If your commercial lease expired but you are still paying rent, do not assume that the lease has renewed or that you can remain in the premises indefinitely. Your position depends on whether the lease had security of tenure, whether it was contracted out and what the landlord and tenant have done since the expiry date.
Continuing to pay rent may be expected while you remain in occupation. However, rent payments alone do not always confirm what tenancy now exists or whether you have a right to a new lease.
In This Article
Does a commercial lease end on its expiry date?
A fixed-term commercial lease normally has a contractual expiry date. What happens on that date depends largely on whether the tenancy is protected by Part II of the Landlord and Tenant Act 1954.
Where the Act applies, the tenancy does not simply end because the date in the lease has passed. Section 24 provides that a protected business tenancy continues until it is ended through one of the procedures set out in the Act.
This statutory continuation is often called “holding over”.
The tenant normally continues occupying the premises and complying with the lease while renewal terms are discussed or the formal notice process takes place.
A different position usually applies where the lease was properly contracted out of the Act. A contracted-out lease does not give the tenant the same statutory right to remain or request a renewal after the agreed term.
Why are you still paying rent after the lease expired?
Remaining in the premises normally means you must continue paying for your occupation.
Where a protected lease continues under the 1954 Act, the existing lease obligations generally continue as part of the statutory tenancy. This can include:
- Rent
- Service charges
- Insurance contributions
- Repair obligations
- Restrictions on use
- Other payments required by the lease
Government guidance also states that a tenant staying after a fixed term must continue paying rent and service charges and following the lease terms while the occupation continues.
You should not stop paying rent because the written expiry date has passed. Failure to pay could create arrears, weaken your position in renewal negotiations and give the landlord grounds to take enforcement action.
Government guidance advises commercial tenants to continue paying rent even during a landlord dispute because non-payment may put the tenancy at risk.
Does paying rent mean the lease has renewed?
Not necessarily.
The landlord accepting rent after expiry does not automatically mean that you have received a new lease for another fixed term. It may mean the protected tenancy is continuing under the 1954 Act. In other circumstances, it could contribute to the creation of another form of occupation arrangement.
The legal result depends on factors including:
- Whether the original lease was protected
- Whether it was contracted out
- What correspondence passed between the parties
- Whether renewal negotiations are taking place
- How rent has been requested and accepted
- Whether either party has served a formal notice
- Whether the landlord has clearly stated that occupation is temporary
This is why informal arrangements can create uncertainty. A tenant may believe they are safely holding over while the landlord believes the occupation can be ended more easily.
Paying rent confirms that money is being accepted for occupation. It does not, by itself, answer how long you may stay or what notice is needed to end the arrangement.
What happens if the lease is protected by the 1954 Act?
Most qualifying business tenants have renewal rights unless those rights were properly excluded before the lease was granted. Government guidance confirms that most tenants have a right to renew, subject to specific exceptions.
If your lease is protected, the tenancy may continue beyond its contractual expiry date on broadly the same terms.
This does not mean that nothing needs to happen. Either party may begin the formal process.
The landlord may serve a section 25 notice. The notice can propose a new tenancy or state that the landlord opposes renewal.
The tenant may be able to serve a section 26 request proposing the start date and terms of a new tenancy. Section 26 applies to qualifying fixed-term business tenancies and sets out the statutory request procedure.
The notices involve formal requirements and deadlines. Serving the wrong notice, using an incorrect date or missing a court deadline can affect the tenant’s renewal rights.
Can the landlord make you leave?
A protected tenancy does not give you a permanent right to remain.
A landlord may oppose renewal only on one or more statutory grounds. Section 30 of the 1954 Act includes grounds connected with matters such as rent arrears, repair failures, other substantial breaches, redevelopment and the landlord’s intention to occupy the property itself.
The landlord normally needs to state its grounds in the section 25 notice or in its response to the tenant’s section 26 request.
Where renewal is opposed, the precise facts matter. For example, a landlord relying on redevelopment will generally need to establish the required intention and ability to carry out the proposed work.
A tenant should not assume that paying rent prevents the landlord from recovering the premises. Equally, a landlord cannot normally disregard the statutory renewal process where the tenancy remains protected.
What if the lease was contracted out?
A contracted-out lease is excluded from sections 24 to 28 of the Landlord and Tenant Act 1954.
Before the lease was granted, the landlord should have served a warning notice and the tenant should have completed the required declaration. The contracting-out formalities are set out in the relevant regulations.
Where the process was valid, the tenant does not normally have an automatic statutory right to a new tenancy.
The contractual lease ends at the end of its fixed term. However, problems can arise where the tenant remains, keeps paying rent and the landlord accepts those payments without documenting the arrangement.
