Commercial Lease Law

Holding Over Commercial Lease UK — Continuation Tenancy, Periodic Tenancy, and Tacit Relocation

When a commercial lease expires and the tenant remains in occupation without a new lease being agreed, the tenant is 'holding over'. Three regimes apply: (1) England and Wales — LTA 1954 protected tenancy: statutory continuation under LTA 1954 Part II; tenancy continues on existing terms until terminated by s.25 notice (6–12 months before proposed termination date; prescribed form SI 2004/1005; hostile = opposing renewal (grounds s.30(1)(a)-(g)); friendly = proposing terms) or s.26 request by tenant (landlord must serve counter-notice within 2 months to oppose); interim rent (ss.24A–24D: market rent; applies from earliest possible s.25 notice date; application must be made within 6 months of tenancy termination). (2) England and Wales — contracted-out leases: no statutory continuation; holding over creates periodic tenancy at common law (typically quarterly on existing terms); no LTA 1954 protection; end with notice to quit (at least one rental period; expiring at end of period). (3) Scotland — tacit relocation: automatic renewal for one year unless notice to quit served at least 40 days before term date; LTA 1954 does not apply in Scotland; no equivalent of interim rent; rent continues at existing contractual rate during tacitly relocated period.

10 min readUpdated 7 June 2026Last reviewed: 17 May 2026holding-over-commerciallta-1954-continuationperiodic-tenancy-commercialtacit-relocation-scotland

LTA 1954 Continuation Tenancy and Contracted-Out Leases

LTA 1954 protected tenancy (England and Wales): on the contractual term date, a protected commercial tenancy does not expire — it continues as a statutory continuation tenancy on existing terms until terminated by the LTA 1954 procedure. The landlord must serve a s.25 notice (prescribed form SI 2004/1005) between 6 and 12 months before the proposed termination date: hostile notice (opposing renewal) specifying grounds of opposition under s.30(1)(a)–(g) or friendly notice (proposing terms for a new tenancy). Interim rent: landlord may apply under ss.24A–24D LTA 1954 for an open market rent to apply during the holding-over period; interim rent is assessed at the market rent for the new tenancy; application must be made within 6 months of termination of the tenancy by the court. During LTA 1954 continuation, the tenant pays the existing contractual rent unless and until an interim rent order is made. Contracted-out leases (England and Wales): where the lease has been contracted out under s.38A LTA 1954 (statutory or simple declaration before grant), LTA 1954 protection does not apply. On expiry, the tenant has no right to remain. If the tenant holds over and the landlord accepts rent, a periodic tenancy arises at common law (typically quarterly); no LTA 1954 protection applies to the periodic tenancy; ended by notice to quit of at least one rental period expiring at the end of a period.

Tacit Relocation in Scotland and Practical Landlord Steps

Scotland — tacit relocation: LTA 1954 Part II does not extend to Scotland. Scottish commercial leases are governed by the common law doctrine of tacit relocation (tacita locatio). On the contractual term date, if neither party has served adequate notice to quit, the lease automatically renews for a further period equal to the lesser of one year or the original duration (for short leases). This operates by silence — without any action by either party. To prevent tacit relocation, notice to quit must be served at least 40 days before the term date (for leases of one year or more); the lease may specify a longer notice period — the longer of the two applies. Tacit relocation can renew annually in perpetuity if notice is not served each year. Practical steps for English and Welsh landlords: diarise s.25 notice window at least 12 months before expiry; apply for interim rent as soon as LTA 1954 continuation begins; for contracted-out leases, do not accept rent after expiry unless intending to create a periodic tenancy; serve notice to quit immediately after expiry if the tenant is to vacate. Scotland: diarise 40 days before each term date; serve notice to quit in writing well before the deadline.

Frequently asked questions

What happens when a commercial tenant holds over after the lease expires?+

In England and Wales, a protected LTA 1954 tenant automatically continues as a statutory continuation tenant on existing terms. For contracted-out leases, holding over creates a periodic tenancy (typically quarterly) if the landlord accepts rent. In Scotland, tacit relocation automatically renews the lease for up to one year if neither party serves notice to quit at least 40 days before the term date.

How does a landlord end a commercial tenant's holding over?+

For an LTA 1954 protected tenant, serve a s.25 notice 6–12 months before the proposed termination date. For a contracted-out tenant on a periodic tenancy, serve a notice to quit of at least one rental period expiring at the end of a period. In Scotland, serve notice to quit at least 40 days before the next term date to prevent further tacit relocation.

What is tacit relocation in Scotland?+

Tacit relocation is the Scottish common law rule under which a commercial lease automatically renews for up to one year if neither party serves adequate notice to quit before the contractual term date. It operates by silence — no action is needed. To prevent it, a notice to quit must be served at least 40 days before the term date (or such longer period as the lease specifies).

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Commercial lease renewal guide 2026 under the Landlord and Tenant Act 1954 (LTA 1954): business tenancies protected by Part II LTA 1954 do not end at contractual expiry — they continue under s.24 until validly terminated by the statutory procedure. Key provisions: (1) Continuation tenancy (s.24): protected tenancy continues after contractual expiry on the same terms until terminated. (2) Landlord's s.25 notice: specifies whether landlord opposes renewal and on which ground(s); proposed terms if not opposing; must be served 6-12 months before the specified termination date. (3) Tenant's s.26 request: proactive renewal request specifying proposed commencement date (6-12 months ahead); landlord has 2 months to counter-notice opposing renewal. (4) Opposing grounds (s.30(1)): (a) failure to repair; (b) persistent rent delays; (c) substantial breaches; (d) alternative accommodation; (e) sub-letting of part; (f) demolition or reconstruction — landlord must show fixed, definite intention with planning, finance, and contractor in place; (g) own occupation — landlord must have owned for at least 5 years. (5) Compensation (s.37): for no-fault grounds (e)(f)(g) — 1× rateable value (2× if 14+ years' occupation). (6) Interim rent (ss.24A-24D): either party can apply; typically market rent. (7) Contracting out: exclude LTA 1954 protection by warning notice + statutory declaration before lease is granted.

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