Lease Renewal Negotiation Pack

Start negotiations 12-18 months before the lease expiry date. Under the Landlord and Tenant Act 1954, if your lease is protected, the landlord must serve a Section 25 notice or you can serve a Section 26 request between 6-12 months before expiry. Early engagement gives you more time to gather comparable evidence and negotiate terms.

FRI (Full Repairing and Insuring) means the tenant is responsible for all repairs, maintenance, and insurance of the property. IRI (Internal Repairing and Insuring) means the tenant only handles internal repairs. FRI leases shift more cost and risk to the tenant, but often come with lower rent. IRI is more common in multi-let buildings.

A break clause gives either the tenant, the landlord, or both the right to end the lease early on a specified date. For tenants, it provides flexibility and negotiation leverage. You must usually give 6-12 months written notice and comply with all lease conditions (e.g., up-to-date rent, clear of breaches) to exercise a break.

An upward-only rent review means the rent at review can only stay the same or increase. It can never decrease, even if market rents have fallen. This is common in UK commercial leases and is a significant point to negotiate. Push for an open market review that can go up or down.

You can check recent lettings on commercial property websites (Rightmove Commercial, CoStar, EGi), ask local commercial agents for comparable evidence, or instruct a RICS chartered surveyor to provide a formal market rent opinion. The VOA (Valuation Office Agency) also publishes data on rateable values.

Dilapidations are the costs of putting a property back into the condition required by the lease at the end of the term. Under an FRI lease, this can be substantial. Landlords may serve a schedule of dilapidations and claim costs against the tenant. Get a dilapidations survey early to understand your potential liability.

If your lease is protected under the Landlord and Tenant Act 1954, the landlord can only refuse renewal on specific grounds: they intend to redevelop, they want to occupy the premises themselves, or there are persistent breaches. If none of these grounds apply, you have the right to a new lease on similar terms.

A service charge covers the landlord costs of maintaining common areas, insurance, and building management. You can challenge unreasonable charges. Check your lease for the service charge provisions, request a breakdown, and compare with RICS benchmarks. The RICS Service Charge Code provides guidance on best practice.

For leases above £20,000 per year, professional advice usually pays for itself. A chartered surveyor (MRICS or FRICS) with lease negotiation experience can gather comparable evidence, conduct rent review negotiations, and advise on lease terms. Fees are typically 10-15% of the annual rent saving achieved.

Key negotiation points include: rent level, rent review mechanism, lease length, break clause dates and conditions, repair obligations (FRI vs IRI), alterations provisions, alienation (subletting and assignment rights), service charge cap, and rent-free period. Do not focus solely on rent — the total package matters.