Section 25 Notice: What It Means For Your Business Lease

If you run your business from leased premises, your lease renewal (or exit) can be one of the biggest “make or break” moments for your operations.

One document that often kicks off that process is a Section 25 notice. If you’ve just received one (or you think your landlord might serve one soon), it’s normal to feel a bit on edge - especially if your premises are essential to your customers, staff, and cashflow.

In this guide, we’ll explain what a Section 25 notice is, when it applies, what it can (and can’t) do, and what practical steps you should take to protect your business.

What Is A Section 25 Notice?

A Section 25 notice is a formal legal notice a landlord can serve on a business tenant under the Landlord and Tenant Act 1954 (often shortened to “the 1954 Act”).

It’s used to bring a protected business tenancy to an end and either:

• start the lease renewal process (where the landlord is willing to grant a new lease), or
• oppose renewal (where the landlord is saying they will not grant a new lease, relying on one or more legal grounds).

So, if you’re asking “what is a Section 25 notice?”, the simplest answer is: it’s the landlord’s formal trigger for renewal negotiations or (in some cases) termination of a protected business lease.

Why Does The “1954 Act” Matter?

The Landlord and Tenant Act 1954 gives many business tenants a valuable right called security of tenure. In plain English, that means you may have a right to stay in the premises and renew the lease - even if your contractual term is ending - unless:

• the lease was contracted out of the 1954 Act (more on that below), or
• the landlord can prove one of the legal grounds to oppose renewal.

This is why a Section 25 notice is such a big deal: it’s not just a “heads up” email from your landlord - it’s a formal step with deadlines and consequences.

Does A Section 25 Notice Apply To Your Business Lease?

Before you do anything else, you need to confirm whether your lease is actually protected by the 1954 Act. A Section 25 notice is only relevant if your tenancy has security of tenure.

Most Protected Tenancies Have These Features

• You occupy premises for business purposes (not purely residential).
• You have a “tenancy” (usually a lease) rather than a more informal arrangement.
• You are in occupation (i.e. you’re actually using the premises for your business).
• The lease has not been contracted out of the 1954 Act.

If you’re unsure what you have signed (or what you’re currently operating under), it’s worth getting your documents checked - sometimes businesses operate under something that is closer to a licence than a lease. For example, a Licence to Occupy may not give the same renewal protections.

What Does “Contracted Out” Mean?

Some commercial leases are “contracted out” of the 1954 Act. This means the tenant agrees in advance that they won’t have security of tenure and won’t have the automatic right to renew.

If your lease is contracted out, the landlord generally doesn’t need to serve a Section 25 notice to end the lease at expiry - the lease ends when it ends (subject to any holding over arrangements you negotiate).

This is one reason it’s smart to have your lease reviewed before you’re deep into renewal discussions. A Commercial Lease Review can clarify where you stand and what leverage you do (and don’t) have.

What Should A Section 25 Notice Include (And When Can It Be Served)?

A Section 25 notice isn’t just any letter. It needs to meet certain formal requirements, and timing is one of the biggest traps for small businesses.

Key Timing Rules (6–12 Months)

Generally, a landlord must give:

• at least 6 months’ notice, and
• no more than 12 months’ notice

before the “termination date” stated in the notice.

That termination date is important because it usually becomes the date that shapes the whole renewal process - including the deadline to start court proceedings if terms can’t be agreed (see below).

What The Notice Usually Says

A compliant Section 25 notice will typically:

• identify the landlord and tenant
• identify the premises
• state the termination date
• say whether the landlord is willing to grant a new lease (and on what proposed terms) or whether the landlord is opposing renewal
• if opposing renewal, state the statutory ground(s) relied upon

Can You Ignore A Section 25 Notice?

Practically, you really shouldn’t. Even though the notice is served by the landlord, the risks of inaction usually fall on you as the tenant.

If deadlines pass and no proper steps are taken, you could end up:

• losing your right to renew (even if you would otherwise have been entitled), and/or
• having to move out on a timetable that’s bad for your business, staff, customers, and cashflow.

