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Business tenancy renewals (1954 Act)

Part II of the Landlord and Tenant Act 1954 - Grounds of Opposition

Part II of the Landlord and Tenant Act 1954 only allows a landlord to oppose the grant of a new tenancy to a tenant where the landlord is able to prove one of a number of limited grounds, which are set out in section 30 of the Act. Details on these grounds are set out below.

Ground A – Breach of repairing obligations

Compensation payable to the tenant? Factors the Court will consider Other points to note
No

The state of disrepair of the premises, both at the date of service of the landlord’s notice and at the date of hearing.

Whether the breach is sufficiently substantial that the tenant ought not to be granted a new tenancy.

The tenant’s conduct and its reasons for failing to carry out the necessary repairs.

Whether the tenant is prepared to covenant to repair the premises forthwith.

Bear in mind element of discretion: “ought not to be granted a new tenancy”. In approaching this question, the Court will focus exclusively on the state of repair of the premises and determine whether the proper interests of the landlord will be prejudiced by continuing with the same tenant. (Youssefi v Mussellwhite [2014] EWCA Civ 885.)

A schedule of dilapidations will be required, together with expert evidence in support.

Specifying this ground of opposition is sometimes used as a tactic to force a tenant to comply with its repairing obligations.

 

Ground B – Persistent delay in payment of rent

Compensation payable to the tenant? Factors the Court will consider Other points to note
No

The frequency of late payments, the length of delay, the action taken by the landlord as a result and the tenant’s reasons for the delay.

The court will consider the position as at the date of the landlord’s notice and at the date of the hearing.

Whether appropriate lease provisions or security can protect the landlord’s position.

Bear in mind element of discretion: “ought not to be granted a new tenancy”

“Persistent delay” is a question of fact.

If the landlord has not previously complained about the late payments, it may be prevented from relying on this ground.

Once the court is satisfied that there has been a persistent delay in paying the rent, the tenant must prove that its conduct is sufficiently unlikely to recur so that it should be granted a new tenancy.

Ground C – Other breaches or any other reason connected with the tenant’s conduct in relation to the tenancy

Compensation payable to the tenant? Factors the Court will consider Other points to note
No

The seriousness of the breaches, i.e. whether the breaches are substantial and have prejudiced the landlord’s interest.

The landlord does not have to show a quantifiable loss to the reversion to show prejudice (Youssefi v Mussellwhite [2014] EWCA Civ 885)

The court will consider the position as at the date of the landlord’s notice and at the date of the hearing.

Whether the tenant has made proposals to remedy the breach.

Bear in mind element of discretion: “ought not to be granted a new tenancy”

“Substantial” is a question of fact.

The court will consider the whole relationship between the parties. If the landlord has not previously complained about the breaches, it may be prevented from relying on this ground.

Ground D – Provision of alternative suitable accommodation

Compensation payable to the tenant? Factors the Court will consider Other points to note
No

Whether the alternative accommodation and the timing of its availability are suitable for the tenant’s requirements.

Whether the terms on which the alternative accommodation is available are reasonable, bearing in mind the terms of the current tenancy and all other relevant circumstances.

The landlord must ensure that it makes a sufficiently clear offer to provide/secure the alternative accommodation.

The alternative accommodation should be available at the time of the court hearing.

Ground E – Possession required in order to let/dispose of the property as a whole

Compensation payable to the tenant? Factors the Court will consider Other points to note
Yes

Whether the aggregate of the rents reasonably obtainable on separate lettings of the premises comprised in the current tenancy and of the remainder of the property will be substantially less than the rent reasonably obtainable on letting the whole property.

Whether the landlord needs possession of the premises comprised in the current tenancy in order to let or dispose of the property as a whole.

This only arises where the current tenancy was created by the subletting of part of a property out of a superior tenancy. It is also only available where the superior landlord is entitled to serve notice on its tenant under the 1954 Act, i.e. where the superior landlord is the subtenant’s competent landlord because the intermediate tenant’s interest will determine within 14 months.

The ground is rarely used. Expert valuation evidence will be required in support of the landlord’s case.

Ground F – Landlord’s intention to demolish/reconstruct the premises

Compensation payable to the tenant? Factors the Court will consider Other points to note
Yes
  • Whether the nature of the landlord’s proposed works includes (i) the demolition of all, or a substantial part, of the premises demised to and occupied by the tenant; (ii) reconstruction of all, or a substantial part, of the premises demised to or occupied by the tenant; or (iii) substantial work of construction on all, or a substantial part, of the premises demised to and occupied by the tenant.
  • Whether the landlord has both the intention and the ability to carry out its proposed works within a reasonable period after the termination of the current tenancy. In determining this, the Court will look at evidence such as:
    • the landlord’s ownership of the premises;
    • whether the landlord has taken appropriate steps to determine any other tenancies (including agreements for the installation of telecommunications equipment) and whether it has a good chance of obtaining vacant possession of those premises within a reasonable time after the termination of this tenancy;
    • whether there are firm details as to the nature of the proposed works;
    • whether the landlord has entered into a building contract for the execution of the works or will be doing so within a reasonable timescale;
    • whether the landlord has the necessary funds to carry out the proposed works;
    • whether there are any other impediments to the proposed works and, if so, whether such impediments will be removed within a reasonable timescale; and
    • whether any necessary consents have been obtained or are likely to be obtained within a reasonable timescale.
    • Whether the landlord would be carrying out the works if it wasn’t trying to get rid of the tenant/satisfy ground (f).
  • In S Franses Limited v the Cavendish Hotel (London) Ltd [2018] UKSC 62 the Supreme Court ruled that the landlord’s motive could be relevant to satisfying this ground. To rely on ground (f) the key test as to whether the landlord has a firm and settled intention is whether the landlord would intend to carry out the works if the tenant left voluntarily.
  • The landlord does not need to carry out the works personally. Agents or contractors can carry out the work on its behalf. It has also been held to be sufficient if works are carried out by a prospective tenant under a building lease: Gilmour Caterers v St. Bartholomew’s Hospital [1956] 1 QB 387. Santander UK PLC v LCP Estates Limited [2018] EWHC 2193 (Ch) also provides a more recent example.
  • Section 31A of the 1954 Act can be used by a tenant to defend a landlord’s opposition to granting a new tenancy on this ground. One option under this section is for the court to grant a new tenancy of the existing premises, but including terms to allow the landlord access to the property to carry out its proposed works. The other option is for the tenant to take a tenancy of an economically separate part of the premises, with the Lease providing for access during the landlord’s works if this is still necessary.

Ground G – Landlord’s intention to occupy the premises

Compensation payable to the tenant? Factors the Court will consider Other points to note
Yes

Whether the landlord intends to occupy the premises and is reasonably able to achieve this intention.

If the landlord’s occupation of the premises is to be for the purposes of its business (rather than as a residence), the landlord will need to show that that the business is to be carried on by the landlord or an entity with a sufficiently strong connection with the landlord, e.g. a group company.

This ground cannot be used where the landlord’s interest in the premises was only purchased or created less than 5 years prior to the termination of the current tenancy and there have always been business tenancies at the premises during the period of the landlord’s ownership.

Occupation through an agent or manager of the landlord’s business is sufficient.

The landlord’s intended occupation must be for more than the short term – see Patel v Keles [2009] EWCA Civ 1187.

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