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By Julian Norris, Consultant Solicitor BMA Law & Alya Yasmin, Consultant Solicitor BMA Law

Lease renewals can be a challenge for GP practices. Unlike many other businesses, GP surgeries and other healthcare practices can’t just up sticks and move easily. They’re often tied to a location because of their contract with the commissioner, specialist layouts and regulatory hoops, leaving landlords with the upper hand when it’s time to renew, pushing up rents or tightening the terms. If practices aren’t careful, they can also end up agreeing to lease conditions that make running the practice more difficult than necessary. A bit of early, practical advice can go a long way in avoiding problems down the line.

First, let’s consider the ways in which you might occupy your premises.

1. Owning the freehold so perhaps the only contentious matter for you is the amount of notional rent you receive.
2. Having a business lease protected by the 1954 Landlord & Tenant Act (“The Act”).
3. Having a business lease, contracted out of the Act.
4. Less commonly, you may have a tenancy at will or a licence to occupy.

This article is about business leases protected by the Act (number 2 above) and what happens when they end.

A lease is the grant of a right to the exclusive possession of land (land includes a building or part of a building) for a defined period of time. It is a contractual arrangement but also grants an interest in land which can be transferred to someone else (usually subject to certain conditions).

Business leases are subject to certain protections under the Act unless they are contracted out.  Contracted out leases will usually state this fact within them and the tenant will invariably be asked to sign a statutory declaration to evidence the conscious agreement to waive the protections of the Act.

So, let’s say that you have a protected business lease and you are approaching the end of your 15-year term. What might you need to think about?

The Act says that you (as a tenant) are entitled to end the lease and leave, or to ask for a new lease. To do so, you must serve a notice on the competent landlord containing certain prescribed information.  It is important that the notice contains all relevant information and is an opportunity for the tenant to ask for different terms.  That does not mean that the landlord must agree them and usually there will be a process of negotiation.

The landlord is also entitled to serve a notice to end the current lease and whilst they will usually offer a new lease, there are certain circumstances in which they may decline to do so.

Unsurprisingly, a landlord may not want to offer a new lease to a tenant who owes rent, or is late paying, or persists in breaching other terms of the lease. These all offer potential reasons for a landlord to object to a tenant having a new lease.

A landlord may also object to a new lease if they want to use the premises for themselves or if they want to reconstruct or demolish the premises, or if they can offer equivalent premises on similar terms.

In any of these scenarios a dispute may arise, and ultimately where there is a difference of opinion between landlord and tenant it is open to either party to apply to the court to determine the matter but it is important not to miss procedural deadlines once a notice has been served.

One further potential area of contention is that the landlord is prepared to offer a new lease but wants to change something about it which the tenant finds unpalatable.

Terms of a new lease will often be negotiated by landlord and tenant without the need to go to court but correspondence and drafts of the lease passing during these negotiations should be marked “without prejudice and subject to lease” because once a term has been agreed by both parties on an open basis, it cannot be renegotiated.

If terms cannot be agreed (for example the length of the lease, the passing rent or major re-writes of conditions) then either party may ask the court to make the decision. Courts will usually not interfere substantially with the existing lease terms without good reason.

A new lease may well signal a new rent, and the landlord (and the tenant) will be interested to establish what rent should be paid in the interim. The court can be asked to determine the level of rent payable between the end of the old lease term and the start of the new one.

If you have a question about your lease or would like assistance with renewing or negotiating terms, please contact BMA Law on 0300 123 2014 or submit an inquiry Contact Us – BMA Law.