What Happens After A Section 25 Notice Is Served?

Once the Section 25 notice is served, there are a few possible pathways - and which one applies will depend on what the notice says and what you want to do next.

Scenario 1: The Landlord Is Open To Renewal

If the landlord indicates they’re willing to grant a new lease, you usually move into a negotiation phase about key terms, such as:

• rent (and how/when it increases)
• lease length
• break clauses
• repairing obligations
• service charge and insurance provisions
• alienation terms (assignment/subletting)

Even if renewal is agreed in principle, the details matter. Small wording changes can shift a lot of risk onto your business.

If you’re renewing into a new lease, it’s also a good time to revisit any money held by the landlord. For example, a lease renewal might involve renegotiating how a deposit is handled, so it can help to be across commercial lease deposit rules.

Scenario 2: The Landlord Is Opposing Renewal

If your landlord is opposing renewal, the Section 25 notice should state which ground(s) they’re relying on under the 1954 Act.

In broad terms, the landlord can only oppose renewal by relying on one or more of the statutory grounds in section 30(1) of the 1954 Act (often referred to as grounds (a) to (g)). These include:

• tenant fault grounds (for example, certain breaches of covenant or persistent delay in paying rent), and/or
• landlord intention grounds (for example, they genuinely intend to redevelop or occupy the premises themselves and can prove that intention).

Whether those grounds are valid and provable is very fact-specific. This is where getting legal advice early can be the difference between negotiating a workable exit package and being pushed into a corner.

Scenario 3: You Negotiate A Surrender Or Exit Plan

Sometimes the “right” commercial outcome is to plan an orderly exit - even if you might have a technical right to renew.

For example, imagine your café is trading well, but the landlord plans redevelopment. You might negotiate:

• extra time to relocate,
• a fit-out contribution for your next premises,
• rent concessions during the final months, and/or
• an agreed surrender date that avoids disruption during your peak season.

This is also the point where businesses often realise their “lease paperwork” is only one piece of the puzzle. If you’re moving, you may also need to think about supplier arrangements, customer subscriptions, and service contracts - and what termination notices you need to give. (A clean exit can save you from disputes later.)

Scenario 4: You Can’t Agree, So You Apply To Court

If renewal is contested (either because the landlord is opposing it or because you can’t agree the new lease terms), the matter can be determined by the court.

One critical point: there are strict deadlines for making an application. In most cases, if you want to protect your right to a new lease you must issue your court application before the termination date stated in the Section 25 notice (unless that date is later changed by agreement).

It’s also worth knowing that the renewal process can be triggered in different ways. For example, in some situations the tenant may serve a Section 26 request for a new tenancy - and the interaction between a Section 25 notice and a Section 26 request can affect timing and strategy.

This is exactly the kind of “don’t DIY this” moment. Even if you’re confident negotiating rent, the procedural side has real consequences.

What Should You Do If You Receive A Section 25 Notice? (A Practical Checklist)

When a Section 25 notice lands, it’s easy to focus only on one question: “Do we have to leave?”

But the smarter approach is to run through a structured checklist so you can make decisions based on strategy - not panic.

1) Confirm Whether You Have 1954 Act Protection

Check whether your lease is protected or contracted out. If you don’t have security of tenure, your negotiation position may be very different.

2) Diarise The Key Dates Immediately

At a minimum, record:

• the date the notice was served
• the termination date stated in the notice
• any internal business deadlines (e.g. peak trading periods, planned refurbishments, staffing changes)

Also diarise the deadline to issue any court application if you may need to protect your renewal rights - in most cases, that means before the termination date.

If your business relies on foot traffic, seasonality, or appointment-based bookings, your ideal move/renewal timeline might be very different from your landlord’s.

3) Decide What Outcome You Want (Renew, Relocate, Or Restructure)

Try to be clear on your commercial goal early. For example:

• If the premises are central to your brand, you may prioritise renewal certainty (even at higher rent).
• If the area has changed or your business model has evolved, relocation might be the best long-term move.
• If your team has grown, you might need different premises terms (storage, access, hours, signage rights).

