Written for owners of restaurants, cafes and coffee shops, pubs and bars, takeaways and delivery kitchens, food trucks and bakeries with seating, anywhere in the UK.
The short version
- Check whether the lease is contracted out.In England and Wales, a contracted-out lease ends on its date with no right to renew. Price any fit-out against that date.
- Fix the red flags before you sign.Get landlord and planning consent for extraction, takeaway and delivery in the user clause, a capped personal guarantee and a photo record of condition.
- Diarise any notice deadline the day it arrives.Issue a court claim or agree a written extension before the date in a section 25 notice, or lose protection. Call a solicitor that day.
For most restaurants, cafes and pubs the lease is the biggest contract you will sign, and the fit-out you pay for is only worth what the lease lets you keep. In England and Wales a business tenant in occupation has the right to a new lease at the end of the term, unless the lease was contracted out. Scotland has no 1954 Act (leases roll on by tacit relocation) and Northern Ireland has its own Order, so check which applies.
Contracting out
To contract out, the landlord must serve a warning notice at least 14 days before you commit, and you sign a simple declaration; if it is less than 14 days, a statutory declaration. A contracted-out lease ends on its date with no right to renew, so price the fit-out against that date. As of Oct 2026.
Landlord and Tenant Act 1954 Part II, s.38A
The renewal deadline
A landlord's section 25 notice or your own section 26 request starts the clock, giving 6 to 12 months. You must issue a court claim, or agree a written extension, before the date in the notice or request. Miss it and the protection is gone. A landlord can oppose renewal only on the grounds in section 30(1), such as redevelopment or wanting the site for its own use. As of Oct 2026.
Landlord and Tenant Act 1954 ss.25, 26, 29A, 29B and 30(1)
| Compensation at one times rateable value | £48,000 |
| Doubled after 14 years in occupation | £48,000 |
| Compensation if the landlord proves its intention | £96,000 |
Rateable value £48,000. The owner's solicitor issues the claim before the date in the notice. Compensation is due only where the landlord wins on ground (e), (f) or (g) (s.37). As of Oct 2026.
Red flags to fix before you sign
- Contracted out for a full fit-out: negotiate a longer term or an option to renew.
- No extraction consent in the lease: get landlord and planning consent before exchange.
- A user clause that excludes takeaway or delivery: widen it first.
- A personal guarantee with no cap or end date: limit it in amount and to the first 3 years.
- A full repairing lease with no schedule of condition: attach a photographic schedule.
- A brewery loan with tied supply above market prices: price the tie against bank finance.
- A franchise fee on gross sales including VAT: negotiate a net sales base.
- Buying a business or lease with fixtures: agree a section 198 election fixing their value within 2 years, and check the seller pooled them, or you can lose the capital allowances on them for good (Capital Allowances Act 2001 ss.187A and 198).
Tied pubs: the 21-day window
Where the pub company has 500 or more tied pubs in England and Wales, a tied tenant may ask to go free of tie at a market rent (MRO, market rent only) on a trigger event: a rent assessment or review, a renewal, a significant tied price increase, or an event outside the tenant's control. The MRO notice must be served within 21 days of the trigger; miss it and the option waits for the next event. As of Oct 2026.
Pubs Code etc. Regulations 2016
Before choosing, compare 3 years of each deal: the tied deal (rent, beer price per barrel, machine income share, repairs) against the MRO lease (market rent, free buying, often a new repairing lease). A tenant of a smaller pub company has only the lease; Scotland has its own code.
A premium pays for the right to trade there, so its value depends on the term, the 1954 Act protection and the right to assign. Check those before you talk price.
If you want to sell later, your landlord's consent to assign cannot be unreasonably withheld and must be decided in writing within a reasonable time (Landlord and Tenant Act 1927 s.19(1)(a); Landlord and Tenant Act 1988 s.1). Expect to sign an authorised guarantee agreement.
Asked in Greymill
Normally the Landlord and Tenant Act 1954 gives a business tenant in occupation the right to a new lease when the term ends. A contracted-out lease simply ends on its date.
