The Renters’ Rights Act 2025
5 April 2026(2026-Apr LinkedIn>1261 views) The Renter’s Rights Act is going to be less of a problem at rent review and more on renewal in commercial property leases where the tenant is permitted to sub-let part for residential use.
Less at rent review because generally one assumption for the hypothetical lease is vacant posssession. This is regardless of whether the residential part is sub-let at the review valuation date. It is also regardless of whether the sub-rent is lower than the open market rent (as defined by the lease).
On renewal, the same principle, albeit s34 LTA54 does not expressly stipulate vacant possession. Where it presents an oppportunity for a landlord is in being able to decide whether to renew the existing holding or exclude the residential part. Excluding brings with it responsibility for repair and maintenance of the roof.
How to extricate the residential sub-tenant is a separate issue. For the tenant, this is less of a problem where the lease is renewed. It’s more of a problem where the tenant wants to assign, but cannot find a substitute tenant who wants to take over the sub-let. And far more where the landlord wants to redevelop the property.
Where the tenant is a limited company, a possible solution is for a sub-let to be to a newly-formed company permitted to occupy sharing as a group company.
Multiple retailers, in my experience, shun sub-letting upper parts of their shops for residential use: too much of a hassle. Shops with residential flats above, originally designed for owner-occupier shopkeepers to live over the shop, are nowadays generally sub-let; shopkeepers and local traders wanting a home of their own. Whether it would pay tenants to live on-site, perhaps the time has come for no choice?
Return to Article