Where a tenant occupies premises for business purposes under a tenancy, it may have security of tenure under Part II of the Landlord and Tenant Act 1954 (LTA 1954).
Where a landlord under a business tenancy with security of tenure wishes to end the tenancy, it must serve notice under section 25 of the LTA 1954. Where a tenant under a business tenancy with security of tenure wishes to end the tenancy, it must serve notice under section 26 of the LTA 1954.
Opposing renewal
Where a tenant under a business tenancy has security of tenure, it has the right to receive a new tenancy when the current tenancy ends. The landlord can only oppose this renewal on certain limited grounds, which are set out in section 30 of the LTA 1954.
Section 30(1)(f) of the LTA 1954 provides a ground for resisting the grant of a new tenancy on the basis:
“(f) that on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding;”
In Betty’s Cafés Ltd v Phillips Furnishing Stores Ltd [1959] AC 20, the House of Lords held that the date when the landlord must have the necessary intention to redevelop is the date of the court hearing relating to the grant of the new tenancy. There was some uncertainty as to whether this principle applied to changes made to the section 25/section 26 regime by the Regulatory Reform (Business Tenancies) (England and Wales) Order (SI 2003/3096) (RRO 2003) which came into effect from 1 April 2004. This was cleared up by the case of Hough v Greathall Ltd [2015] EWCA Civ 23.
Hough v Greathall
In this case, the Court of Appeal held that the changes made to section 25 of the LTA 1954 in 2004 had not affected the law on when a landlord must have an intention to redevelop property sufficient to satisfy section 30(1)(f) of the LTA 1954.
The Court of Appeal dismissed an appeal against a refusal to order a new tenancy under the LTA 1954 where the landlord had opposed the grant of the new lease on the basis that it intended to redevelop the demised premises under ground 30(1)(f) of that Act.
The tenant argued that the landlord had to show that it had possessed the necessary intention at the date on which it served a notice ending the existing tenancy under section 25 of the LTA 1954. The Court of Appeal held that the changes made to the LTA 1954 in 2004 had not altered the legal position, and that the date on which the landlord must show its intention to redevelop the property remains the date of the court hearing to determine whether a new lease should be granted.
Comment
The law in this area is well established and the decision will be welcomed by landlords who will continue to have the further necessary time to prepare their case in support of ground (f). The opposite decision may have created an unfair situation, potentially depriving landlords of possession of their premises where there is a legitimate intention to redevelop.