How a periodic tenancy arises on expiry
When a commercial lease expires and the tenant holds over with the landlord's acquiescence, a periodic tenancy arises automatically by operation of law on the same terms as the expired lease (except the term). The period matches the rent payment interval — quarterly rent creates a quarterly periodic tenancy; monthly rent creates a monthly periodic tenancy. No new document or SDLT is required. The landlord's acceptance of rent is the most common form of acquiescence. If the original lease was LTA 1954 protected, the periodic tenancy is also protected. If the original lease was contracted out, the periodic tenancy is not protected and can be ended by a common law notice to quit.
Terminating a protected periodic tenancy
A LTA 1954-protected commercial periodic tenancy can only be ended by a valid s.25 notice (prescribed form; 6-12 months' notice; termination date at least on expiry of the current period; state whether landlord opposes renewal and grounds). A common law notice to quit is ineffective for a protected periodic tenancy. If the landlord opposes renewal, s.30(1) LTA 1954 grounds must be stated (ground (f) reconstruction; ground (g) own occupation are the most commonly relied on). The tenant must apply to court for renewal no later than the s.25 notice termination date. Interim rent (LTA 1954 s.24A) is payable at the open market rate during the renewal process.
- s.25 notice: prescribed form; 6-12 months' notice; opposition grounds required if landlord wants possession
- Common law notice to quit is INEFFECTIVE for a protected periodic tenancy
- Tenant must apply to court by the termination date in the s.25 notice or the tenancy ends
- Interim rent (s.24A): either party can apply for open market rent during the renewal process
Terminating an unprotected (contracted-out) periodic tenancy
Where the original lease was contracted out of LTA 1954, the periodic tenancy is unprotected and can be ended by a common law notice to quit. The notice must match the period of the tenancy (one quarter's notice for a quarterly tenancy; one month's for a monthly tenancy) and must expire on the last day of a period of the tenancy. No prescribed form is required and no grounds need to be stated. Serve in writing under s.196 LPA 1925. Allowing an unprotected periodic tenancy to continue for a very extended period (years) without taking steps to end it may create arguments that the parties have formed a new, distinct protected tenancy — take legal advice if the holdover becomes long-running.