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Every commercial lease comes to an end eventually, and you may be wondering about what happens if your lease has expired and you have decided not to renew your lease. If your lease has already expired, you may be unsure about whether you can stay on the property. If you have contacted your landlord about the end of your lease, you may be unsure about what your rights and obligations are as a tenant. This article will outline your options if your lease has expired but you are still on the property.

Holding Over

If your lease expires and you are still occupying the property, this is known as ‘holding over’. Most lease agreements will contain provisions covering what:

  • it means to hold over; and
  • happens in this period.

Usually, this continues until either you or your landlord provide written notice terminating this period. This is usually a temporary arrangement, and not intended to replace any long term lease.

If your lease agreement does not contain provisions detailing what happens when you hold over, then the law implies a statutory tenancy. This is a month-by-month tenancy where you can still occupy the property, and generally, you need your landlord’s consent to do so. Either of you can terminate the tenancy by giving 20 days written notice.

You can still occupy the land without your landlord’s express consent after the term expires. It is, however, important to note that you may open yourself up to legal consequences if you do so. You still have to fulfil all of your original obligations of the lease if you occupy the property. Your landlord does not necessarily consent to you being on the property if they still accept your rent payments.

Why Hold Over?

There are various reasons why you may need to hold over after your lease expiration date. Usually, your lease agreement will include an ‘option term’ that details your option to renew your lease, that you would have negotiated at the time of signing the contract.

If there is no option term, holding over can be an option for planning your next move. Some reasons for holding over include:

1. Negotiating a Renewal

If you did not have an option to renew in your original lease agreement, this does not stop you from negotiating a lease renewal or entering into a new lease once your original one expires. A holding over period can be useful for giving you enough time to negotiate the terms of a new lease with your landlord.

For example, you may have originally intended to only stay on the property for a year, then move to a larger premise. Here, your business has not grown as much as you expected, or you may be happy with the lease you currently have. Holding over can be useful for providing time to negotiate a new lease with your landlord.

2. No Commitment

You may also decide to hold over because you are still looking for new commercial property to rent, or you are still deciding on your options. This gives you some flexibility and you do not have to commit to a longer fixed-term tenancy.

3. Reinstatement Obligations

Your landlord may ask you to stay on the property longer if you still have obligations under a make good clause or other reinstatement obligations. Under most lease agreements, you have a responsibility as a tenant to return the property to its original state, as it was before you occupied it. This may include:

  • replacing carpets;
  • giving the premises a new coat of paint;
  • removing any fixtures or fittings you have attached; and
  • repairing any damage.

Potential Risks

It is important to note that there are certain risks to holding over and occupying the land, even if you are doing so under your lease agreement or through a statutory tenancy. This kind of lease is uncertain, and if your landlord asks you to leave all of a sudden, it can be difficult to pack up your business and find a new hub of operation within 20 days.

If you are worried about this, rather than relying on the holding over provisions in your lease agreement, you may be able to negotiate a short fixed-term lease with your landlord. This can be useful if you are still uncertain about what you want to do after your lease expires, and you are still deciding whether you wish to renew.

Key Takeaways

Most lease agreements will have provisions detailing what happens if your lease has expired. These may include holding over, where you can still occupy the property until either you or your landlord terminate this arrangement with 20 days written notice. This can be risky, as it is uncertain. If you would like more information or help with your lease expiry, contact LegalVision’s property lawyers on 0800 005 570 or fill out the form on this page.

What happens when my commercial lease expires?

If your commercial lease has expired, generally you would vacate the property after you fulfil your leaving obligations set out in your lease agreement. But, if your landlord does not object, you may be able to stay on the property for a hold over period.

Can a lease be renewed automatically?

No, you need to notify your landlord if you want to renew your lease. This does not necessarily have to be written expressly – in some cases, it can be implied that you wished to renew your lease based on your behaviour and how you communicated with your landlord.

What is a right of renewal?

A right of renewal means that you have a right to renew your lease when it ends. You have to give your landlord notice if you wish to do so, and there may be certain conditions attached to this right.

How can I avoid renewing my lease?

You should notify your landlord if you do not want to renew your lease or want to negotiate a new one. There is usually a notice period that you have to do this by as well.

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