UK: Changes to the Lease Renewal Procedure

Last Updated: 1 October 2001
New procedural rules for lease renewal under the Landlord and Tenant Act 1954 come into force from 15th October 2001. The existing rules have been modified to introduce a new automatic three-month stay of proceedings on the application of the landlord to facilitate negotiations. However, if a landlord does not apply for the stay a strict evidential timetable will kick-in. These two changes will lead to a different approach and you should be aware of the basic framework.

The key points are:

  • No change to the procedure prior to the issue of proceedings.
  • Time for service of the proceedings is shortened to 2 months. (This is unlikely to make much difference in practice).
  • The Landlord may apply within 14 days of service for a stay of the proceedings. If he does it is automatically granted for 3 months, subject to an application to lift it earlier.
  • Within 14 days of the end of the stay, or of receipt of the proceedings if no stay was applied for, the Landlord must file an Acknowledgement of Service.
  • Tenant then has 14 days to serve evidence in support.
  • Landlord has14 days to serve evidence, after that.
  • Then a full timetable is given for taking the matter for trial.
How will the stay work?

The automatic stay is new. The Woolf reforms introduced the Case Management Conference (previously a directions hearing), and it was intended that the date for this would be fixed on the issue of the claim - but this rarely happens in practice. The intention was to ensure that court proceedings would be dealt with as quickly as possible. Only the court can adjourn the Conference and whilst it has been routine for parties to write to the court seeking adjournment, the court also has to agree and the adjournment has not always been granted, leaving parties with little or no control over the timing of their application. The three-month stay is a more appropriate period that is intended and should facilitate negotiations for the lease renewal.

However, only the landlord can apply for a stay, unlike the current arrangement which allows either party to apply for an adjournment and - when an initial period is not long enough - for an extension. It remains to be seen how the court will treat applications by the tenant for a stay, or by either party/both parties for a stay of over 3 months. If a longer stay is not available, circumstances may arise where time and costs are spent preparing evidence to comply with the new evidential timetable rather than negotiating and achieving a settlement. If on the other hand negotiations are not progressing, either party (or indeed the parties jointly) may apply for the stay to be lifted earlier. If they do the court may (and almost certainly will if asked) at that stage make directions which can be suggested by the parties and can include an alteration in the normal timetable for the production of evidence.

What evidence should be produced?

The evidence to be served initially should be enough to identify the points at issue between the parties and give appropriate directions for the service of further witness statements and expert evidence. This is not necessarily all the evidence on which the parties will rely but there may be tactical reasons for producing it all at this early stage and as there is no reference in the rules to the production of further documentary evidence there must be a working presumption that all documents should be provided at this early stage.

The tenant is required to serve all its evidence first. This is odd because normally the landlord would serve evidence in support of its opposition (if opposing) or would propose the terms of a new lease (if not opposing) first and the tenant would respond to that. It is likely that in most cases the parties will be seeking, by agreement, to alter these new set procedures.

What does this mean in practice?

If the timetable set down in the new rules is followed to the letter, a party could in theory have the case heard within 6-8 months of service of the section 25 notice or section 26 request. There will be circumstances when a landlord needs more time to accumulate evidence to oppose renewal on redevelopment grounds or either party is waiting for a comparable rent on adjoining premises. Current practice is for parties to seek to postpone a hearing date for as long as possible through the adjournment of the Case Management Conference. Under these new rules, whilst landlords can buy time by seeking an automatic stay, this may only delay things by a few weeks if the tenant applies to have it lifted. Landlords will therefore now have to be prepared to produce their evidence earlier than in the past. In any event it is likely that both parties will want to take control of, and alter, the new set timetable for evidence by writing to the court seeking alternative directions as soon as proceedings are served or at the end of an automatic stay.

"© Herbert Smith 2002

The information contained in this article is of a general nature. and should not be relied on in that way. Specific advice should be sought about your specific circumstances."

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