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A CLOSE LOOK AT THE LANDLORD AND TENANT ACT AND THE HIGH PROFILE COURT THAT LINKS TO IT ..

The Barford + Co ‘Did You Know’ series:

A close look at the Landlord and Tenant Act and the high profile court case that links to it…

Questions have been raised in the press as to the level of protection that is afforded to business tenants by the Landlord and Tenant Act 1954 Part II; with a recent case hitting the headlines. Here we look at the Act and offer our thoughts and recommendations for both landlords and tenants. 

What are the provisions of the Landlord and Tenant Act 1954 Part II?

This Act governs the rights and obligations of landlords and tenants of premises which are occupied for business purposes.

The purpose of the act is to give security of tenure for the tenant – meaning that the tenant of business premises has the right to a new lease when the old lease comes to an end. This means that, even though the fixed term of the lease has ended, tenants of business premises have:

  • the right to remain in occupation at the end of the contractual term of a lease; and
  • the right to apply to court for the grant of a new lease if new terms cannot be agreed with the landlord.

The landlord can regain possession of the property only on certain specified grounds, the most important of which are:

  • where the landlord requires the property back either for development purposes, or to occupy himself;
  • where the tenant has a history of non-payment of rent, or not complying with the lease obligations;
  • where premises have been split up by subletting into a number of units and the whole premises would command a higher rent if let together under one lease.

Putting the Act into practice in a High Court judgement

In the summer of 2017, the High Court handed down its judgement in a dispute between The Cavendish Hotel (London) and its tenant, the art dealer, S Frances Limited. The Cavendish Hotel turned down its tenant’s request for a new lease, citing plans for the conversion of the art gallery premises into two separate retail units. The tenant argued that the landlord did not have the necessary intention to carry out these plans and instead felt they were designed purely to evict S Frances as the tenant.

The tenant had occupied the premises for more than 25 years and issued proceedings seeking the grant of a new tenancy, in line with the principles of the act set out above. The judge found in the landlord’s favour; with the tenant then appealing to the High Court.

The High Court rejected this argument – explaining that it was only necessary to examine “what the landlord intends to do and whether he intends to do it, not why he may intend to do it.”

In other words, as long as a landlord can show that he does intend to carry out plans of this nature, its motive for doing so is irrelevant. 

The Barford+Co view – what we think

In our experience, this really is quite an unusual issue as tenants are a valuable asset to landlords and they don’t usually want them to leave! However, we are aware that in some areas of the country, (like London) redevelopment opportunities, and the potential commercial benefits arising therefrom, are high - meaning that similar occurrences are more prevalent. The result of this case is likely to set a precedent for future disagreements of a similar nature between tenants and landlords.

So, what would we recommend to tenants? It is understandable that the results of this case may make worrying reading for tenants who find themselves under threat from landlords seeking to challenge a tenant’s right to renew. As we say, it’s a highly unusual issue but one that we would recommend tenants are aware of. Our advice for when your lease is up for renewal? At least twelve months prior to the lease end, discuss your businesses requirements for the property with your surveyor and instruct them to contact your landlord to discuss their intentions at lease end.  If there is any indication that the landlord has aspirations not to renew your business lease, take advice from your surveyor and/or solicitor 

Barford + Co is on hand to discuss this topic in more detail and to explain how it may affect both tenants and landlords, so just get in touch <LINK TO CONTACT PAGE> if it’s an area that we can help you with. 

 

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