A tenant which has the benefit of security of tenure pursuant to the Landlord and Tenant Act 1954 (LTA 1954) has an automatic right to a renewal lease at the expiry of its contractual term, unless the landlord can successfully oppose the renewal on one or more of the statutory grounds set out in section 30 of the LTA 1954. Certain grounds are classed as "no-fault" grounds, such as ground F (redevelopment) for which statutory compensation is generally payable. A landlord seeking to oppose renewal on one or more grounds, including no-fault grounds, will need to serve a section 25 notice, or serve a counter notice in response to a tenant's section 26 request.
Timing of the section 25 notice
A section 25 notice must give between 6 and 12 months’ notice of the landlord's opposition to the renewal of the lease and cannot expire before the contractual term end date of the lease. For landlords, early strategic advice around the timing for the service of the section 25 notice is key.
Rates revaluation – April 2026
Where a landlord serves a section 25 notice opposing lease renewal on one or more of the "no-fault" grounds, a tenant will be entitled to statutory compensation by reference to the rateable value of the property as at the date of service of the notice (pursuant to section 37(5) LTA 1954).
On 26 November 2025 the Valuation Office Agency announced that the next business rates revaluation will take effect on 1 April 2026, increasing rateable values for many properties.
Understandably, landlords and tenants are asking whether this will affect statutory compensation payable when renewal is successfully opposed under a "no fault" ground. If the section 25 notice is served prior to 1 April 2026, compensation will be based on current rateable values, even if the termination date falls after the revaluation.
Landlords intending to rely on "no fault" grounds should consider whether they are in a position to serve section 25 notices before April 2026 if they wish to avoid higher compensation liabilities linked to increased rateable values. Tenants should ensure they understand how this timing could influence the sums payable. Seeking advice now could help both parties avoid costly surprises.
