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25 February 2016

Relief for landlords: Court re-confirms the date of landlord’s intention to redevelop when opposing lease renewals

The Landlord and Tenant Act 1954 gives certain business tenants security of tenure ie the right, where permitted by the Act, to claim a new tenancy on expiry of their current lease. Where this applies, landlords have an uphill task if they wish to bring such a tenancy to an end and to oppose the grant of a new one. There are only certain grounds that can be relied upon and all have their difficulties.

Section 30(1)(f) of the Act (otherwise known as the redevelopment ground) contains one of the most common grounds for refusing a renewal:

“that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding”.

Long ago (*1) the House of Lords held that the date upon which the landlord must have the required intention is the date of the court hearing that will determine the question as to whether or not the ground has been successfully made out. However, that precise question was revisited by the Court of Appeal in the recent case of Hough v Greathall Ltd (*2).

Key Facts and High Court Decision

On 19 June 2013, the landlord terminated the existing tenancy, giving notice to the tenant under section 25 of the Act and relying upon section 30(1)(f) as the relevant ground. The tenant opposed this and argued (against the accepted position) that the date upon which the landlord’s intention to redevelop must be demonstrated was the date of service of its section 25 notice rather the date of the hearing.

The High Court decided that, although the landlord did not have the required intention at the date of service of the section 25 notice, that did not matter - the relevant date for demonstrating intention was, in fact, the date of the hearing.

The tenant appealed to the Court of Appeal. It claimed that changes made to section 25(6) of the Act which took effect from 1 April 2004 (*3) meant that the High Court was wrong in law.

Appeal Decision

The Court of Appeal, however, unanimously rejected the appeal. It held that the 2004 changes (which altered certain wording in section 25 requiring the landlords to state whether or not a renewal tenancy “would” be opposed, to “is” opposed) did not alter the date upon which the landlord had to show an intention to redevelop. Instead, the Court held that the change in wording addressed the fact that tenants were no longer required to serve counter-notices upon receipt of an opposed section 25 notice if they wanted to remain in possession.

The Court also decided that the current approach in civil litigation to pre-action disclosure and conduct did not change the relevant date either.

What this means

The outcome of this case will come as a welcome relief to landlords – had the tenant won, then this would have had wide reaching ramifications for landlords wishing to rely on section 30(1)(f) of the Act in the future.

That said, opposing lease renewals under the Act remains a stringent hurdle for landlords to overcome and this decision should not be seen as anything other than the Court of Appeal restating a principle that has been settled for approaching 60 years.

Lease renewals will undoubtedly remain a hotbed of litigation and we wait to see in which direction the next issue of dispute takes us.

(*1) Betty’s Cafés Ltd v Phillips Furnishing Stores Ltd [1959] AC 20
(*2) [2015] EWCA Civ 23
(*3) As a consequence of the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003


This article was written by Richard Flenley.

For more information please contact Richard on +44 (0)1483 25 2520 or richard.flenley@crsblaw.com

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