When a commercial lease comes to an end and you have decided not to renew, there are important steps to take to hand back the property correctly, avoid a hefty dilapidations bill, and recover your rent deposit. Getting the exit wrong can be expensive. Here is a plain-English guide for England and Wales.
First: check whether the 1954 Act applies
How you bring the tenancy to an end depends on whether it is protected by Part II of the Landlord and Tenant Act 1954:
- Contracted out (outside the Act): the lease ends on its expiry date. However, if the tenant remains in occupation after expiry and the landlord acquiesces or accepts rent, a tenancy at will or periodic tenancy may arise, so the handover and any post-expiry occupation must be managed carefully.
- Protected (inside the Act): a business tenancy continues automatically after the contractual end date unless properly ended. If you don't want to renew, you (the tenant) can end it by serving a section 27 notice (or by vacating on or before the contractual expiry, depending on timing), generally giving at least three months' notice to end a continuation tenancy. Don't just walk away assuming it has ended.
Get the timing and notices right, mistakes can leave you liable for more rent.
Give vacant possession on time
To end your liability cleanly, you usually must give vacant possession by the termination date, meaning the property is empty of your people, possessions and rubbish, and the keys are returned. Leaving items behind, or staying a day too long, can cause problems (and, with break clauses, can even invalidate the termination).
Deal with dilapidations and reinstatement
This is often the biggest issue. Under a typical full repairing lease you must hand the property back in repair, and you may have to reinstate any alterations you made (removing partitions, making good). At the end of the lease the landlord may serve a schedule of dilapidations claiming the cost of putting the property right. However, under section 18(1) of the Landlord and Tenant Act 1927, damages for breach of repair covenants at lease end are generally capped by the diminution in value of the reversion caused by the disrepair, and no damages are recoverable if the landlord intends to demolish or structurally alter the premises in a way that would render the repairs valueless. The claim is therefore not simply the landlord's cost of works.
To manage this:
- review your repairing and reinstatement obligations early;
- do the works yourself where it is cheaper than paying the landlord's claim;
- check any schedule of condition agreed at the start, which can cap your liability; and
- take surveying advice on a dilapidations claim, they are often negotiable.
Recover your rent deposit
If you paid a rent deposit, the rent deposit deed governs its return. The landlord can usually deduct for unpaid rent or breaches (including dilapidations), and must return the balance. Chase it in writing, with a clear account of what is owed.
Final practical steps
- Pay all sums due up to the end (rent, service charge, insurance rent) and get a final account.
- Cancel or transfer utilities, business rates and insurance, and redirect post.
- Settle any service-charge balancing payments.
- Keep records and photos of the property's condition on handover.
- Remove your data/equipment securely.
Key takeaways
- Check the 1954 Act: contracted-out leases end on expiry, but a protected tenancy continues unless you end it properly (e.g. a section 27 notice), don't assume it has ended.
- Give vacant possession on time (empty property, keys returned).
- Plan for dilapidations and reinstatement early, use any schedule of condition and take surveying advice; claims are often negotiable.
- Recover your rent deposit under the deed (less legitimate deductions), settle final accounts, and tidy up utilities/rates/insurance.
Sources
- Landlord and Tenant Act 1954, Part II (continuation tenancies; tenant's section 27 notice; ending a protected tenancy)
- Lease repairing and reinstatement obligations; dilapidations schedules; the Dilapidations Protocol
- Rent deposit deeds (return of deposit and permitted deductions)
--- This article is general information about the law of England & Wales as at 2026, not legal advice. For advice on your circumstances, consult a qualified solicitor.