Lease Renewal Under the 1954 Act: Section 25 and Section 26 Notices

Last updated: 5 May 2026

Quick answer

Part II of the Landlord and Tenant Act 1954 gives most business tenants in England and Wales a statutory right to renew their lease at expiry. The renewal process is started by either side serving a notice. The landlord serves a section 25 notice (specifying termination and either offering renewal terms or opposing renewal on one of the seven grounds in section 30). The tenant serves a section 26 notice (requesting a new lease on specified terms). Either party must then issue a court application (the tenant under section 24 — or, where the landlord has served a hostile section 25, the landlord under section 29(2)) before the relevant statutory deadline, or extend that deadline by written agreement under section 29B. Otherwise the renewal right is lost. Get the notice form right, calculate the dates carefully, and file proceedings on time. The 1954 Act process punishes procedural slips. CPR Part 56 governs the court procedure.

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Which leases are protected

The 1954 Act's renewal regime applies to a lease where:

• The premises are used wholly or mainly for the purposes of a business carried on by the tenant
• The lease is not contracted out under section 38A (more on this below)
• The tenant occupies for the purposes of that business at the contractual term date

A lease can be excluded from protection if both parties followed the section 38A contracting-out procedure when the lease was granted: the landlord must have served a "warning notice" before grant, and the tenant must have made a declaration acknowledging the loss of statutory rights. If those steps were not followed properly, the lease is protected, even if it says it is contracted out.

This is worth checking carefully. Many leases described as "contracted out" turn out, on inspection, not to comply with section 38A — and the tenant has a renewal right after all.

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The two routes — sections 25 and 26

Either side can start the renewal process.

The landlord's route — section 25

The landlord serves a section 25 notice. The notice must:

• Be in the prescribed form — Schedule 2 Form 1 (where the landlord does not oppose renewal) or Schedule 2 Form 2 (where the landlord opposes renewal on one or more section 30 grounds) under the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003
• Identify the property and the lease
• Specify a termination date — between 6 and 12 months from service, and not earlier than the contractual term date
• State either that the landlord does not oppose renewal (and propose terms), or that the landlord opposes renewal (citing the section 30 ground or grounds)

A friendly section 25 starts the negotiation. An opposed section 25 puts the tenant on notice that they will need to fight for renewal at court — and if they do not, the tenancy ends on the specified date.

The tenant's route — section 26

The tenant serves a section 26 notice requesting a new lease. The notice must:

• Be in the prescribed form (Schedule 2 Form 3 under the 2003 Order)
• Specify a date for the new lease to begin — between 6 and 12 months ahead, and not earlier than the contractual term date
• State the proposed terms of the new lease

A section 26 notice forces the landlord's hand. Within two months of receipt, the landlord must serve a counter-notice if they oppose renewal — and the counter-notice must specify the section 30 ground(s).

If the landlord does not serve a counter-notice within two months, they cannot oppose renewal at all. This is a hard deadline.

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Section 30 — the seven grounds for opposition

A landlord opposing renewal must rely on one or more of the seven grounds in section 30(1):

Compensation under section 37 is paid for grounds (e), (f), and (g). The amount is one or two times the rateable value, depending on the length of occupation.

Grounds (f) and (g) are the most-litigated. Both require the landlord to prove a genuine, settled intention at the trial date — not just a vague plan. S Franses Ltd v The Cavendish Hotel (London) Ltd [2018] UKSC 62 is the leading case on ground (f): the landlord's intention must be unconditional and not contingent on the tenant's conduct.

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The court application — CPR Part 56

If the parties cannot agree, the matter goes to court. The procedure is in CPR Part 56 and Practice Direction 56.

Who applies, and when

Either side can apply, but only one application can be in being. Whoever applies first is the claimant; the other is the defendant.

The deadline depends on the route:

• Following a section 25 notice: the application must be made before the termination date specified in the notice
• Following a section 26 notice: the application must be made before the date the new lease is to begin (as specified in the section 26 notice)
• The deadline can be extended only by written agreement before it expires (a so-called "section 29B agreement")

If no agreement is reached and no court application is made before the deadline, the renewal right is lost. The tenant then occupies as a contractual tenant on the existing lease (which has expired) and must vacate, or as a tenant at will, depending on the facts.

What the court decides

In a contested case, the court determines:

• Whether the landlord has made out a section 30 ground
• If renewal is granted, the terms of the new lease — duration, rent, repairing obligations, alienation, break clauses

The court can also approve a settlement on agreed terms ("ordered terms").

Interim rent — section 24A

While the matter is at court, the contractual rent continues but the landlord (or sometimes the tenant) can apply for interim rent under section 24A. The court fixes interim rent based on what the property could reasonably be let for in the open market.

This is often a strategic choice: a landlord under-let on the contractual rent will apply for interim rent; a tenant on a passing rent above market may apply themselves to bring it down.

