Can Landlords oppose the grant of a lease renewal relying upon the redevelopment works?
Where a new lease is sought by a Tenant whom is afforded the protection of the Landlord and Tenant Act 1954 (the LTA) what right does the Landlord have to oppose this where they plan to redevelop the property.
The starting point when it comes to determining whether Landlords are able to oppose the granting of a new lease for redevelopment works is the LTA. Section 30(1)(f) of the LTA says that one of the grounds on which a landlord can oppose the grant of a new lease is:
‘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.’
This means a landlord who wishes to oppose the grant of a new lease may do so under the LTA so long as they can show that when the current lease comes to an end they intend to:
- demolish or reconstruct the premises comprised in the holding or a substantial part of those premises; or
- carry out substantial work of construction on the holding or part of it.
What constitutes substantial works?
‘Substantial’ means having a notable impact in terms of scale and time. The courts will assess the works as a whole and it will be a question of fact and degree as to whether the works proposed are substantial works of construction.
In the case of Marazzi v Global Grange, it was ruled that the installation of a new lift, new partition walls and bedroom facilities did not count as sufficient grounds to oppose a new lease. Conversely in the case of Morar v Chauhan, it was held that the addition of an extension for the premises to be used as a dry cleaning business and commercial laundry was a substantial work of construction.
Holly Minney, Head of Dispute Resolution, said:
“Landlords will need to be careful in their use of s30(1)(f) in opposing lease renewals for business tenants. They will need to make sure that the works proposed constitute ‘Substantial Works’ and fall within the LTA definition.
“Moreover, Landlords will need to be able to show that any proposed works will be undertaken regardless of whether the tenant applies for a new tenancy or not. Any intention to carry out the works must be unconditional.”