Tenant's right to end a business tenancy: a simple guide to Section 27 of the 1954 Act

Tenant's right to end a business tenancy: a simple guide to Section 27 of the 1954 Act

Published:

Author: Stacey Moore

Section 27 of the 1954 Act provides the tenant that does not wish to renew its tenancy with a flexible right to end the tenancy on or after contractual expiry.

By virtue of Section 24 of the Landlord and Tenant Act 1954 (the "Act"), a business tenancy will continue until brought to an end in accordance with the Act. Section 27 of the Act provides the tenant that does not wish to renew its tenancy with a flexible right to end the tenancy on or after contractual expiry.

  • Scenario 1:
    The tenancy is yet to expire and the contractual expiry date is over three months in the future
    Under Section 27(1), the tenant may serve not less than three months' notice on the landlord bringing the tenancy to an end on contractual expiry.

    Alternatively, Section 27(1A) provides that the tenancy will come to an end on contractual expiry if the tenant has vacated on or before that date. The tenant cannot end the tenancy any earlier than the contractual expiry date of the existing tenancy. Serving notice is preferable as it prevents a continuation tenancy from arising. Where a tenant intends to rely on Section 27(1A), it should take great care to ensure it vacates fully and on time.
  • Scenario 2:
    The tenancy has continued beyond contractual expiry by virtue of Section 24 of the Act
    Under Section 27(2), the tenant may serve not less than three months' notice to bring the tenancy to an end at any time.

Whilst there is no prescribed form for a Section 27 notice, there are certain conditions which must be observed:

  • the only party entitled to serve the notice is the tenant
  • notice must be served in writing and recorded or Special Delivery is recommended
  • the tenant must have been in occupation under the tenancy for at least one month
  • the notice must be served on the competent landlord as defined by Section 44 of the Act

Tenants should also consider the following:

  • once this notice has been served, it is irrevocable and the tenant has no right to remain in the property once the termination date passes 
  • if the tenant has previously served a Section 26 Request, it cannot later serve a Section 27 notice 
  • once a Section 27 notice is served, the tenant is unable later to serve a Section 26 request and has lost all statutory renewal rights