Possession for redevelopment
The most common ground for a landlord to oppose the renewal of a business lease where the tenant has security of tenure is ground (f). This ground states 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 of the holding or part thereof that he could not reasonably do so without obtaining possession of the holding.”
The following three questions need to be asked when deciding whether a landlord can oppose lease renewal on ground (f):
1. Do the works that the landlord intends to carry out fall within those covered by ground (f)?
2. Does the landlord have the intention to carry out the works?
3. Does the landlord have a reasonable prospect of carrying out the works within a reasonably short time after gaining possession of the property?
At what time must the landlord have the requisite intention to redevelop? Somerfield Stores Limited v Spring (Sutton Coldfield) Limited has decided that the landlord need not have the intention to redevelop the property when it serves the section 25 notice (ie. the notice opposing renewal), but it must have sufficiently formed the intention by the date of the trial. Also, it does not matter if the landlord changes between the date of the section 25 notice and the date of the trial.
Therefore, a landlord who has no intention of redeveloping a property can serve a section 25 notice with a view to then selling or letting the property to a third party provided that by the trial date the buyer/alternative tenant has a sufficient interest in the property and can show the requisite intention to redevelop.
This article contains information of general interest about current legal issues. It does not give legal advice and specific advice should always be sought about your particular circumstances. We will be happy to assist.
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