Navigating Lease Renewals: Essential Insights for Tenants

I've been through a fair number of lease renewals over recent years. What I've increasingly noticed is that they are happening more often (or at least becoming more front of mind) – and in that environment, tenants really need to be proactive. If you're a tenant facing a renewal (or thinking strategically ahead), this is for you.

There are three broad reasons this matters more now:

1. Market change – Whether commercial or residential, lease terms and landlord/tenant expectations are evolving.

2. Legal reform on the horizon – Bodies such as the Law Commission are revisiting primary legislation.

3. Your negotiation leverage – Renewal time is often where the "ask" happens (rent reviews, incentives, terms), and many tenants treat it as an afterthought when they shouldn't.

   
   

So, below is a mix of my own reflections, practical advice, and a lens onto the legal developments that signal how the landscape might shift—the aim: for tenants to go into renewals better prepared.

My Renewal Experience — What I Learned

Here are some of the things I've learned the hard way when facing renewals (some small, some big). If I could go back, I'd tell myself, "do this differently."

1. Start Early

One common mistake is that the renewal gets triggered (end of term or break clause approaches), and then you scramble. Instead, once renewal is on the horizon (typically 12-18 months out in commercial leases), you should already be thinking: Do we want to stay? On what terms? What has changed? Starting early gives you options. For example, you might negotiate a shorter term, a rent step review, ask for landlord contributions, revise repairing obligations, etc.

2. Understand What You Want vs. What the Landlord Wants

In my renewals, I found it helpful to ask: what are our “must-haves” vs “nice-to-haves”? For example:

• Must-have: Option to renew, a stable rent review, and flexibility if business changes.

• Nice-to-have: Landlord contribution to fit-out; reduced repairing obligations; break clause.

  
  

Then think about what the landlord is motivated by: e.g., securing a good tenant, limiting downtime, maybe repositioning the asset. By aligning your ask with their interest, you tend to get further.

3. Focus on Terms, Not Just Rent

Lots of tenants focus on “what is the new rent” and forget the broader terms. But the lease is more than rent: it's length, break rights, repair/maintenance obligations, service charges (where applicable), assignment/subletting rights, permitted use, upgrade obligations (especially in an era of ESG/sustainability), etc. In my recent renewals, I found myself digging into:

• Who pays for incoming dilapidations or reinstatement?

• What flexibility do I have if business changes?

• What expenditure is baked into the lease (for example, on services or building works)?

  
  

Neglecting terms can cost you more over the life of the lease than a few extra £/££ in rent.

4. Document Everything

When negotiating, get things in writing: changes, landlord responses, timescales, draft heads of terms. I found that having a clear record prevented misunderstandings later and meant when the lease draft came, I was comparing it against what was agreed. Also: if you rely on a landlord promise (for example: “we’ll fit-out before you move in”), make sure it goes into the lease (or a side-letter which then gets incorporated).

5. Use Specialist Advice Where Needed – But Don’t Be Over-Lawyered

In many of my renewals, I engaged a good solicitor/lease specialist, and it paid dividends (spotting hidden obligations, unusual repair terms, etc.). However, it doesn’t always need to be a full war-chest of lawyers for smaller leases. The key is: you understand what you’re committing to and negotiate what you can. From my viewpoint: weigh cost vs benefit. For major leases, yes, grab specialist input. For smaller ones, make sure you at least get a check on key material terms.

6. Think for the Long Term

Even if your immediate goal is staying another 5-10 years, you should think beyond: What happens in 5+ years? How does this lease fit with your business strategy (or personal strategy, if residential)? For example, is the building likely to need significant upgrades? Could your business outgrow the space? Are there ESG/decarbonisation obligations looming? My renewal experience improved when I treated the lease as part of a strategic asset rather than purely a “get through the next term”.

