Landlords are entitled to refuse a lease renewal if they intend to demolish or reconstruct their property provided that they can satisfy the requirements under section 30(1)(f) of the Landlord and Tenant Act 1954 (“ground (f)”).

The tenants’ rights of renewal should not be allowed to impede redevelopment.

In the recent case of S Franses Ltd v The Cavendish Hotel (London) Ltd [2017] EWCH 1670 (QB), the landlord operated The Cavendish Hotel in Westminster and the tenant was a textile dealership and consultancy which occupied the ground floor and basement of the hotel under commercial leases that had the benefit of security of tenure provisions. The landlord had devised a scheme of works to satisfy ground (f) and sought to resist renewal on the basis that it intended to carry out the works and could not do so without evicting the tenant.

The tenant argued that the work proposed by the landlord would be commercially and practically useless and the purpose of them was to deprive the tenant of its security of tenure, however, the landlord gave an undertaking to the court (at a cost of over £700,000) that it would carry out the works when the lease ended. Despite the artificial elements of the works and the fact that no landlord would consider carrying out such works if the lease had not been protected, the landlord succeeded.

The court concluded that in this case any doubt over the landlord’s scheme had been allayed by its undertaking to do work and a breach of the undertaking it had given would be a contempt of court. Ground (f) requires the landlord to prove what it intends to do and whether it intends to do it, not the why. The court need not be satisfied that the works provide the most efficient use of the land. This means that there is the potential for landlords to create a clever package of works to satisfy the ground (f), however, it is a very expensive way to secure an eviction and landlords would have to commit to doing the work.

If you have any queries about any landlord and tenant issues please do not hesitate to contact our Commercial Property team on 0161 941 400 or email us lawyers@myerson.co.uk.

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