Opposing Lease Renewal On The Grounds of Redevelopment

Those who have the benefit (or the burden) of a tenancy protected by the Landlord and Tenant Act 1954 (the ‘1954 Act’) will be well aware that a tenant has the right to the grant of a new tenancy unless the landlord can successfully prove one of the statutory grounds to oppose it.

Section 30(1)(f) of the 1954 Act states that a landlord may oppose a lease renewal if he intends to demolish or reconstruct the premises (or a substantial part thereof), and he could not reasonably do so without obtaining possession of the property.

In the case of Franses Ltd v Cavendish Hotel (London) Limited, a landlord cited ground (f) as reason to oppose the grant of a new tenancy. The scheme of works submitted included lowering the basement floor and demolishing a wall only to replace it with a similar one. The works carried no commercial benefit for the landlord, and in fact, during cross-examination, the landlord admitted that he would not carry out the works if the tenant left voluntarily.

The issue for the Supreme Court to consider was whether a landlord could claim the benefit of ground (f) when the works were contrived for the purpose of evicting the tenant rather than to obtain any commercial benefit.

The appeal was allowed.

In his judgement, Lord Sumption expressed his concern that to allow the claim to succeed would allow the landlord to use ground (f) as a means to obtain a right to vacant possession, when this was the “very interest that Part II of the Act is designed to restrict”.

To allow a contrived scheme to receive the benefit of ground (f) would allow wealthy landlords to undermine the Act’s purpose and conduct relatively useless works with the sole purpose of evicting a tenant.

Whilst the Supreme Court did not appoint motivation as an express requirement in this matter, it was held that this could be drawn upon as evidence to show whether or not the landlord had a “firm and settled intention” to carry out the works. The acid test was therefore whether the landlord would carry out the works if the tenant left the premises voluntarily.

Comment

This case is undoubtedly a tenant-friendly decision, and may provide some encouragement for tenants looking to challenge the motivation behind their landlord’s decision to redevelop the premises.

On the other hand, the Court noted that this case contained facts that were relatively extreme. A more common application of this judgement may be where a landlord does have a firm and settled intention to carry out some works at the premises, but that these works would not be substantial enough to warrant the removal of a tenant. In these circumstances, a landlord may be tempted to commission more extensive works in order to successfully oppose the grant of a new tenancy. Here, it would be for the landlord to show that his intention to conduct the works at the premises existed separately from the tenant’s statutory claim for a new tenancy.

Whilst on the face of it, this recent decision may provide some comfort to tenant’s seeking to challenge their landlord’s use of ground s.30(1)(f), the Court has been clear that each case will turn on its own facts and so the application of this judgement in the County Court remains to be seen.

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