Section 25 notices: a guide for commercial landlords and tenants

A Section 25 notice is a formal notice served by a commercial landlord to bring a business tenancy protected by the Landlord and Tenant Act 1954 to an end.

The notice can take one of two forms. The landlord can indicate that it is willing to grant the tenant a new lease and propose terms for the new tenancy, or it can oppose renewal and state the statutory ground or grounds on which it intends to rely.

For landlords, serving the correct notice at the right time is an important part of managing the renewal or termination of a protected commercial lease. For tenants, receiving a Section 25 notice means there are important decisions and deadlines to consider.

If you are considering serving a Section 25 notice or have received one from your landlord, contact our solicitors for advice.

What is a Section 25 notice?

Many business tenancies benefit from security of tenure under Part II of the Landlord and Tenant Act 1954.

Where the Act applies, the tenancy does not simply end on the contractual expiry date. The tenant will generally have a statutory right to a new tenancy unless the landlord can establish one of the statutory grounds for opposing renewal.

A Section 25 notice allows the landlord to formally begin the process of bringing the existing protected tenancy to an end.

The position is different where a commercial lease has been validly 'contracted out' of the security of tenure provisions of the 1954 Act. In those circumstances, the tenant will not normally have a statutory right to a new tenancy when the contractual term expires.

Establishing whether the existing lease has security of tenure is therefore an important first step.

The two types of Section 25 notice

A landlord serving a Section 25 notice must establish whether it is willing to grant the tenant a new tenancy or intends to oppose renewal.

1. Unopposed Section 25 notice

An unopposed notice, sometimes informally referred to as a 'friendly' Section 25 notice, means that the landlord is not opposing the tenant's right to a new tenancy.

The notice will set out the landlord's proposals for the new lease, which may include:

• The proposed rent.
• The length of the new lease.
• Rent review provisions.
• Other proposed lease terms.

These proposals provide a basis for negotiation. The tenant is not automatically required to accept them, and the parties can negotiate the commercial terms of the new tenancy.

2. Opposed Section 25 notice

An opposed notice, sometimes referred to as a 'hostile' Section 25 notice, means that the landlord does not intend to grant the tenant a new tenancy.

The landlord must identify the statutory ground or grounds under Section 30 of the Landlord and Tenant Act 1954 on which it intends to rely.

If the tenant does not accept the landlord's position, the dispute may ultimately need to be determined by the court.

When can a landlord serve a Section 25 notice?

A Section 25 notice must generally give the tenant between six and 12 months' notice.

The termination date specified in the notice cannot be earlier than the contractual expiry date of the existing lease.

Landlords should therefore consider their intentions well in advance of expiry rather than waiting until the end of the contractual term approaches.

A tenant with a protected tenancy may alternatively be able to start the renewal process by serving a Section 26 request. Once one party has validly initiated the statutory process, the other cannot subsequently use the alternative procedure.

What should a landlord consider before serving a Section 25 notice?

The first question for the landlord is whether it wants the tenant to remain in occupation.

Where the landlord is willing to grant a new lease, consideration should be given to the commercial terms it proposes, including the rent, the length of the new term, and any other provisions that may need to change.

Where the landlord intends to oppose renewal, the position requires particularly careful consideration. The landlord will need to identify the relevant statutory ground and consider whether it has the evidence required to establish that ground if challenged.

The timing and contents of the notice should also be considered carefully before it is served.

What should a tenant do after receiving a Section 25 notice?

A Section 25 notice should not be ignored, even where the landlord and tenant are already discussing a possible new lease informally.

The tenant should establish:

• Whether the landlord is proposing a new tenancy or opposing renewal.
• The termination date stated in the notice.
• The terms proposed for any new lease.
• Whether any statutory grounds for opposing renewal have been identified.
• The deadlines that now apply.

Where the landlord proposes a new tenancy, the tenant should consider the proposed terms and whether they meet the future requirements of the business.

This may provide an opportunity to negotiate matters such as the rent, the length of the new lease, break rights, repair obligations, and other commercial terms.

Where the landlord opposes renewal, early advice is particularly important. The tenant will need to consider the ground relied upon and whether it intends to challenge the landlord's position.

Can a landlord refuse to renew a commercial lease?

