Ending a Commercial Lease UK: Notices & Process

At a glance

• Governing law: Part II of the Landlord and Tenant Act 1954 (sections 24–38A) gives most business tenants security of tenure — an automatic right to renew — unless the lease has been validly contracted out.
• Landlord's notice: a section 25 notice must be in the prescribed form and give not less than six and not more than twelve months' notice of the termination date.
• Tenant's request: a section 26 request works the same way in reverse, asking for a new tenancy to start on a date six to twelve months ahead.
• Tenant's notice not to continue: section 27 lets a tenant end a protected tenancy by written notice — either before the contractual term ends (at least three months' notice, and only once occupation has lasted a month) or at any point while the tenancy is continuing under section 24.
• Contracting out: since 1 June 2004, landlords and tenants can agree to exclude sections 24–28 using the section 38A procedure — a landlord's warning notice plus a tenant's declaration (a statutory declaration if less than 14 days' notice was given) — without needing a court order.
• Grounds to oppose renewal: a landlord can only refuse a new lease on one of the seven grounds in section 30(1); grounds (e), (f) and (g) (redevelopment, the landlord's own occupation, and related grounds) trigger statutory compensation under section 37.
• Dilapidations: any claim for damages to the condition of the property is capped by section 18(1) of the Landlord and Tenant Act 1927 at the diminution in the value of the landlord's reversion, and the Dilapidations Protocol sets the pre-action process.
• Reform watch: the Law Commission is consulting on changes to the 1954 Act's security of tenure regime, but as at the date of this guide nothing has been enacted — the law below remains current.

What this document is

A commercial lease is the contract that sets out a tenant's right to occupy business premises for a fixed period in return for rent and other obligations. Ending one means formally bringing that contract to a close so that neither side owes any further rent, repair, or occupation obligations going forward.

In England and Wales, most business tenancies occupied for business purposes are protected under Part II of the Landlord and Tenant Act 1954, which gives qualifying tenants a right to renew when the contractual term ends. That protection directly shapes how a lease must be brought to an end: the landlord usually has to serve a prescribed statutory notice, and the tenant can serve one too if they want to request a new lease or formally confirm they are leaving.

Outside the mechanics of the 1954 Act, leases can also end through a break clause, mutual surrender, forfeiture for breach, or simply because the fixed term has run out and the tenancy was never protected in the first place. Each route has its own rules, timing and risks, and getting the wrong one wrong can be expensive.

Is your lease protected by the 1954 Act?

The single most important question, before any notice is drafted, is whether the tenancy is "inside" or "outside" the 1954 Act's security of tenure provisions.

A business tenancy is presumptively protected under section 23 if the tenant (or a company they control) occupies the premises for the purposes of a business they carry on. Most ordinary shop, office, industrial and warehouse leases qualify.

However, since the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003 came into force on 1 June 2004, landlords and tenants have been able to agree, before the lease is granted, to contract out of sections 24 to 28 using the section 38A procedure:

1. Warning notice. The landlord serves a prescribed-form warning notice on the tenant, setting out the consequences of giving up the statutory right to renew.
2. Tenant's declaration. If the warning notice is served at least 14 days before the lease is completed (or the tenant enters into a binding agreement for it), the tenant can make a simple declaration confirming they have read and accept the warning notice.
3. Statutory declaration if time is short. If less than 14 days' notice was given, the tenant must instead make a statutory declaration in front of an independent solicitor, notary or commissioner for oaths.
4. Reference in the lease. The lease itself must refer to the warning notice and the tenant's declaration for the contracting-out to be effective.

Before the 2003 Order, contracting out required a joint application to court under the old section 38(4) procedure; that route no longer applies to new agreements. If any step in the section 38A procedure was missed or done in the wrong order, the "contracted-out" status can be challenged, so it is always worth checking the actual paperwork rather than assuming the lease heading is correct.

If the lease was never validly contracted out, section 24 keeps it alive on the same terms — with the tenant paying rent and both sides bound by the other covenants — even after the contractual term date passes, until it is properly terminated using one of the routes below.

