Here we look at the tenant’s section 26 request for a new lease. Before reading on, it is worth checking to make sure that your lease is not excluded from this applying, and that your lease is a tenancy as defined by the 1954 Act (the “Act”). Landlords often exclude leases so that tenants don’t have as much protection. We’ll look at tenancies a little later.
The Section 26 request
As long as the tenancy does not exclude the Act, is not a ‘periodic’ tenancy, or for a fixed term of a year or less, rather than wait for the landlord to serve a section 25 notice (we cover the section 25 notice here), the tenant may want to take the initiative and serve a section 26 request for a new tenancy.
The section 26 request must be in a form that is prescribed by the courts, and must be given between 6 and 12 months before the end of the current tenancy or before the new tenancy is to start. It must also enclose the tenant’s proposed new tenancy terms and cannot be served on a landlord who has already served a section 25 notice on the tenant.
If the landlord wishes to oppose the grant of a new tenancy, it is required to serve a ‘counter-notice’ on the tenant within 2 months of the tenant’s section 26 request, along with the ground on which they intend to rely on to oppose the new lease. If the landlord does this, then the tenant will need to apply to the Court for a new lease (as with the section 25 above) so as not to lose their tenancy rights. The landlord may pre-empt this by making an application to the court to end the tenancy itself.
This looks and feels like playing chess to some extent and it’s vital to have the right forms and deadlines here.
What are my options as a Landlord on receiving a section 26 notice?
- If you don’t wish to oppose the grant of a new tenancy, the parties should enter into negotiations for the terms of a new lease. If agreement to new lease terms will be settled before the expiration of the section 26 notice, then no further action is required (provided the new lease is completed by the required date).
- However, if agreement to new lease terms will not be concluded before the expiration of the section 26 notice, and the tenant has therefore applied to Court for a new lease, the court will decide on the terms of the new lease.
- If you do wish to oppose the grant of a new tenancy, you should serve a counter-notice within 2 months. If the tenant has applied to Court for a new lease, the court will decide on the terms of a new lease and whether it should be given.
- If the tenant has not applied to Court for a new lease, and the expiration date has not yet arrived, the landlord may apply to the Court for termination of the lease and the Court will determine the issues.
- If the expiration date has passed, and neither have applied to the court, the tenant will lose their right to renew the lease and must leave the premises.
What about rent and compensation?
If the tenant has been required to apply to the Court for a new tenancy, the current tenancy will not end on the expiry of the section 26 request, but will continue, at the same rent, until three months after the end of the Court proceedings. It is possible, however, for either the landlord or the tenant to apply for an ‘interim rent’ to apply during the time waiting for the Courts to make a decision.
If the tenant fails to obtain a new lease compensation may be available. We can advise you of whether you are entitled to compensation.
The compensation available will be the equivalent sum to the rateable value of the property, unless the tenant has been in the property for at least 14 years (in which case this amount is doubled).
If you are a commercial tenant or landlord and wish to discuss your tenancy, get in touch with us at email@example.com.
Author: Leonie Savory