Our team of experienced surveyors act on behalf of Landlords and Tenants in respect of Rent Reviews.
From a landlord’s point of view you may find that the rent you are receiving is in excess of the current open market rental value of the property, in which event it would be better to allow the tenant to continue holding over at the increased level of rent, rather than terminating the lease and initiating the process by which the lease will be renewed at a potentially lower open market rent.
As a landlord you need to clearly state in your Notice terminating the lease whether you will oppose renewal or not. You cannot change your mind once the Notice is served and therefore this step needs to be very carefully considered. If the tenant is satisfactory and you have no redevelopment plans for the property then you may be prepared not to oppose renewal.
If however you have an unsatisfactory tenant, or alternatively you require possession, perhaps for redevelopment, your own occupation or some other purpose, then consideration should be given to opposing renewal. However such a step in some circumstances will lead to compensation for the tenant and in all cases it will be necessary to prove the grounds for possession to the satisfaction of the court should the tenant resist. The landlord’s Notice may be given not more than 12 months, nor less than 6 months, before the lease end date in order to terminate the tenancy on the contractual lease expiry. It is therefore important to give due consideration to your objectives at least 15 months and, ideally, 21 months prior to the lease expiry date. Although action need not be taken at this early time it does allow for a strategy to be formulated and any necessary steps put in place.
From the tenant’s point of view he can serve a Section 26 Notice under the Landlord and Tenant Act terminating the tenancy. It may be appropriate to do this where the landlord has not served a Section 25 Notice where rents have fallen and there is an advantage to the tenant in terminating the tenancy as soon as possible and assessing the rent to market levels.
Similarly, in a rising market there is again an advantage to the tenant in bringing the tenancy to an end at the earliest point in order to set at a rent at the earliest opportunity.