Security of tenure is a legal right that may allow a business tenant to remain in commercial premises after its lease ends and request a new tenancy. It can affect whether you can continue trading from the property or must leave when the contractual term expires.
For many business owners, this is an important point to check before signing a commercial lease. You need to understand whether the lease is protected, whether the right has been excluded, and what that could mean for your future plans.
In This Article
What does security of tenure mean?
Security of tenure is provided by Part II of the Landlord and Tenant Act 1954.
When the Act applies, a qualifying business tenancy does not normally end simply because the date written in the lease has passed. The tenancy can continue until it ends through one of the procedures set out in the Act. The tenant may also have the right to request a new lease.
In practical terms, it may give a business tenant:
- The right to remain in the premises after the lease term ends.
- The right to request a new tenancy.
- Protection against a landlord refusing renewal without relying on a permitted legal ground.
It does not mean that the tenant can remain at the property indefinitely. The landlord may oppose renewal in certain circumstances.
Which commercial leases have security of tenure?
Many business tenancies in England and Wales receive security of tenure automatically unless the landlord and tenant properly agree to exclude it before entering into the lease.
Whether the Act applies depends on the facts of the arrangement. A key requirement is usually that the tenant occupies at least part of the premises for business purposes.
Some tenancies fall outside the Act. There may also be situations where the parties have followed the formal process to exclude the renewal rights.
Do not assume that your lease is protected because you operate a business from the premises. Check the lease and any documents signed before it was completed.
What is a protected commercial lease?
A protected commercial lease is one where the tenant has not validly contracted out of the security of tenure provisions and the tenancy otherwise qualifies for protection.
At the end of the contractual term, the tenant does not automatically receive a new lease on exactly the same terms. However, the existing tenancy may continue, and either party can begin the statutory renewal or termination process.
The landlord may serve a notice under section 25 of the Landlord and Tenant Act 1954. The tenant may be able to request a new tenancy under section 26. These are formal procedures with legal requirements and deadlines.
What does “contracted out” mean?
A commercial lease can be granted outside the security of tenure provisions of the Landlord and Tenant Act 1954. This is commonly called a contracted-out lease.
When a lease has been properly contracted out:
- The tenant does not have an automatic right to remain after the lease expires.
- The tenant does not have a statutory right to request a new tenancy.
- The landlord can require the tenant to leave at the end of the agreed term.
- Any further occupation or new lease will depend on what the landlord agrees.
Contracting out must take place before the tenant becomes legally bound by the lease. The landlord must serve the required warning notice, and the tenant must make the necessary declaration. The standard procedure usually requires the warning notice to be served at least 14 days before the tenant enters into the lease or becomes contractually bound. A different declaration process applies where the 14-day period is not available.
The declaration should not be treated as routine paperwork. By signing it, the tenant accepts that the statutory right to renew will not apply.
Why might a landlord exclude security of tenure?
A landlord may want greater control over the property when the lease ends.
For example, the landlord may want to:
- Relet the premises to another tenant.
- Change the use of the property.
- Redevelop the building.
- Occupy the premises for its own business.
- Renegotiate the arrangement without a statutory renewal process.
A contracted-out lease can provide more certainty about when the tenant must leave.
However, excluding the Act may create uncertainty for the tenant. A business could invest in fitting out the premises, building local goodwill and attracting regular customers without having a legal right to renew the lease.
Why does security of tenure matter to a tenant?
Your premises may play an important part in the value and operation of your business.
Losing the right to remain could affect:
- Your ability to continue trading from the same location.
- Money spent on fitting out the property.
- Customer access and local goodwill.
- Staff travel and working arrangements.
- Licences or permissions connected to the premises.
- The cost and disruption of relocating.
- Your ability to sell or expand the business.
This does not mean you should reject every contracted-out lease. A shorter or contracted-out arrangement may suit a temporary project, test location or business that expects to move.
The important point is to understand the position before signing. Onyx’s approved buyer research identifies this as a central concern for commercial lease clients: they want to know what the document means and what they are agreeing to before they commit.