The main routes a business lease can end

1. Section 25 notice from the landlord — the landlord either offers a new tenancy on stated terms or states the ground(s) on which they will oppose renewal.
2. Section 26 request from the tenant — the tenant proposes new terms for a further tenancy; the landlord has two months to serve a counter-notice if they intend to oppose.
3. Section 27 notice from the tenant — the tenant tells the landlord in writing that they do not want the tenancy to continue, either before the contractual expiry or at any time while holding over under section 24.
4. Break clause — either party (usually the tenant) exercises a contractual right to end the lease early on a specified date, subject to whatever conditions the lease attaches to the break.
5. Surrender by agreement — landlord and tenant agree, usually by deed, to bring the lease to an end before its natural conclusion.
6. Forfeiture — the landlord ends the lease early because of a serious breach by the tenant, such as substantial rent arrears, subject to the tenant's right to apply for relief from forfeiture.
7. Simple expiry — if the lease was validly contracted out of the 1954 Act, it ends on the contractual expiry date without any notice being required at all.

Section 25 notices in detail

A section 25 notice is served by the landlord and must:

• be in the prescribed form set out in the Landlord and Tenant Act 1954, Part 2 (Notices) Regulations 2004;
• specify a termination date that is not earlier than the date the tenancy could otherwise have ended, and falls not less than six months and not more than twelve months after the notice is given;
• state whether the landlord is willing to grant a new tenancy and, if so, on what proposed terms; and
• if the landlord opposes renewal, state which of the section 30(1) grounds are relied on.

Because the notice period is fixed at six to twelve months, landlords need to plan ahead — serving a section 25 notice too close to the lease end risks pushing the termination date, and the tenant's own procedural rights, well past when the landlord wanted vacant possession.

Section 26 requests in detail

A tenant who wants a new tenancy, rather than waiting for the landlord to act, can serve a section 26 request proposing the terms of a further tenancy starting between six and twelve months after the request. The landlord then has two months from the request to serve a counter-notice stating whether they intend to oppose the grant of a new tenancy and, if so, on which grounds. Missing that two-month window can significantly weaken the landlord's negotiating position.

Section 27: the tenant's notice not to continue

Section 27 gives the tenant a way to bring a protected tenancy to an end without a court process:

• Before the contractual term ends: the tenant can give the landlord at least three months' written notice that they do not want the tenancy to continue. This route is only available once the tenant has been in occupation under the tenancy for at least one month — a notice given earlier does not have this effect.
• While the tenancy continues under section 24: if the contractual term has already passed and the tenancy is being kept alive by section 24, the tenant can bring it to an end at any time by giving the landlord three months' written notice.

A section 27 notice is a useful, low-friction way for a tenant who simply wants out to avoid triggering the full renewal machinery, but the notice periods and occupation requirements are strict and worth checking carefully before relying on this route.

Grounds for opposing renewal — section 30 and compensation

A landlord who does not want to renew must rely on one of the seven grounds in section 30(1) of the 1954 Act, commonly labelled (a) to (g):

• (a) the tenant's failure to comply with repairing obligations;
• (b) persistent delay in paying rent;
• (c) other substantial breaches of the tenant's obligations;
• (d) the landlord having offered suitable alternative accommodation;
• (e) where the tenancy is a sub-letting of part, the landlord being able to let or otherwise dispose of the whole property more advantageously if it is not sublet;
• (f) the landlord's genuine intention to demolish or reconstruct the premises;
• (g) the landlord's genuine intention to occupy the premises for their own business or as a residence (subject to a five-year ownership qualification).

Grounds (a) to (c) are fault-based and do not attract compensation. Where the landlord relies only on grounds (e), (f) or (g) — none of which involve any fault by the tenant — the tenant is entitled to statutory compensation for disturbance under section 37, calculated using the rateable value of the holding, at a higher rate where the tenant (or their predecessor in the same business) has occupied for 14 years or more. The landlord must identify the grounds relied on in the section 25 notice, or in the counter-notice to a section 26 request, and generally cannot rely on new grounds later.

Break clauses: conditions matter

Where a lease contains a break clause, either the tenant, the landlord, or both may have the right to end the lease early on a specified date. Break clauses are contractual, not statutory, so their exact terms and conditions depend entirely on the drafting of the individual lease. Common conditions include:

• serving written notice by a specified deadline, often six months before the break date;
• paying all rent (and sometimes other sums) up to date;
• giving vacant possession, with no continuing subtenancies or occupiers left in place; and
• in some leases, having complied with repairing obligations.

Courts have historically taken a strict approach to break conditions: if a lease requires vacant possession or rent paid in full, falling even slightly short can invalidate the break notice and leave the tenant bound for the rest of the term. Anyone relying on a break clause should check the exact wording well in advance and build in enough time to fix any shortfall before the deadline.

