Commercial property · 6 min read · 23 October 2026

Deed of variation of a commercial lease. When a change becomes a new lease.

Most terms of a commercial lease can be changed by a deed of variation and the lease simply carries on. Two changes cannot: extending the term and adding premises. Either one operates in law as a surrender of the existing lease and the grant of a new one, whatever the parties intend, and that new lease can change who is liable, which statutory rules apply and what has to be registered.

What a variation can change

Rent, rent review, use, alienation, repair, break rights and most other covenants can be varied while the original lease carries on. In Friends Provident Life Office v British Railways Board [1996] 1 All ER 336 the Court of Appeal held that a deed which substantially varied a lease, increasing the rent and altering the use and alienation covenants, did not work a surrender and regrant. The Upper Tribunal set out that holding in Weycroft Weybridge Ltd v Wilson [2025] UKUT 64 (LC) at [56], with Sir Christopher Slade's explanation that where landlord and tenant vary the subsisting tenancy but show a clear intention not to create a new one, the court will give effect to that intention, "unless the only way by which the law can give effect to the arrangements made between the parties is to imply the surrender of the old tenancy and the creation of a new one."

The two changes that create a new lease

Extending the term. It is not possible to add years to an existing leasehold estate, so an agreement to extend the term takes effect as an implied surrender of the existing lease and the grant of a new lease for the longer term (Weycroft at [55]). That happens independently of what the parties intend (Weycroft at [56]). The High Court recorded the same result for commercial warehouse premises in Great Jackson Street Estates Ltd v Manchester City Council [2026] EWHC 740 (Ch) at [3], where a 1985 deed that extended the term of a 1978 lease operated as a surrender and regrant.

Adding premises. A deed of variation that enlarges the demised premises also takes effect as a surrender and regrant, producing a lease of the original and the additional land for the unexpired term on equivalent terms. The Court of Appeal gave that as an example of a case where the law will not permit a lease merely to be varied, whatever the parties wish, in Cobalt Data Centre 2 LLP v HMRC [2022] EWCA Civ 1422 at [136].

HM Land Registry takes the same approach: a deed that increases the term or adds land to a registered lease is treated as a surrender of the existing lease and the grant of a new one (Practice Guide 28).

Common variations at a glance

• Changing the rent, the rent review mechanism or the service charge: a variation, and the lease continues.
• Adding, removing or moving a break clause: a variation.
• Widening the permitted use or relaxing the alienation covenant: a variation, as in Friends Provident.
• Extending the term, even by a few months: a surrender and regrant.
• Adding a floor, a yard or a car park space to the demise: a surrender and regrant.

The list matters because the parties often ask for one deed that does several of these things at once. If any one of them extends the term or adds premises, the whole lease is regranted.

Why a surrender and regrant matters

The 1995 Act regime. Leases granted after 1 January 1996 are new tenancies under the Landlord and Tenant (Covenants) Act 1995 (Scottish & Newcastle plc v Raguz [2006] EWHC 821 (Ch) at [20]), and section 1(5) applies the same rule to a tenancy granted because a variation works a deemed surrender and regrant. Extending the term of an older lease therefore brings the regranted lease within the 1995 Act. Under that Act a tenant who assigns the whole of the premises is released from the tenant covenants (section 5(2)), and an outgoing tenant can be asked to give an authorised guarantee agreement (section 16).

Former tenants and guarantors. A former tenant who remains liable after an assignment, and that former tenant's guarantor, are not liable for any amount referable to a relevant variation of the tenant covenants made after the assignment, meaning a variation the landlord had an absolute right to refuse (section 18(2) to (4)). A surrender and regrant goes further, because the lease the guarantee was given for comes to an end. Guarantors of the current tenant should therefore join in the deed and confirm that the guarantee applies to the lease as varied.

Contracting out. An agreement under section 38A of the Landlord and Tenant Act 1954 relates to a tenancy to be granted, and the warning notice must be served not less than 14 days before the tenant enters into that tenancy or, if earlier, becomes contractually bound to do so, unless the statutory declaration route is used (Schedule 2, paragraph 2, Regulatory Reform (Business Tenancies) (England and Wales) Order 2003, set out in TFS Stores Ltd v Designer Retail Outlet Centres (Mansfield) General Partner Ltd [2019] EWHC 1363 (Ch) at [42]). Where a contracted out lease is to be varied in a way that creates a new lease, we deal with contracting out the new lease before the deed is signed, rather than assume the old procedure carries over.

Registration. Where the landlord's title is registered, the grant of a lease for a term of more than seven years must be completed by registration and does not operate at law until it is (Land Registration Act 2002, section 27(1) and (2)(b)(i)), and section 27 applies to dispositions by operation of law as it applies to other dispositions (section 27(5)). A surrender and regrant of a long registered lease therefore needs its own application to HM Land Registry.

How to vary without creating a new lease

• Leave the term and the demise alone if the parties want the existing lease, its guarantees and its statutory position to continue. Extra space can be taken under a separate lease or licence of the additional area.
• Record in the deed that the parties intend a variation and not a new tenancy. That intention is given effect unless the change can only take effect as a surrender and regrant (Weycroft at [56]).
• Have every guarantor, and any former tenant who is still liable, join in and consent.
• Check mortgagee and superior landlord consents before anything is signed.

What we do, and where the line is

We advise on and negotiate a variation or surrender to agreed form from £850, fixed in writing before any work begins: what the change does to the term, the guarantees and the statutory position, and the drafting that gets you the result you want. Execution of any deed and every Land Registry step go to an instructed authorised solicitor, and we do not act on the grant or assignment of a lease for a premium.