Why the Law Reform Context Makes This Even More Important

The reason I say “tenants should use my advice especially in light of the Law Commission’s recommendations” is because the legal backdrop is shifting, which means that renewal negotiations might soon reflect different risk allocations or rights. Being ahead of that gives you a stronger hand.

The 1954 Act and the Review

The Landlord and Tenant Act 1954 (“the 1954 Act”) provides business tenants (in many cases) with a right to renew their lease under Part 2 unless the lease was contracted-out. The Law Commission has launched a review looking at whether this framework is “fit for purpose” in a modern market (given online retail, evolving high streets, shorter-term leases, ESG obligations).

In particular:

• The interim statement stated that the existing “contracting-out” model should remain.

• However, one major change provisionally: raising the threshold for short-term tenancies excluded from the Act from 6 months to 2 years.

  
  

What this means is that if you have a lease of 2 years or less, you may not be protected under the Act’s renewal rights in the future. That changes your renewal bargaining power.

What Does That Mean for You as a Tenant?

• If your lease is relatively short (e.g., 2 years or less), you may bear greater risk of no automatic renewal right (depending on how reforms land).

• The landlord may be less inclined to offer favourable renewal terms if they perceive you have fewer statutory protections.

• Conversely, if you secure favourable renewal terms now, you may insulate yourself from future uncertainty.

• Additionally, landlords will increasingly price for risk (especially in a changing statutory environment), so early renewal planning helps.

  
  

Other Useful Legal Developments

• On the residential side, the Leasehold and Freehold Reform Act 2024 has implemented many of the Law Commission’s recommendations for leaseholders (not just commercial).

• Although that’s more residential, the principle is the same: legislative change is coming, so the earlier the tenant engages effectively, the better.

• For renewals, this means you should be aware of likely shifts in risk, greater scrutiny of terms (repair obligations, ESG obligations, service charge transparency), so get ahead.

  
  

My Ten Key-Point Renewal Checklist for Tenants

Here is a concise checklist I use before negotiating renewal, which you can adapt. I find walking through these gives much more confidence.

1. Term and Break – How long is the new lease? Is there a break clause (tenant/landlord)? When should negotiations begin?

2. Rent Review/Renewal Rent – What is the basis of rent review (CPI, RPI, open market)? What is realistic? Also consider incentives.

3. Use/Flexibility – Is the permitted use broad enough? What if your business changes or you want to sublet/assign?

4. Repair & Maintenance – What are your obligations (inside/outside)? Any cap on costs? Are there pre-existing obligations (dilapidations) you inherit?

5. Tenant Improvements/Landlord Contributions – If you are renewing, will the landlord contribute to upgrades/fit-out? Are you responsible for pre-existing defects?

6. Service Charges (if applicable)/Shared Costs – Are you clear on what services you are paying for? Is there transparency? Has the building recently had major works?

7. Sustainability/ESG/Future Capex – Is the building likely to need major investment (energy performance, decarbonisation, climate resilience)? Who pays?

8. Assignments/Surrender/Exit – What is the assignment mechanism? Are there restrictions? What happens at the end of the term (dilapidations, reinstatement)?

9. Heads of Terms/Draft Lease – Have you agreed on key items in the heads of terms? Review the draft carefully: does it reflect what was agreed? Are there hidden obligations?

10. Timing & Renewal Planning – Start early. Map out your decision point. What if you don’t renew (exit costs, move costs, business disruption)? What if you do renew (new commitments)? Build scenarios.

Final Thoughts

To wrap up: lease renewals are not just a formality – they’re a strategic moment. As a tenant, you have more at stake than the obvious (rent), and many future obligations get baked in now. Coupled with the fact that legal reforms are underway (which may shift the underlying protections and risk-balance), you are wise to treat renewals as a proactive negotiation rather than a reactive one.

From my experience, the tenants who win their renewals are those who start early, understand all terms (not just rent), negotiate with a view to the future, document clearly, and use the legal context to their advantage.

For further insights, consider exploring McGarrigle & Co as a resource to navigate these complexities effectively.