Two completely different situations
Everything in a holding over commercial lease situation turns on a single question, so it is worth answering it before anything else. Was the lease protected by the Landlord and Tenant Act 1954, or was it contracted out?
If the lease was protected, it has not actually ended. Section 24 of the Act continues it automatically on exactly the same terms until somebody takes one of the specific steps the Act allows. That is not a loophole or an accident. It is how the Act is designed to work.
If the lease was contracted out, it ended on the expiry date and the tenant has no statutory right to stay. Whatever is happening now is a new arrangement, whether or not anyone intended to create one.
Most landlords and tenants who find themselves in this position have not thought about which of the two they are in. It makes a substantial difference to who holds the cards.
Holding Over a Protected Commercial Lease
A protected business tenancy does not expire at the end of its contractual term. It carries on under section 24 until something in a short list brings it to an end: a section 25 notice from the landlord, a section 27 notice or notice to quit from the tenant, forfeiture, or surrender. A tenant’s section 26 request does not end the tenancy by itself, but it sets a date, and the tenancy ends immediately before that date.
So if a protected lease expired in March and nobody served anything, the tenant is not holding over on sufferance. They are occupying under a continuation tenancy, on the same terms as before, with the same right to apply for a new lease that they always had.
The rent stays at the old contractual level unless somebody applies for interim rent. Either party can apply under section 24A. They must apply within six months of the tenancy ending.
In a rising market that matters to the landlord. In a falling one, it can matter to the tenant.
For a landlord, cost is the practical point. A continuation tenancy at 2019 rent levels in 2026 is expensive, and it lasts exactly as long as you let it last. Serving a section 25 notice starts the clock.
Tenants in this position are often more comfortable than they realise, but the comfort is static. Nothing improves while you wait. If you want a new lease on terms you have chosen rather than terms you are reacting to, a section 26 request lets you set the timetable.
Holding Over a Contracted-Out Commercial Lease
This is where it gets less comfortable, and where most of the risk sits.
A contracted-out lease ends when it says it ends. There is no continuation tenancy. Strictly, a tenant who stays on without a new agreement is a trespasser.
In practice nobody treats them as one, because the parties are usually negotiating a new lease and the tenant is usually still paying. What the law then has to decide is what kind of arrangement has come into existence. There are two candidates, and the difference between them is significant.
A tenancy at will. No security, no fixed term, endable by either side at any moment. This is what both parties almost always want during negotiations, and what the courts will usually find where negotiations are genuinely under way.
An implied periodic tenancy. This arises when a landlord accepts rent tied to a set period. The circumstances must also suggest the parties intended more than a tenancy at will.
A yearly periodic tenancy of business premises is a business tenancy like any other, which means it attracts full 1954 Act protection.
That last sentence is the one to read twice. Contracting out only applies to the lease it was done for. The landlord’s warning notice and the tenant’s declaration don’t cover any new tenancy that arises later by implication.
A landlord who let a contracted-out lease expire, kept banking quarterly rent for two years and never documented anything can discover they have granted a protected tenancy by accident.
The leading case is Javad v Aqil, and its message is reassuring as far as it goes: where the parties are negotiating, accepting rent does not automatically create a periodic tenancy. The court looks at all the circumstances to work out what the parties intended. But “the court looks at all the circumstances” is not a position any landlord wants to be relying on. It means litigation.
What Richard Says About a Holding Over Commercial Lease
I asked Richard Kaufman, our SRA-regulated co-founder, a question. What should a landlord do when a contracted-out lease has expired and the new terms aren’t agreed yet?
If you find yourself in a position where your contracted out tenancy has expired but you have not yet agreed the terms of a new one, you should really think about a new lease, which should also be contracted out of the 1954 Act on the same terms as the expired one for a period of three months. That will give both parties a limited time to complete the new permanent lease. But make a diary note to make sure that you do not let this temporary lease expire with nothing to take its place.
Using Aqqord obviates this problem. The new lease will be finalised as soon as you have agreed the rent, the length of the term and other straightforward commercial matters.
Richard Kaufman, SRA-regulated solicitor and co-founder of Aqqord
Note that this is a different route from the tenancy at will described above, and a firmer one. A short contracted-out lease gives both sides a fixed end date and terms they already know, where a tenancy at will gives neither. The trade-off: you must grant it properly, including the contracting-out procedure, before the tenant takes occupation.
Reducing the Risk of a Holding Over Commercial Lease
For a landlord with a contracted-out lease running past its expiry date, three things reduce the risk considerably.
Document it. A short, written tenancy at will costs very little and removes the argument entirely. The absence of any document is what creates the uncertainty.
Take rent monthly, not quarterly or annually. Accepting a year’s rent in advance looks a lot like a yearly tenancy. Monthly payments are much harder to characterise that way.
Keep the negotiations visibly alive. The inference of a tenancy at will depends on the parties genuinely negotiating. Six months of silence followed by a rent cheque points the other way.
For tenants, the mirror image applies. Have you occupied the property for a long time after a contracted-out lease expired? Has the landlord accepted rent on a regular cycle, with no document and no live negotiation? If so, your position may be better than you assume.
It is worth taking advice before agreeing to leave.
The short-tenancy exclusion
One more rule catches people out. Section 43(3) of the 1954 Act takes short tenancies outside the Act altogether: a tenancy granted for a term certain of six months or less gets no protection.
But there are two exceptions, and both are easy to trip over. The exclusion does not apply if the tenancy contains provision for renewal or extension beyond six months. And it does not apply if the tenant, together with any predecessor carrying on the same business, has been in occupation for more than twelve months.
So a rolling series of six-month lettings to the same tenant does not keep the property outside the Act. Once that tenant passes twelve months of occupation, protection applies.
Checked 24 September 2026: the Law Commission’s second consultation closed on 16 September 2026. Nothing has been enacted yet, so the six-month threshold stays unchanged. The Commission provisionally concludes that contracting out should remain, but simplified. It also suggests raising the duration threshold. Check this again once the Commission reports.
Where this ends up
Holding over almost always signals the same problem. The parties agreed commercial terms, but the legal process took too long. The expiry date arrived before the new lease did.
That is the problem Aqqord was built around. Drafting, negotiating and completing a renewal in days rather than months closes that awkward gap. The one between a lease ending and the next one starting.
It describes a tenant staying in occupation after the contractual term of the lease has ended. The legal effect depends on whether the lease was protected by the Landlord and Tenant Act 1954 or contracted out of it.
This only applies where the lease was contracted out and no new tenancy has arisen. A protected lease continues under section 24 of the 1954 Act. It ends only through one of the Act’s specified routes, usually a section 25 notice.
Not automatically. Following Javad v Aqil, where the parties are negotiating a new lease, the usual inference is a tenancy at will. But if a landlord accepts rent over a long period, with no negotiation and nothing in writing, a court may step in. It may find an implied periodic tenancy, which can carry 1954 Act protection.
Where a tenancy is continuing under section 24, either party can apply to the court to set a new rent for the continuation period. The application must be made within six months of the tenancy ending.
No. The lease the warning notice and declaration were carried out for is the only one to which the procedure is applied.
If a new tenancy arises by implication after that lease ends, it’s a new one. It hasn’t been contracted out, so it will be protected.
This article is general information about commercial leases in England and Wales, not legal advice on your particular transaction.
Aqqord completes commercial leases and renewals online, with the 1954 Act position set out clearly from the start and contracting-out handled properly where that is what both sides want. Preview a full draft for free at aqqord.com. £375 plus VAT per party, payable only on completion.
