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Business leases: insecurity of tenure?

30 Jul 2018

Business tenants generally enjoy security of tenure under the Landlord and Tenant Act 1954 and have an automatic right to renew their leases, unless a landlord can establish one of the seven grounds of opposition as set out in section 30(1) of the Act. A recent court decision raises questions as to whether that protection can be undermined by landlords determined to oust their business tenants. Associate Lauren Kirby considers the implications.

In S Franses Limited v The Cavendish Hotel, S Franses occupied the ground floor and basement of the Cavendish Hotel in Westminster, operated by the landlord. The tenant applied to the County Court for a renewal lease after the landlord objected on the basis of its intention to carry out works to the premises, relying on section 30(1)(f) of the Act (the redevelopment ground).

The landlord  admitted to the court that the primary motive for carrying out redevelopment works was to evict the tenant; it went as far as creating an artificial scheme of works in order to satisfy Ground (f), and conceded that there was no commercial or practical benefit to the works.

Both the County Court and High Court found that, regardless of the landlord’s reasons behind the works, it nevertheless had a genuine intention to carry out works and thus satisfied the requirements of Ground (f). The courts also clarified that the 1954 Act only required them to consider ’what’ the landlord intended to do, not ’why’, and so the landlord's motive was irrelevant.

One of the key issues arising from the courts’ decision is whether it undermines the protection provided by the Act, allowing wealthy landlords with both the will and the means to create schemes of works purely to drive out tenants. As argued by the tenant, this could not have been Parliament's intention when drafting the Act and leaves tenants in a vulnerable position when they would otherwise enjoy statutory protection.

The tenant has been granted permission to appeal to the Supreme Court, with the case scheduled to be heard later this year. Solicitors for both landlords and tenants eagerly await the decision.

If you need advice on your lease or on any issues to do with commercial property, please get in touch.

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