Estates Gazette Q&A: Redevelopment break clauses

Question

I am the landlord of a well-known tourist attraction in London. The tenant wants to renew its lease, which is protected under the Landlord and Tenant Act 1954. I am happy to agree to the renewing of the lease, however, I want to redevelop in the future. While my plans are currently in the early stages, what steps can I take to protect my intended development during the renewal lease?

I am concerned the tenant may complain that any break would undermine its use of the property as a successful tourist attraction.

Answer

If you intend to commence redevelopment works within the term of the new lease you should consider negotiating a break option. This would allow you to terminate the lease before the contractual end date. However, it would remain necessary for you to serve a section 25 notice and prove the statutory ground of redevelopment under the 1954 Act.

If you are unable to negotiate a break option, the tenant may seek a court determination of whether a landlord’s redevelopment break option should be included in the new lease. The chances of success will turn on you being able to establish a real possibility of development. On the basis of a recent case, the fact that the tenant operates a well-known tourist attraction does not of itself prevent the inclusion of a landlord’s redevelopment break clause in the new lease.

Explanation

Where you have plans to commence redevelopment before the end of the term of the new lease, you should consider agreeing to add a break clause into the renewed lease, to enable contractual termination prior to the end date.

Negotiations will turn on the facts, but you may want to consider factors such as the earliest break date under the lease (the tenant may want a longer period to improve certainty and determine its own business contracts) and whether the break option should be fixed or rolling – the latter would be in your best interests but creates uncertainty for your tenant. You may wish to consider the notice period; a longer notice period adds certainty for the tenant.

Under the 1954 Act, as landlord you must give between six and 12 months’ notice to end a statutory tenancy. A similar notice period will enable the necessary notices to be served simultaneously. A reduction to the amount of rent payable can be used to compensate a tenant for the increased uncertainty caused by a break option. You may also wish to ensure that the lease contains sufficient provisions allowing you to obtain access.

If you are able to agree a redevelopment break clause with the tenant, it will still be necessary for you to serve a valid section 25 notice on the tenant, specifying one (or more) of the grounds of opposition set out in section 30(1) of the 1954 Act when exercising the break option.

If the parties cannot agree on either the inclusion or the terms of a break clause, this will be determined by the court, under section 35 of the 1954 Act. The leading case on the operation of this section is O’May v City of London Real Property Co Ltd [1983] AC 726: the court should consider the terms of the current lease and the burden of persuading the court to impose a change is on the party proposing that change.

A redevelopment break was recently considered in Ministry of Sound v The British and Foreign Wharf Company Ltd [2025] EGCS 182. The tenant was concerned the existence of a landlord’s rolling break, if inserted, “creates constant uncertainty and undermines confidence to invest in the club”.

The court was asked to consider:

• Whether there was a “real possibility” of development during the term of the renewed lease.
• If it should exercise its discretion to include such a break option.

A “real possibility” does not require development to be imminent, or that a specific scheme has been designed, but it must be “more than a fanciful, illusory or imaginary possibility”.

The court explained that this does not require the landlord to have planning permission (whether specific or general), finances to be in place, or even show it has possession of the development site. However, if the landlord can prove one or more of these factors is confirmed, that would support the view that there is a “real possibility” of development.

On the other hand, if the landlord is unable to demonstrate the existence of these factors, that may suggest there is no real possibility of reconstruction.

In Ministry of Sound the court ultimately found that there was a real possibility of development, with the planning experts agreeing in their joint statement that “a redevelopment of the site could be achieved if the parties use their best endeavours”.

This was the case even though it acknowledged that the Ministry of Sound’s brand, and contribution to the night-time economy in the area, could impact the likelihood of planning permission being granted.

However, the court took the view that the inclusion of a landlord’s break clause would not make the tenant’s business “untenable”. It held that the redevelopment break in this instance as proposed by the landlord (a rolling break requiring nine months’ notice, exercisable from June 2028), was reasonable and should be included.

On this basis, the fact that your tenant operates a well-known tourist attraction could make it harder for you to establish a redevelopment break clause. However, following the outcome in Ministry of Sound, if you are able to evidence that there is a real possibility of development, in the event that you cannot negotiate the inclusion of a break clause, a court is likely to include one.

Matthew Cordwent is an associate in the real estate disputes team at Charles Russell Speechlys and Katie Helmore is a barrister at Landmark Chambers

This article was first published in Estates Gazette on 3 March 2026.