Landlord and Tenant Act 1954
Terms of the new lease
In shortOn a 1954 Act renewal the court fixes the property under section 32, the duration under section 33 — up to 15 years — and the other terms under section 35, where the O'May principle means the existing lease terms are the baseline and the party seeking a change must show it is fair and reasonable.
Key facts
- The holding
- Section 32 — the premises the tenant occupies
- Length of term
- Section 33 — such term as is reasonable, up to 15 years
- Other terms
- Section 35, having regard to the current lease
- Guiding case
- O'May v City of London Real Property [1983] 2 AC 726
- Rent
- Section 34 — market rent, disregarding tenant's goodwill and improvements
What property the new lease covers
Section 32 fixes the demise as the holding — the property comprised in the tenancy excluding any part the tenant does not occupy. A landlord can insist under section 32(2) that the new lease covers the whole of the original demise rather than just the occupied part, which matters where the tenant has sub-let space it would rather shed.
Rights enjoyed under the old lease carry across unless the parties agree otherwise, so access, service media and parking should be checked against what is actually used.
How long the new lease runs
Under section 33 the court grants such term as is reasonable in all the circumstances, subject to a 15-year maximum. The starting point is often the length of the old term, adjusted for the parties' plans: a landlord with a medium-term redevelopment scheme will argue for a short term, and the court can grant a shorter lease or include a break to accommodate it.
A tenant seeking a long term must be able to justify it commercially — fit-out cost, business plan, lender requirements — rather than simply preferring stability.
The other terms and the O'May principle
Section 35 tells the court to have regard to the terms of the current tenancy and all relevant circumstances. O'May supplies the discipline: the existing terms are the baseline, and a party proposing a change bears the burden of showing it is fair and reasonable. Crucially, a rent adjustment does not buy the transfer of a material risk from landlord to tenant.
Modernisation of dated drafting — service of notices, insurance, alienation machinery — is usually accepted. Substantive shifts such as converting a fixed service charge into a full recovery clause, or adding a landlord break, need real justification.
- Existing terms are the starting point (O'May)
- The party wanting change must justify it as fair and reasonable
- Compensation in rent does not license a transfer of risk
- Drafting modernisation is usually uncontroversial
- Break clauses and redevelopment rights are heavily contested
Common questions
How long can a renewal lease be?
Up to 15 years under section 33 — the court grants whatever term is reasonable in the circumstances, which is often close to the length of the old lease.
Can the landlord change the lease terms on renewal?
Only if the change is fair and reasonable. Under O'May the current terms are the baseline and the party seeking change carries the burden.
Does the new lease cover everything I currently rent?
It covers the holding — the part you occupy — although the landlord can require the new lease to take in the whole of the original demise.
The provisions behind this guide
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General information on business lease renewal under Part II of the Landlord and Tenant Act 1954 in England and Wales. It is not legal advice, and deadlines under the Act are unforgiving — take advice on your own notices and dates before acting.