Security of tenure (besittningsskydd) works differently for commercial premises than for homes. A commercial tenant has no right to stay when the landlord terminates the lease, but may be entitled to compensation. The protection can also be waived. Here we explain what indirect security of tenure means, when you are entitled to compensation, which deadlines apply and how a waiver of security of tenure works.
Short answer: If you rent commercial premises, you have indirect security of tenure once the tenancy has lasted longer than nine months. If the landlord terminates the lease without an acceptable reason, you are entitled to compensation of at least one year's rent. The protection does not apply if you have waived it in a separate document.
What is security of tenure?
Security of tenure, sometimes called the right of possession (besittningsrätt), is the tenant's protection against losing the lease. There are two variants:
| Direct security of tenure | Indirect security of tenure | |
|---|---|---|
| Applies to | Homes | Commercial premises |
| Means | Right to have the lease extended | Right to compensation if the lease is not extended |
| Can you stay? | Yes, as a rule | No, you have to move out |
The rules for commercial premises are in Chapter 12, sections 56–60 of the Land Code (jordabalken).
When does indirect security of tenure apply?
The protection applies once the tenancy has lasted longer than nine consecutive months. It does not apply if the tenancy has been forfeited, for example because rent has not been paid, or if you have waived the protection.
The protection applies in two situations:
- The landlord terminates the lease and refuses to extend it.
- The landlord terminates the lease and demands terms for an extension that you do not accept, such as a sharply increased rent.
The same rules apply if you have given notice for a change of terms yourself and the landlord refuses to extend or demands terms you do not accept.
What are you entitled to?
The compensation is always at least one year's rent under the terminated lease. If your losses are larger, such as moving costs or lost revenue, the landlord must also cover them to a reasonable extent (section 58 b). Losses linked to alterations you have paid for only count if the landlord consented to the alteration, or if the lease was signed on the understanding that you would be allowed to make it.
The Rent and Tenancy Tribunal (hyresnämnden) can also postpone the move-out by up to two years from the end of the lease term. The application must be filed before the lease term ends.
When do you get no compensation?
The landlord does not have to pay if one of the exceptions in section 57 applies:
- You have breached your obligations so seriously that the landlord cannot reasonably be expected to extend.
- The building is to be demolished and the landlord offers other acceptable premises, or the lease contains a demolition clause and demolition starts within five years of the clause being agreed.
- The building is to be renovated to such an extent that you cannot stay, and the landlord offers other acceptable premises or the lease contains a renovation clause and the renovation starts within five years of the clause being agreed.
- The landlord otherwise has a legitimate reason to end the tenancy.
- The terms the landlord demands for an extension are reasonable and in line with good practice. A rent is not reasonable if it exceeds the market rent, meaning what the premises could be expected to fetch on the open market.
The deadline you must not miss
The landlord's notice of termination must state the terms for an extension or the reason an extension is refused. It must also inform you that you need to turn to the Rent and Tenancy Tribunal within two months if you do not agree to move out without compensation. Without this information the notice has no effect.
If you want compensation, you must refer the dispute to the Rent and Tenancy Tribunal for mediation within two months of the notice. If you miss the deadline, you lose the right to compensation. The tribunal mediates and can give an opinion on the market rent, but the compensation itself is decided by the ordinary courts (the district court, tingsrätten) if you cannot agree.
Waiving security of tenure
The landlord and tenant can agree that security of tenure will not apply. Three things decide whether the waiver is valid:
- Separate document. The waiver must be in a separate document. A clause in the lease is not enough.
- Approval by the Rent and Tenancy Tribunal. If the agreement is made before the tenancy has lasted longer than nine months, which is the usual case, it is only valid if the tribunal approves it.
- Exceptions from approval. No approval is needed if the waiver covers at most five years from the start of the tenancy and the reason is that the landlord will run its own business in the premises, or, in a sublet, that the landlord's own lease is going to end. Standard forms exist for these cases.
A waiver is common for sublets, short leases and when the building is to be renovated. It does not make the lease a bad one, but it changes the negotiating position when the lease expires: without protection the landlord can end the tenancy or raise the rent without risking compensation. If you have invested heavily in the premises or depend on the location, a waiver carries more weight.
For landlords
If you give notice to a tenant who has security of tenure, the notice must be formally correct, served properly and given no later than nine months before the end of the lease term if the lease runs for longer than nine months. A notice with the wrong content has no effect, and the lease is then extended. We describe how termination works in the guide to terminating a commercial lease.
Frequently asked questions
Do you have security of tenure when renting commercial premises?
Yes, indirect security of tenure if the tenancy has lasted longer than nine months and you have not waived it. It gives a right to compensation, not a right to stay.
What is indirect security of tenure?
The tenant has no right to an extension, but is entitled to compensation of at least one year's rent if the landlord ends the tenancy without an acceptable reason.
What does a waiver of security of tenure mean?
That you contract out of the right to compensation in a separate document. You then have to move out without compensation when the lease ends, if the landlord does not want to extend.
Does the Rent and Tenancy Tribunal have to approve the waiver?
Yes, if it is signed before the tenancy has lasted longer than nine months. Exceptions apply for at most five years when the landlord will run its own business in the premises, or in a sublet where the head lease is going to end.
How large is the compensation?
At least one year's rent under the terminated lease, and more if your loss is larger.
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