Dilapidations and the schedule of dilapidations

As the end of the lease approaches, the landlord will often instruct a building surveyor to prepare a schedule of dilapidations — a document listing the ways the tenant has fallen short of their repair, decoration and reinstatement obligations under the lease. It can be served:

• during the lease (an interim schedule), often used to prompt the tenant to carry out works before they accumulate into a larger liability; or
• at or near the end of the term (a terminal schedule), which typically forms the basis of the landlord's claim once the tenant has left.

Two things constrain what a landlord can actually recover:

1. The statutory cap. Section 18(1) of the Landlord and Tenant Act 1927 limits damages for breach of a repairing covenant to the amount by which the value of the landlord's reversion is diminished by the breach — not simply the cost of the repair works. If the landlord intends to demolish or substantially alter the premises regardless, this can reduce or even eliminate a repair claim, because the disrepair may not have diminished the value of what the landlord is actually going to do with the building.
2. The Dilapidations Protocol. The Ministry of Justice's pre-action protocol for commercial dilapidations claims sets out a structured process — the landlord sends a "quantified demand" itemising the claim, the tenant is expected to respond within a reasonable period (commonly around 56 days), and both sides are expected to exchange information and avoid inflated claims before litigation is contemplated.

In practice, most dilapidations disputes are settled by negotiation, often as part of the wider lease-ending discussion, rather than going to court.

Deed of surrender

A deed of surrender is not legally required in every case, but it is the standard way to document a lease ending by mutual agreement before its contractual expiry. It formally releases both landlord and tenant from future obligations under the lease and removes any argument later about whether, or when, the tenancy actually ended.

Where a lease simply expires on its contractual date, or ends validly through a break clause or a statutory notice under the 1954 Act, a separate deed is not usually necessary — though written confirmation that the tenancy has ended, and that any dilapidations or rent issues are resolved, remains good practice for both sides' records.

Worked example: a mid-term lease coming up for renewal

A tenant, Priya, runs a shop under a ten-year lease that is not contracted out of the 1954 Act, with eighteen months left to run. Her landlord wants the unit back to redevelop the building.

• The landlord serves a section 25 notice ten months before the contractual expiry date, stating the termination date and relying on ground (f) — intention to demolish or reconstruct.
• Because ground (f) is a "no-fault" ground, Priya is entitled to statutory compensation under section 37 if the landlord's opposition succeeds, calculated from the rateable value of the shop.
• Priya can apply to court for a new tenancy, or negotiate directly. If she instead decides she does not want a new lease at all, she could have used a section 27 notice to end the tenancy on her own terms — but since the landlord has already served a section 25 notice, the timetable is now largely driven by that notice.
• As the termination date nears, the landlord's surveyor prepares a terminal schedule of dilapidations. Priya's claim exposure is capped by section 18(1) of the 1927 Act — and given the landlord intends to demolish, that cap may significantly reduce what the landlord can actually recover for disrepair, since the value of the reversion is not affected by defects in a building that is about to come down.
• The parties agree final terms, Priya hands back the keys, and — although not strictly required because the tenancy ends by the section 25 process rather than by agreement — both sides exchange written confirmation that the tenancy has ended and all accounts are settled.

What to do, in order

1. Work out whether the 1954 Act applies. Check whether the lease was validly contracted out using the section 38A procedure. If it was not, security of tenure applies and the ending process is far more prescriptive.
2. Identify the ending route. Decide which mechanism fits the situation — a section 25 notice, a section 26 request, a section 27 notice, a break clause, a surrender, or forfeiture. This choice drives the rest of the timeline and should not be made casually.
3. Prepare and serve the correct notice, on time. Statutory notices must be in the prescribed form, served on the correct party at the correct address, and give the right amount of notice. Break notices must satisfy every condition in the lease — courts tend to enforce these strictly.
4. Deal with dilapidations and reinstatement. Expect a schedule of dilapidations from the landlord's surveyor. Remember any claim is capped by section 18(1) of the 1927 Act and governed by the Dilapidations Protocol — carry out agreed works, dispute unreasonable items, or negotiate a settlement.
5. Complete the handover and document the ending. Return the keys, vacate fully, settle final rent and service charge accounts, and keep written evidence of the handover — ideally a signed deed of surrender or written confirmation that the lease has ended, closing the door on future claims from either side.

This guide provides general information about how commercial leases end in England and Wales. It is not legal advice and is not a substitute for advice tailored to your specific lease and circumstances. The law described was accurate as at August 2026 and is subject to change, including the Law Commission's ongoing review of the Landlord and Tenant Act 1954 — always check GOV.UK and legislation.gov.uk for the current position.

Last reviewed: August 2026 by a non-practising solicitor · Next review due: August 2027 or on legislative change.