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Landlords' motives are relevant to ground (f) "redevelopment" lease renewal claims

A landlord's motives for undertaking works will be taken into consideration when assessing whether or not it intends to carry out redevelopment works and can rely on ground (f) of the Landlord and Tenant Act 1954 (“the Act”), the Supreme Court has ruled.

Background

Many business tenants enjoy qualified security of tenure under the Act. Where a tenant requests a new tenancy, the landlord may only oppose the request on certain limited grounds, set out in the Act. One of those grounds is known as "ground (f)" (contained in section 30(1)(f) of the Act). This 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 on the construction of the building or part thereof and that he could not reasonably do so without obtaining possession of the holding.”

Facts

In this case, the landlord's motive for doing the works was to get rid of the tenant.

The landlord admitted that it had devised a package of works which had been contrived only to satisfy ground (f) and those works had little practical use. For example, the landlord proposed demolishing an internal wall only to immediately replace it with a similar wall.

Despite there being little commercial sense in carrying out the works, the landlord provided a written undertaking to the court, promising to start the works as soon as vacant possession had been obtained. 

In the High Court, the landlord was successful in resisting the tenant's claim. The tenant argued that it was inconceivable that landlords should be able to get round the protection of the Act by promising to do works for the sole purpose of getting an order for vacant possession. However, the High Court confirmed that ground (f) deals solely with intention and not motives.

The tenant appealed to the Supreme Court.

Issues and decision

The Court had to decide whether a landlord may validly oppose the grant of a new tenancy if the works it intends to carry out have no purpose other than to get rid of the tenant.

The Court held that ground (f) requires a firm and settled intention to carry out the scheme of works, whether or not that intention is reasonable.

The landlord's purpose or motive for undertaking the works is not of itself a material consideration, but is relevant to test whether the intention required by ground (f) in fact exists.

Where, as in this case, the landlord would not undertake the works if the tenant left voluntarily, the landlord's intention is conditional and there cannot be said to be a firm and settled intention to carry out the works.

Implications of the decision

Although the test remains one based on actual intention to carry out ground (f) works, landlords' motives will be relevant to assessing whether that intention is genuine or conditional.

The ruling will force landlords to think twice before attempting to rely on a scheme of works contrived purely for the purpose of obtaining vacant possession of premises under ground (f).

Simply intending to carry out works (regardless of the motive) will not be sufficient to satisfy ground (f). Instead, landlords proposing to carry out works in order to secure vacant possession will need to be prepared for the court to examine their underlying motives.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at December 2018. Specific advice should be sought for specific cases. For more information see our terms & conditions.

 

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