Landlords will be aware that they can oppose the grant of a new business tenancy under section 30(1)(f) of the Landlord and Tenant Act 1954.
Section 30(1)(f) provides that a landlord may oppose the grant of a new tenancy on the ground that the landlord, “intends to demolish or reconstruct the premises … and could not reasonably do so without obtaining possession …”
A firm and settled intention
The Supreme Court has recently handed down its much-anticipated appeal decision in S Franses Ltd v The Cavendish Hotel, which sheds new light on section 30(1)(f). Prior to this case, a landlord was able to rely on 30(1)(f) of the Landlord and Tenant Act 1954 to oppose the grant of a new tenancy on the basis that it had a firm and settled intention to carry out the reconstruction and a reasonable prospect of achieving that intention. The motive for reconstruction was irrelevant.
The case of Franses v Cavendish was somewhat unusual in that the Cavendish Hotel did not hide the fact that it would not carry out the planned reconstruction work if the tenant left voluntarily. Consequently, in this case, it was clear that the reconstruction work was planned solely in order to rely on section 30(1)(f) as a ground to oppose a new tenancy and gain possession.
A new ‘acid test’
The Supreme Court, in its appeal decision, introduced an additional “acid test” in relation to reconstruction work as a reason to oppose the grant of a new tenancy. The new acid test is, whether the landlord would intend to do the same work if the tenant left voluntarily. Consequently, in addition to a firm and settled intention to do the work and a having reasonable prospect of doing so, the landlord’s motive now becomes relevant. This means that in order to rely on section 30(1)(f), a landlord must now be able to show that it has a genuine intention to carry out the planned reconstruction work even if the tenant vacated the premises voluntarily.
A significant new hurdle
The introduction of this acid test is a significant new hurdle for landlords to negotiate if they wish to rely on section 30(1)(f) to oppose a new tenancy. It is likely that much more evidence will be needed by landlords to prove that the reconstruction work planned is genuine. Such evidence may include fully fleshed out plans of the proposed work and having obtained, or be well into the process of obtaining, all necessary consents and permissions. In short, the more evidence that a landlord can produce to show that the reconstruction will go ahead, the more likely the landlord will pass the acid test.
Although this decision is broadly a win for tenants, it is worth noting that any landlord using this provision purely as a means of gaining possession of the property is unlikely to be as open about this as the landlord in the case under discussion. Consequently, tenants fighting the opposition of a new tenancy on these grounds may have a costlier and more time-consuming battle to prove a well-prepared landlord’s motive in court.
For more information please contact Sophie Harriman
Disclaimer: While we do all that is possible in terms of ensuring its accuracy, this blog contains general information only. Nothing in these pages constitutes legal advice. You need to consult a suitably qualified lawyer from the firm on any specific legal problem or matter.
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