Your fit-out: about £120,000
Over a 5-year term: about £24,000 a year
All of it has to pay back inside those 5 years.
Before you sign:
Push for a longer term or an option to renew
Get landlord and planning consent for extraction before exchange, if the lease has none
Widen the user clause (what the unit may be used for) if it excludes takeaway or delivery
Limit any personal guarantee in amount and to the first 3 years
Paste in the main terms and I will flag anything else. Then take it all to a property solicitor before you commit.
Ask it about your own business
Paste this into Greymill with your own figures, and Contracts & Disputes works it through for your business.
I run a restaurant, cafe or bar in the UK. My lease [is or is not] contracted out, has [number] years left, rent of [amount] a year, and [describe the repairing terms, user clause, personal guarantee and any tie]. I [have received a section 25 notice dated [date] / want to renew / am buying a lease for a premium of [amount]]. List my deadlines, the red flags in these terms and the questions for my property solicitor.
More for restaurants, cafes and bars in the UK
- Pricing a dish and a pint so the GP survives VAT and wasteSet menu prices from what a plate really costs, find the gap between the recipe card and the stock count, and know how many covers you need to break even.Read the lesson
- Getting through the rent quarter day when VAT and payroll land togetherTakings arrive every day but rent, VAT and PAYE arrive in lumps, and a rolling 13-week cash model shows the squeeze weeks before it hits.Read the lesson
- Charging the right VAT on eat-in, takeaway, meal deals and service chargeWhether food is zero-rated or standard-rated turns on where it is eaten, whether it is hot and what it is, and the wording of a service charge decides whether a sixth of it is VAT.Read the lesson
- Changing hours, running an event or losing your DPS without stopping alcohol salesWhat a licensed site can change during the year, by which route and on what notice, and what to do the day your designated premises supervisor walks out.Read the lesson
- Sharing tips fairly and paying casual staff without a claimHow to set up a tipping policy and tronc that stand up, what a casual hour really costs once holiday pay is added, and the rota rules that catch late-night sites.Read the lesson
- Getting more covers without falling foul of the price, review and platform rulesThe channels you control earn the most, and the rules on showing service charges, asking for reviews and signing platform deals decide what you can do to grow.Read the lesson
- An allergic reaction, a food poisoning complaint or the council closing your kitchen: the first 24 hoursWhat to keep, who to call and what not to say when something goes wrong in the kitchen, and the insurance conditions that decide whether you are covered.Read the lesson
Open the interactive lesson · Every restaurants, cafes and bars lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- Landlord and Tenant Act 1954 ss.29A, 29B (The lease: 1954 act protection, renewal and alienation)
- s.38A; SI 2003/3096 Sch 1 and 2 (The lease: 1954 act protection, renewal and alienation)
- ss.26(6), 30(1), 30(2) (The lease: 1954 act protection, renewal and alienation)
- Landlord and Tenant Act 1954 sections 37 and 38(3) (The lease: 1954 act protection, renewal and alienation)
- Landlord and Tenant Act 1954 section 33 (The lease: 1954 act protection, renewal and alienation)
- Landlord and Tenant Act 1954 sections 24A and 24B(2) to (3) (The lease: 1954 act protection, renewal and alienation)
- Pubs Code etc. Regs 2016 regs 4, 23 to 27 (Tied pubs: the pubs code and the MRO option)
- Act and Scottish Pubs Code (Tied pubs: the pubs code and the MRO option)
- CCA 1974 ss.8, 15, 16B (Tied pubs: the pubs code and the MRO option)
- CA21140 restaurant and retail cases; CA23084 examples of assets qualifying for AIA; Capital Allowances Act 2001 Part 2A (Capital allowances on fit-out)
- CAA 2001 ss.187A, 198, 201 (Capital allowances on fit-out)
- TUPE 2006 regs 11 and 13 (Size, growth and exit)
- ss.42, 43 (Size, growth and exit)
- rates; also api/lib-statutory-uk.js (Size, growth and exit)
- FCA v Arch Insurance (UK) Ltd [2021] UKSC 1, judgment and policy-wording analysis (Hard cases: money, growth and exit)