4) Start Negotiations Early (But Don’t Give Away Leverage)

Receiving a Section 25 notice doesn’t mean you must accept the landlord’s proposed terms.

In many cases, the best outcomes come from early negotiation - but with a clear sense of what’s reasonable and what’s risky. This is where a lease review and negotiation support can pay for itself.

5) Check Your Ability To Assign Or Sublet (If You Need Flexibility)

If you’re considering moving but you’re still within your existing lease term, you might explore whether assignment or subletting is allowed (and on what conditions).

These clauses can be heavily landlord-friendly, so it’s worth understanding the practical effect before you rely on them as “Plan B”.

6) Prepare For What Happens If You Do Have To Leave

If renewal is opposed (or you decide relocation is best), start planning early so you don’t end up with a rushed, expensive move.

That might include:

• searching for new premises and negotiating heads of terms
• checking whether you need planning permissions or landlord consents for signage/fit-out
• reviewing key contracts that might need termination or variation
• planning staff communications and operational continuity

Depending on your circumstances, you might also want to understand what happens if you’re operating in a less formal arrangement. Businesses sometimes discover they’ve been trading without a current signed lease, which can lead to uncertainty about rights and notice. If that sounds familiar, it’s worth being aware of commercial tenant rights without a lease.

Common Mistakes Small Businesses Make With Section 25 Notices

Most problems we see aren’t because the business “didn’t care”. They happen because the process feels technical and day-to-day operations get in the way.

Here are a few common pitfalls to avoid.

Missing The Deadline To Protect Your Renewal Rights

This is the big one. If you miss the relevant deadline for taking formal steps (including issuing a court application where necessary), you may lose your right to renew.

Even if you have a great relationship with your landlord, don’t rely on informal conversations to protect your position.

Assuming The Landlord’s Proposed Terms Are Standard

Some landlords start negotiations with terms that strongly favour them - and see what the tenant will accept.

That might show up as:

• shorter lease terms (less certainty for your business)
• more aggressive rent review terms
• wider repair obligations
• new restrictions on use, alterations, or assignment

It’s far easier to negotiate fair terms before you’ve “agreed in principle” than after you’ve already accepted key positions by email.

Not Planning For “Operational Reality”

A lease renewal isn’t just legal paperwork - it affects your real-world operations.

For example, if your landlord wants you out for redevelopment, you may need time to:

• fit out a new site
• manage customer expectations
• transfer stock and equipment
• retrain staff or adjust shift patterns

These practical realities should feed into your negotiation strategy. If you need six months to move without harming your business, that needs to be part of the discussion early.

Trying To DIY Complex Legal Documents Under Pressure

When deadlines are looming, it’s tempting to sign whatever is in front of you (or use a template for related documents) just to “get it done”.

But rushed paperwork can create long-term risk - especially around rights to renew, repairing obligations, and exit liabilities.

Key Takeaways

• A Section 25 notice is a formal notice a landlord can serve under the Landlord and Tenant Act 1954 to start the renewal process or oppose lease renewal for a protected business tenancy.
• The key issue is whether your lease has 1954 Act protection - if your lease is contracted out, a Section 25 notice usually won’t be needed to bring the lease to an end at expiry.
• Timing is critical: Section 25 notices usually involve a 6–12 month notice window, and if you need to protect your renewal rights you will generally need to issue court proceedings before the termination date (unless extended by agreement).
• After receiving a Section 25 notice, you should quickly confirm your legal position, diarise dates, and decide whether renewal, negotiated exit, or relocation is best for your business.
• If renewal is opposed, the landlord must rely on one or more of the statutory grounds (a) to (g) under the 1954 Act - whether those grounds stand up depends on the facts, so early legal advice is often key.
• Lease renewals can change major business risks (rent, repairs, assignment/subletting), so it’s worth having the lease terms reviewed rather than accepting “standard” wording.

If you would like help with your business lease renewal, negotiating terms, or responding to a Section 25 notice, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.