Landlords looking to reject the renewal of a commercial tenancy with a view to carrying out works?

Summary of S Franses Ltd v The Cavendish Hotel (London) Limited [2018] UKSC 62

Overview

The Supreme Court considered whether a Landlord can refuse the grant of a new tenancy under Ground (f) where the proposed scheme of works was devised solely to comply with that Ground.

S.30 (1) (f) of the Landlord and Tenant Act 1954 enables a Landlord to oppose a tenants application for the statutory renewal of their lease, where the Landlord on termination of the current tenancy intends to demolish or reconstruct the premises, or a substantial part of it, or intends to carry out substantial construction works and could not reasonably do so without obtaining possession.

The previous test to assess the Landlord’s intention identified that Landlord’s intention must have moved “out of the zone of contemplation” and into “valley of decision.” In other words the Landlord must show a firm and settled intention and a reasonable prospect of achieving that intention. The development the landlord intends to carry out does not need to be set in stone. Using this test the Landlord was initially able to reject the tenant’s application.

Outcome

The Landlord’s intention to carry out the works could not be conditional on whether the tenant chose to assert his claim to a new tenancy and to persist in that claim. The acid test was whether the landlord would intend to do the same works if the tenant left voluntarily.

On the facts, the landlord did not intend, within the meaning of section 30(1)(f) of the Landlord and Tenant Act 1954 (LTA 1954), to carry out the works specified in the scheme of works relied upon in opposition to the tenant’s application for a new tenancy.

The court further found that, where the landlord was relying on section 30(1)(f) of the LTA 1954 to oppose the tenant’s application for a renewal lease, the landlord’s motive or purpose may be investigated at trial as evidence for the genuineness of his professed intention to carry out the works.

The landlord’s objection to the tenant’s entitlement to a renewal lease failed.

Relevance to you

Landlords who are looking to reject an application for statutory tenancy under Ground (f) must have a genuine intention to carry the works suggested. It follows that the landlord’s intention to carry out the works cannot be conditional on whether the tenant chooses to assert his claim to a new tenancy. The intention to demolish or reconstruct the premises must exist independently of the tenant’s statutory claim to a new tenancy. The entire value of the Ground (f) lies in removing the tenant and not in any benefit to be derived from reconstruction itself

We have the knowledge and experience to resolve even the most complicated property matters, so if you need further advice from our Commercial Property team contact Michael Harrigan on 01908 692769 or email mharrigan@geoffreyleaver.com