Where a business tenancy is protected by the 1954 Act, the landlord cannot simply refuse to grant a new lease without relying on one or more of the statutory grounds for opposition.

There are seven grounds under Section 30 of the Act. Broadly, these concern:

• The tenant's failure to comply with repairing obligations.
• Persistent delay in paying rent.
• Other substantial breaches of the tenant's obligations or reasons connected with its use or management of the premises.
• The availability of suitable alternative accommodation.
• Certain circumstances involving a subletting of part of a larger property.
• The landlord's intention to demolish, reconstruct or carry out substantial works to the property.
• The landlord's intention to occupy the premises for its own business or as a residence.
• Some grounds relate to the conduct of the tenant, while others concern the landlord's plans for the property.

Whether a landlord can successfully oppose renewal will depend on the particular ground and the evidence available.

Section 25 notice deadlines

The statutory timetable is one of the most important aspects of dealing with a Section 25 notice.

Serving the notice is not necessarily the end of the process. Where a new tenancy has not been agreed, the landlord or tenant may need to make an application to court before the relevant statutory deadline.

The parties can agree in writing to extend the deadline, which can allow negotiations to continue without immediately commencing proceedings.

Landlords and tenants should therefore keep the timetable under review throughout the renewal process and take advice before allowing a deadline to expire.

For a broader overview, read our guide to the process of renewing a commercial lease.

What happens if the terms of a new lease cannot be agreed?

Where the landlord is willing to renew but the parties cannot agree the terms of the new tenancy, either party may be able to apply to the court.

The court can determine matters including the rent, duration of the tenancy and other terms of the new lease.

In practice, landlords and tenants will often continue negotiating while ensuring that their position is protected under the statutory procedure.

Many renewals can therefore be completed by agreement without the court ultimately having to determine the terms.

What happens when the landlord opposes renewal?

Where an opposed Section 25 notice has been served and the tenant wishes to remain in occupation, the landlord may ultimately need to establish its ground for opposition before the court.

The evidence required will depend on the particular ground relied upon.

For example, where a landlord intends to demolish, reconstruct or carry out substantial works to the property, its plans and ability to carry out those works may become important to establishing the relevant statutory ground.

Both landlords and tenants should therefore obtain advice early where renewal is likely to be contested.

Statutory compensation following an opposed renewal

A tenant may be entitled to statutory compensation where the landlord successfully opposes the grant of a new tenancy on certain grounds that do not relate to fault by the tenant.

Whether compensation is payable, and the amount available, will depend on the circumstances and the statutory provisions applying to the tenancy.

Potential compensation should therefore be considered as part of the wider strategy where a landlord intends to recover possession or a tenant receives an opposed Section 25 notice.

Section 25 notices and interim rent

The rent payable while a commercial lease renewal is being dealt with can also become important, particularly where market rents have changed since the existing rent was agreed.

The Landlord and Tenant Act 1954 contains provisions allowing an application for interim rent in appropriate circumstances.

This can affect the rent payable during the period between the relevant statutory date and commencement of the new tenancy.

Landlords and tenants should therefore consider interim rent alongside negotiations over the rent payable under the new lease.

Reform of the Landlord and Tenant Act 1954

The Law Commission is currently reviewing Part II of the Landlord and Tenant Act 1954 and published its second consultation on reform of the security of tenure regime in June 2026. 

The existing Section 25 procedure remains in force while that review continues.

Advice on serving or responding to a Section 25 notice

A Section 25 notice may be the beginning of a straightforward commercial lease renewal or the first stage of a contested attempt to recover possession.

Michael Mulcare, consultant solicitor at SO Legal, has extensive experience advising commercial landlords and tenants on leasehold disputes, including Section 25 notices, forfeiture, break notices and lease surrenders.

He says:

"Section 25 notices are often treated as a procedural step in a lease renewal, but they can have significant consequences for both parties. Landlords need to be clear about what they want to achieve before serving a notice, while tenants should understand immediately whether renewal is being proposed or opposed and what deadlines now apply."

Our solicitors advise landlords and tenants on Section 25 notices and the wider lease renewal process, including preparing and responding to notices, negotiating new lease terms, opposed renewals and managing statutory deadlines.

If you are considering serving a Section 25 notice or have received one from your landlord, contact our team for advice.