Depending on the facts and the parties’ conduct, the occupation may be treated as:
- A tenancy at will
- A periodic tenancy
- A short-term arrangement pending a new lease
- Another form of continued occupation
These arrangements have different consequences. In particular, the creation of a periodic business tenancy may raise questions about whether statutory protection has arisen.
Neither party should rely on labels used casually in emails. The arrangement must be considered in light of the documents and conduct as a whole.
What is a tenancy at will?
A tenancy at will is commonly used where a tenant remains in occupation while the parties negotiate a new lease.
It is intended to be temporary and can generally be ended by either party at any time. It does not provide the certainty of a fixed-term lease.
A tenancy at will may be useful where renewal negotiations are progressing but the new lease is not ready. However, the parties’ actions must remain consistent with a temporary arrangement.
Regular rent payments over a long period, combined with other conduct, could create disagreement about whether the occupation has become something more permanent.
A written tenancy-at-will agreement can help record the intended basis of occupation, although the parties should continue to act consistently with it.
Could the rent change after the old lease expires?
Yes.
The rent stated in the expired lease may continue to be paid while the protected tenancy holds over. However, either party may be able to apply for an interim rent as part of the statutory renewal process.
Sections 24A to 24D of the 1954 Act provide the framework for determining interim rent. The amount may differ from the rent previously paid and can become payable from the relevant statutory date.
This means that a later rent determination may create:
- A backdated payment due from the tenant
- A credit where the interim rent is lower
- A change in the amount payable while renewal is resolved
The new lease may also have a different rent. If the parties cannot agree, the court can determine appropriate terms where the statutory requirements are met.
Do not assume that continuing to pay the old amount settles the rent position permanently.
Can the tenant leave after the lease has expired?
A tenant should not simply move out, return the keys or cancel the rent payment without confirming how the tenancy must be ended.
For a protected tenancy continuing under the 1954 Act, section 27 provides a route through which the tenant may end the continuation tenancy.
Government guidance states that after a fixed-term commercial tenancy has ended, a tenant will usually need to give notice if it wants to end the lease. The required process depends on the tenancy and applicable documents.
Leaving without completing the correct process may cause uncertainty over:
- Continuing rent liability
- Service charges
- Repair obligations
- Removal of alterations
- Dilapidations
- Return of the rent deposit
- Whether the landlord has accepted a surrender
An implied surrender may sometimes arise from the conduct of both parties, such as the tenant returning the keys and the landlord retaking possession. However, it is safer to document the end of the tenancy clearly.
What if you want a new lease?
If you want to remain in the premises, begin by checking the legal status of the existing tenancy.
Do not wait until the landlord asks you to leave or proposes terms you were not expecting.
The renewal discussion may cover:
- The length of the new lease
- Rent and rent review
- Break rights
- Repair obligations
- Service charges
- Permitted use
- Assignment and subletting
- Security of tenure
- Rent deposit or guarantee requirements
Continuing to pay rent can keep the immediate occupation running, but it does not settle these future terms.
A new lease may also be contracted out even where the previous lease was protected. Contracting out should be considered carefully because it affects what happens when the new term ends.
Why leaving the position unresolved can create problems
Holding over may appear convenient because the business continues trading and the landlord continues receiving rent.
The uncertainty often becomes visible when something changes.
The tenant may decide to sell the business and discover that there is no fixed lease term to transfer. A lender may want evidence of secure occupation. The landlord may plan redevelopment or ask for a higher rent. The tenant may want to invest in fitting out the premises but lack certainty about how long it can remain.
A prolonged informal arrangement can therefore affect:
- Business sale value
- Funding applications
- Investment in the property
- Future relocation plans
- Rent liabilities
- Negotiating power
- The ability to assign the tenancy
Do not ignore formal notices
A section 25 notice, section 26 request or other lease notice should be reviewed as soon as it is received.
These documents can contain dates by which an application must be made or another step completed. The parties may be able to agree to an extension in some circumstances, but that agreement must be handled correctly.
Missing a deadline could result in the tenancy ending or the tenant losing the opportunity to ask the court for a new lease.
Do not rely on ongoing negotiations as a substitute for complying with a formal notice. Friendly discussions with the landlord do not necessarily pause statutory deadlines.
What should happen next?
Where your commercial lease expired but you are still paying rent, the first issue is not whether the landlord has accepted another payment. It is identifying the legal basis on which you remain in occupation.
The original lease, contracting-out documents, notices and correspondence should be reviewed together.
You need to know:
- Whether the tenancy remains protected
- Whether a formal renewal process has started
- Whether the landlord can oppose renewal
- Whether interim rent may apply
- How you can leave if you do not want to renew
- What terms should be negotiated for a new lease
Continuing to pay rent may be correct, but it should not replace a clear decision about the premises.
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