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Section 25 Notice

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About

A Section 25 Notice is a notice sent to a tenant of a commercial property after the expiry of their property lease. It is used to make the tenant aware of proposed changes to the existing lease or to oppose renewal. Section 25 notices must be served no more than 12 and not less than 6 months prior to when the landlord wants the current tenant to leave.Next steps

How much does a Section 25 Notice cost?

The cost for a licensed solicitor to help with a Section 25 Notice is dependent on many factors including the complexity and specific requirements of the case. On average it is expected to range from £100-£180 but in some cases it could cost as much as £300.

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Section 25 Notice Solicitors

In the world of commercial leases, a section 25 notice holds lots of weight as it signifies the start of lease renewal discussions or termination. 

As a tenant, it is important to understand what a Section 25 notice means and how to deal with one when it is served to you by your landlord. 

Or, if you are a landlord, understanding what a Section 25 notice can be used for, how to serve one, and on what grounds you can object to a new lease, is crucial. 

This guide provides comprehensive information for landlords or tenants regarding Section 25 notices. It covers their purpose, usage, and their legal implications.

What is a Section 25 Notice?

A section 25 Notice is a legal notice from a landlord to a tenant to either end or renew a commercial lease as outlined in the Landlord and Tenant Act 1954.

It indicates the landlord's intentions regarding the lease, whether they intend to continue under the existing terms, with new terms, or terminate the lease altogether.

This notice typically kickstarts discussions or legal actions regarding the future of the lease.

When are Section 25 Notices used?

Section 25 notices are used when a landlord wishes to end a protected business tenancy or when they wish to negotiate new lease terms with the tenant.

These notices serve as the first step in either terminating or renewing the lease.

These notices are relevant for business tenancies where the property is used for commercial purposes, such as shops, offices, or industrial units.

Friendly vs Hostile Section 25 Notices

A Section 25 notice can be issued amicably, with both parties agreeing to its terms.

However, it can also be issued under hostile circumstances, signalling a disagreement over lease terms or termination. 

Friendly Section 25 Notices

These notices are issued when both the landlord and the tenant agree on the lease terms.

Typically, in a friendly scenario, the landlord and tenant will have already discussed the lease renewal terms and have agreed before the notice is served.

The purpose of a friendly Section 25 notice is to formalise the agreed-upon terms and comply with legal requirements.

Hostile Section 25 Notices

Hostile notices are issued when there is a disagreement between the landlord and the tenant regarding lease renewal terms.

This may happen when negotiations have broken down, and the parties can't reach an agreement on rent, lease duration, or other terms.

In a hostile situation, the landlord or tenant may serve a Section 25 notice to start the formal legal process for lease termination or renewal, even if the other party opposes it.

Hostile notices can often lead to disputes and may result in legal proceedings if the parties cannot resolve their differences through negotiation or mediation.

Key components of a Section 25 Notice

A valid section 25 notice must include essential details such as the landlord's identity, the property's description, the lease's termination date or renewal terms, and compliance with legal requirements, as outlined in the Act.

The key components of a section 25 notice are:

Identification of Parties

The notice should identify the landlord and the tenant, including their names and addresses. This ensures that the intended recipient of the notice is identified.

Property Description

The notice must give an accurate description of the property subject to the lease.

This description should include details such as the address and any specific identifiers that uniquely identify the premises.

Notice Period

The notice should specify the length of the notice period, which is the period given to the tenant to respond to the notice.

The notice period is typically determined by the terms of the lease or statutory requirements.

Termination or Renewal

The notice must clearly state whether the landlord is seeking to terminate the lease or renew it.

This is a critical decision that has significant implications for both parties, so it must be communicated in the notice.

Terms of Renewal (if applicable)

If the landlord is offering a lease renewal, the notice should outline the proposed terms of the new lease.

This may include details such as the duration of the lease, rent amount, rent review provisions, and any other relevant terms.

Service date

The notice should include the date of which it is served on the tenant.

This date is important as it determines the start of the notice period and establishes compliance with legal requirements regarding notice service.

Signature

The notice must be signed by the landlord or their authorised representative.

This confirms the landlord's intention and consent to start the lease termination or renewal process.

Method of service

The notice should specify the method by which it is served on the tenant. This could include personal delivery, recorded delivery, or serving it through a professional process server.

The chosen method must comply with legal requirements and ensure the tenant receives the notice.

While not a formal component of the notice, landlords and tenants should seek legal advice from a commercial property solicitor before serving or responding to a Section 25 notice.

Legal advice can help ensure that their rights and interests are protected throughout the lease termination or renewal process.

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Who can serve a Section 25 Notice?

Only the landlord or their authorised agent can serve a Section 25 notice.

