices, court applications).
• Using correctly drafted legal documents and clear contract terms will help protect your interests and avoid future disputes.

If you need help with a Section 25 notice, commercial lease, or have questions about your rights under the Landlord and Tenant Act 1954, our team can guide you through the process. Call us at 08081347754 or email team@sprintlaw.co.uk for a free, no-obligations chat.