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When it comes to business tenancies, security is not always clear cut

03rd September 2018

Many business tenants have an automatic right to renew their lease under the Landlord and Tenant Act 1954 unless their landlord can demonstrate that one of the seven specific grounds for opposition set out in Section 30(1) apply. As long as the tenant did not agree to dis-apply the Act when taking on the lease, then they may believe they are safe for the long haul.

However, a recent case involving the Cavendish Hotel in London’s Westminster highlighted a possible get-out clause for well-funded albeit somewhat disingenuous landlords. Section 30(1)(f) of the Act entitles a landlord to re-possess a property if they can show both that they intend to redevelop the property, or at least a substantial part of it, at the end of the lease and that they would not be able to undertake these works unless they get the property back. This is known as redevelopment ground.

In order to qualify for redevelopment ground, a landlord must be able to show a court there is a settled intention to carry out the works at the end of the tenant’s lease, that there is a reasonable prospect of undertaking such works, and that the only way the landlord can carry out the works is to get the property back from the tenant – the proposed works must be substantial, such as demolition, reconstruction or substantial construction.

The Cavendish case considered the landlord’s intention – here, the landlord admitted their primary motivation for carrying out the works was to evict the tenant and created an artificial scheme purely with that end in view. They even conceded there was neither a practical benefit nor a commercial reason to do the works in question.

Unfortunately for the tenant, the High Court ruled the landlord had gone far enough to show it had both sufficient intention to carry out the works and was resolved to do so, despite the lack of obvious commercial benefit in the short term and regardless of the fact that the intention was far from honest.

This sort of situation is extremely unusual, but the Cavendish decision shows that, when you have highly desirable premises, a well-advised, determined landlord may be able to get around a tenant’s enshrined rights – even despite a lack of immediate commerciality.

For more information on commercial landlord and tenant law as well as tailored business advice and support, contact the George Ide team on 01243 786668, or email us at info@georgeide.co.uk.

Danii Jhurry-Wright. Partner, commercial property department.

 

 

 

 

Business, Commercial Property, General, George Ide, News
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