Lease renewal can be a delicate process where robust professional advice is even more important than in the case of rent review, because the tenant is not legally obliged to stay in the same place and they may choose different premises. When it comes to the commercial sector, when companies prefer maintaining the same premises for practical and financial reasons, tenants should keep in mind that not all leases are automatically renewable. Therefore, they should make their intention known to the landlord 6 to 12 months in advance
For leases held Inside the Landlord and Tenant Act 1954, both the tenant and the landlord have the right to initiate the lease renewal process and if the tenant is the one who initiates it, then the landlord is given a 2-month period to decide whether he will allow it. If he does, then both parties will start to negotiate rent cost and conditions. When they cannot reach an agreement, one of the parties can take the case to Court for settlement, but this course of action is rarely advisable because it costs both time and money. Complications and misunderstandings can be avoided if professional consultancy is sought.
After initiating the lease renewal process, the tenant can change his mind and opt out, but if the negotiations reached an advanced stage and the landlord is inconvenienced by this decision, the tenant may have to provide financial compensation.
In the UK, tenants have the right to renew their lease under the Landlord and Tenant Act 1954. However, if the landlord wants to occupy the premises himself or demolish the building, he may choose to do provided that financial compensation is offered. If the current lease is held outside the landlord and tenant act 1954 then the tenant does not have the automatic right to renew, however a lease renewal can still be agreed between parties on mutually acceptable terms, subject to negotiation.
Considering the legal nature of the lease renewal process and the technical details involved, many tenants and landlords do not know their rights and end up agreeing for unfair amounts. Working with a professional makes the process simpler and gives both parties the peace of mind that the terms of lease renewal are unbiased and the cost of rent reflects the state of the local market.