Can a landlord refuse to renew a protected lease?
Yes. Security of tenure gives a tenant a right to request a new tenancy, but it does not guarantee that the renewal will be granted.
Section 30 of the Landlord and Tenant Act 1954 sets out grounds on which a landlord may oppose a new tenancy. These include circumstances involving:
- Failure by the tenant to comply with repairing obligations.
- Persistent delay in paying rent.
- Other substantial breaches of the lease.
- Suitable alternative accommodation.
- The landlord’s intention to demolish or reconstruct the premises.
- The landlord’s intention to occupy the premises for its own business or residence.
The precise requirements differ for each ground. A landlord cannot normally rely on a general preference to replace the tenant. It must establish an applicable statutory ground where renewal is opposed.
A tenant may be entitled to statutory compensation where renewal is refused on certain grounds that are not based on the tenant’s conduct, subject to the legal requirements.
Does a protected lease renew automatically?
Not in the sense of creating a new fixed-term lease without further action.
The existing tenancy may continue after the contractual expiry date under the Act. The landlord and tenant can then negotiate a renewal, or one party can begin the formal statutory process.
The new lease may involve changes to:
- Rent.
- Lease length.
- Repairing obligations.
- Service charges.
- Permitted use.
- Break clauses.
- Other terms.
When the parties cannot agree, the court may be asked to determine whether a new tenancy should be granted and, where appropriate, settle its terms.
Because the notice procedure involves strict requirements, landlords and tenants should take advice before serving or responding to a section 25 notice or section 26 request.
What should you check before signing?
Before entering into a commercial lease, check:
Is the lease protected or contracted out?
Look for wording stating that sections 24 to 28 of the Landlord and Tenant Act 1954 are excluded. Also check whether you received a warning notice and signed a declaration.
How long do you need the premises?
Consider whether the lease length supports your business plan. A contracted-out lease may be a larger concern where you expect to remain for many years.
How much will you invest in the property?
Think about fitting-out costs, equipment, signage and improvements. Consider what happens to that investment if you must leave at the end of the term.
Is there an option to renew?
A contracted-out lease may include a contractual renewal option, but this is different from statutory security of tenure. Check the conditions carefully.
What happens at the end of the lease?
Ask whether you must remove alterations, repair the property, reinstate it or return it in a particular condition.
Is there a break clause?
A break clause may provide flexibility, but it often comes with conditions. Failure to meet them could affect whether the break is effective.
Can security of tenure be added later?
The parties can negotiate a new protected tenancy, but a tenant cannot normally restore the excluded statutory right by deciding later that it would prefer protection.
Where the original lease was validly contracted out, the tenant’s position at expiry will usually depend on the lease terms and what the landlord agrees.
Remaining in occupation after a contracted-out lease expires can create legal uncertainty. It should not be treated as a reliable way to gain renewal rights. Both parties should clarify the basis of any continued occupation before the expiry date.
Is the security of tenure law changing?
The Law Commission is reviewing the business tenancy regime. In June 2026, it published a second consultation on modernising the operation of the Landlord and Tenant Act 1954. Its current provisional direction keeps the existing model under which qualifying tenants receive protection unless the parties contract out. These proposals are part of an ongoing consultation and are not the same as enacted changes to the law.
Get your lease checked before signing
Security of tenure can affect whether you have a legal right to remain in your business premises when the lease ends.
Before signing, you should know:
- Whether the Landlord and Tenant Act 1954 applies.
- Whether you are being asked to contract out.
- What rights you will lose if you sign the declaration.
- How the lease term fits your business plans.
- What happens when the lease expires.
Onyx Solicitors can review the commercial lease documents and explain the terms that may affect your occupation, costs and next steps.
Your Next Step
Contact us today at 0121 268 3208 or via email at info@onyxsolicitors.com for a FREE consultation. Let us help you achieve the peace of mind that comes with having expert legal support on your side.