Landlords are typically the legal owners of a property or have the legal authority to act in this capacity.

Authorised representatives may include property management companies or solicitors appointed by the landlord to handle lease-related matters.

The person serving the section 25 notice must have the legal authority to do so, as failure to comply with this requirement could render the notice invalid. 

Additionally, the notice must be served following the specific requirements outlined in the Landlord and Tenant Act 1954 and any other relevant legislation. 

How is a Section 25 Notice Served?

A section 25 notice must be served in writing and delivered to the tenant by hand or via registered post.

Proof of service is required, as failure to comply with service requirements may invalidate the notice.

As mentioned earlier, the delivery method must be detailed in the notice. 

What happens when a Section 25 Notice is served?

On receiving a Section 25 notice, the tenant becomes aware of the landlord's intention not to renew the lease at the end of its term.

This triggers a negotiation period between the landlord and tenant regarding the terms of the lease renewal.

The tenant can either accept the landlord's proposed terms for lease renewal or negotiate alternative terms within a specified time frame.

If they can't reach an agreement, the matter may go to court where a judge will decide the lease renewal terms, including rent amounts and other conditions.

During this period, the tenant may also find a solicitor and get legal advice to understand their rights and obligations under the lease and to negotiate effectively with the landlord. 

Both parties must engage in good faith negotiations and comply with legal requirements to ensure a fair and lawful outcome.

How long does a Section 25 notice take?

The duration of a Section 25 notice process varies depending on several factors, including tenant response, negotiation outcomes, and potential legal disputes. 

A deadline will be given for the tenant to either agree to the terms or start legal proceedings. 

The minimum notice period that a Section 25 notice can give is six months and the maximum is 12 months. 

On what grounds can a landlord object to a new lease?

A landlord can object to giving a new lease to a tenant on various grounds outlined in the Landlord and Tenant Act 1954. 

There are two mandatory grounds for a landlord to object to a new lease. These grounds need to be proven in court, necessitating the court to refuse a new lease. 

They include:

Intention to demolish or reconstruct

If the landlord can demonstrate a genuine intention to demolish or reconstruct the property, the court must refuse the grant of a new lease.

Intention to occupy the premises

Similarly, if the landlord intends to occupy the premises themselves, they can object to a new lease, and the court must uphold this objection if proven.

Some discretionary and common grounds for objection, of which a court will have the discretion to decide, include:

  • Non-payment of rent

  • Breach of lease terms

  • Change in property use

  • Willingness to occupy

  • Commercial viability

  • Persistent breach of lease obligations 

  • Substantial repairs or alterations.

The grounds for objection must be valid and lawful, and the landlord must follow the legal procedures outlined in the Landlord and Tenant Act 1954 when serving a section 25 notice. Failure to do so could result in legal repercussions for the landlord.

What happens if a tenant refuses to leave after receiving a Section 25 Notice?

If a tenant refuses to vacate the premises following a valid Section 25 notice, the landlord may start eviction proceedings to regain possession of the property. 

Initially, the landlord may negotiate with the tenant to get them to leave voluntarily. They may offer incentives or discuss alternative arrangements to facilitate a smooth transition.

If negotiation fails, both parties may opt for mediation, where an impartial mediator helps them reach a mutually acceptable agreement. Mediation can be a cost-effective and less confrontational way to resolve disputes compared to court proceedings.

If negotiation and mediation are unsuccessful, the landlord may start court proceedings to evict the tenant.

This involves submitting a claim for possession to the court and attending a hearing where a judge will consider the case.

If the court determines that the landlord is entitled to possession of the property, they will issue a possession order specifying the date by which the tenant must vacate.

The tenant may be given a fixed period to leave voluntarily, usually around 14 to 28 days.

If the tenant fails to vacate by the specified date, the landlord can apply for a warrant for possession, allowing court-appointed bailiffs to evict the tenant forcibly.

The bailiffs will attend the property, remove the tenant and their belongings, and change the locks if necessary.

The tenant may be liable for the landlord's legal costs associated with the eviction process.

Additionally, if the tenant's refusal to leave causes financial losses or damages to the landlord, they may seek compensation through further legal action.

Can a Section 25 Notice be challenged?

Tenants can challenge a Section 25 notice in court if they believe it's invalid, issued in bad faith, or fails to comply with legal requirements. 

Seeking legal advice and representation is advisable for going through court proceedings.

At Lawhive, we offer expert legal advice and support for landlords and tenants navigating Section 25 notices and lease terminations. 

Our experienced network of landlord and tenant solicitors provides tailored guidance, ensuring legal compliance and protecting your interests throughout the process.

Get in touch today to get a free case assessment. 

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