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Setting the new rent

The new lease's rent is determined under section 34. The starting point is the open-market rent at the date of the hearing (or at the date the new tenancy is to begin — sometimes there is a gap), assuming:

• A willing lessor and willing lessee
• The premises let with vacant possession
• All other terms of the new tenancy as fixed by the court
• No goodwill of the tenant taken into account
• No improvement carried out by the tenant taken into account, where the improvement was not a contractual obligation and was finished within the previous 21 years

In practice the rent is set by expert evidence — surveyors call comparable evidence from recent open-market lettings of similar properties. The Royal Institution of Chartered Surveyors guidance (the "Red Book") frames the methodology.

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Setting the new lease terms — section 35

The court fixes the terms of the new lease under section 35 by reference to the existing lease, with such modifications as are reasonable. The leading case is O'May v City of London Real Property Co Ltd [1983] 2 AC 726.

The party seeking a change to existing terms bears the burden of justifying it. Common areas of disagreement:

• Length of term — landlords often want shorter, tenants want longer
• Rent review — pattern, mechanism, upward-only or up-and-down
• Repairing covenant — full repairing vs internal repairing
• Alienation — restrictions on sub-letting and assignment
• Break clause — whether one is included; if so, on what terms

The court keeps modifications limited. A radical rewrite of the lease is unlikely to be ordered against opposition.

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Costs

The 1954 Act renewal procedure is in the County Court hearing centre with property jurisdiction (or, for high-value or specialist matters, in the High Court Property, Trusts and Probate List).

Costs follow the event. A landlord who fails on a section 30(f) or (g) ground typically pays the tenant's costs. A successful tenant in a contested rent dispute typically recovers most costs.

A 1954 Act renewal trial commonly runs to 2-5 days for a single property. Costs of £50,000-£250,000 per side are not unusual. Most cases settle at or before exchange of expert evidence.

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Practical timeline

Assume a contractual term date of 31 December 2026. Here is how a friendly process might run.

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Bundle preparation for a 1954 Act trial

A 1954 Act renewal trial bundle commonly contains:

• Section A: Pleadings (Claim Form, Particulars of Claim, Defence, replies)
• Section B: Notices (section 25, section 26, counter-notice, agreements extending time)
• Section C: Existing lease and any side letters or variations
• Section D: Witness statements
• Section E: Surveyor's report — claimant
• Section F: Surveyor's report — defendant
• Section G: Joint surveyors' statement
• Section H: Comparable evidence and market data
• Section I: Building condition survey (if section 30(f) or (a) in issue)
• Section J: Inter-party correspondence
• Section K: Authorities

The bundle commonly runs to 1,500-3,000 pages. CPR Part 32 governs witness statements; Part 35 governs expert reports. The trial centre will direct pagination and electronic format.

BundleCreator's Commercial Property template structures the bundle in the order trial counsel and the trial judge expect. Pagination, hyperlinked index, OCR, and bookmarks are produced automatically. A bundle that takes 8-15 hours to assemble manually is usually finished in around 30 minutes.

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Frequently asked questions

What happens if the section 25 notice is in the wrong form?

A defective section 25 notice can be void. A void notice does not start the process; the contractual lease continues, and the landlord must re-serve. Garston v Scottish Widows' Fund and Life Assurance Society [1998] 1 WLR 1583 set the strict approach to notice formalities.

Can the tenant withdraw a section 26 notice?

Yes — until the date specified in the notice for the new tenancy to begin. After that, the tenant is committed to the renewal process unless both parties agree to terminate.

Can the landlord oppose on a ground developed after service of the section 25 notice?

No. The section 25 notice fixes the grounds. Adding a new ground later requires the landlord to serve a fresh notice — which restarts the clock and may be too late.

What about a fixed-term lease that has already expired without notice being served?

If neither side served a notice and the tenant remains in occupation, a periodic tenancy or tenancy at will can arise depending on the facts. The 1954 Act may continue to apply if the original lease was protected. Take advice early — the analysis is fact-sensitive.

What is a "section 29B agreement"?

A written agreement between the parties extending the deadline to apply to court (or making no application). The agreement must be made before the deadline expires. Section 29B agreements are common in friendly cases and effectively buy time for negotiation.

Can I represent myself?

Possible for simpler cases, but 1954 Act renewals are technical and the consequences of getting them wrong are severe (loss of premises). Most tenants instruct a solicitor and surveyor; many landlords have an in-house team. Specialist Chambers regularly take instructions on counter-fee bases for Tribunal-suitable disputes.

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Further reading

• Landlord and Tenant Act 1954 — particularly Part II
• CPR Part 56 and PD 56 — Landlord and tenant claims
• Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 — Notice forms
• Dilapidations Claims: Section 18 Cap and Tenant Defence Strategies
• Service Charge Disputes in Commercial Leases: How Tenants Challenge Costs