FAQ: The Renters’ Rights Act and Mixed‑Use Commercial Leases

This FAQ explores the practical implications of the Renters’ Rights Act for landlords, commercial tenants, and property professionals dealing with mixed‑use premises such as a shop with a self‑contained flat above.

1. Does the Renters’ Rights Act apply to mixed‑use commercial leases?

Yes — but only to the residential element.
Where a flat is included within a commercial lease, the residential occupier becomes protected under the Renters’ Rights Act. The commercial parts of the property remain governed by commercial landlord and tenant law.

This split creates a legal mismatch that the Act does not currently address.

2. Can a commercial tenant use Section 8 to recover possession of the flat?

No.
The Section 8 grounds for possession are designed for residential landlords, not commercial tenants. A commercial tenant who sublets or includes a flat within their demise has no applicable ground to regain possession under the Act.

This is the core problem: the law provides no mechanism for a commercial occupier to recover the residential unit.

3. What happens if the commercial tenant needs vacant possession?

They may be unable to obtain it.
Vacant possession is often required:

• at lease renewal under the Landlord and Tenant Act 1954
• when exercising a tenant break clause
• when complying with repairing, reinstatement, or hand‑back obligations

If the flat is occupied under a protected periodic tenancy, the commercial tenant may be left in breach of their lease obligations with no statutory route to remove the occupier.

4. Does the abolition of Section 21 make this worse?

Yes.
With Section 21 removed, Section 8 is now the only route to possession for residential property. Because none of the Section 8 grounds apply to commercial tenants, the gap becomes absolute — there is no fallback option.

5. Should landlords avoid including flats within commercial leases?

Many may choose to.
The new risk profile means landlords may prefer to:

• let the flat separately under a compliant residential tenancy
• retain direct management of the residential unit
• avoid tying residential and commercial elements into a single lease

This reduces risk for both parties and ensures the landlord — not the commercial tenant — controls possession of the flat.

6. How might this affect commercial rents?

Commercial tenants may seek:

• lower rents
• more flexible terms
• indemnities or contractual protections

The increased uncertainty around vacant possession is likely to be priced into negotiations.

7. What should landlords and tenants do now?

Both parties should review:

• existing mixed‑use leases
• upcoming lease renewals
• break clauses
• any arrangements where a commercial tenant houses staff or sub‑occupiers in a flat

Early legal advice is essential, as the Act introduces risks that cannot be resolved through the usual possession routes.

8. Will future legislation fix this gap?

It is unclear.
The issue has not been widely discussed in government commentary, and few professional bodies have addressed it. Until further guidance or legislative amendment emerges, mixed‑use arrangements remain exposed.

9. How can James & Sons help?

We advise landlords, commercial tenants, and investors on:

• restructuring mixed‑use leases
• mitigating vacant possession risk
• preparing for lease renewals under the 1954 Act
• drafting break clauses that reflect the new legal landscape
• managing residential units within commercial portfolios

Our team can review your current arrangements and help you plan ahead.