Section 26 Notices

What is a Section 26 Notice?

Commercial (Business) Tenancies in England & Wales are regulated by the Landlord & Tenant Act 1954 (Part 2) and the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003. This Act provides for security of tenure. Security of tenure is the right to renew the tenancy when it comes to an end. In practice this means that the tenant has an automatic right to renew his lease on similar terms to the old one.

The Section 26 Notice can be used by the tenant of business premises in England & Wales (a similar system operates in Scotland) to renew the tenancy on the same terms.

Landlord’s challenge to renew

The landlord can challenge this right to renew if the tenant has seriously breached the terms of his lease for example, has failed to pay rent, or on certain limited grounds such as if the landlord wants to develop the land.

The tenant can pre-empt the landlord’s Section 25 Notice, request a new tenancy and propose terms for renewal using the Section 26 Notice, however, the Section 26 Notice cannot be sent if the landlord has already sent a section 25 notice.

Renewal of the lease

Where both parties are willing to renew the lease on the tenant’s proposed terms the new tenancy can begin on the date specified in the notice. Alternatively, the parties may need to negotiate different terms for a settlement, or, if the landlord is opposing renewal, either party may apply to the court. The court will either uphold the landlord’s opposition or order the grant of a new tenancy and settle the terms upon which the parties cannot agree.

Interim Rent

Pursuant to Section 24B of the 1954 Act, if a Section 26 Notice has been served, interim rent is payable from the earliest date which could have been specified in the Notice as the commencement date of the new tenancy.

Of course none of the above is applicable in Scotland, or in England and Wales if the tenant and landlord had opted out of the Landlord and Tenant Act 1954 when the lease was first agreed.