Author: Rachel Croft, Senior Associate, Real Estate Dispute Resolution, London
This post follows from our previous posts on a landlord's right to oppose a tenant's request for a lease renewal (under the Landlord and Tenant Act 1954). Here we look at what happens if the landlord disposes of its interest before trial or if it will be instructing third party building contractors to do the works, either under a building contract or by granting them a building lease.
Section 30(1)(f) of the Landlord & Tenant Act 1954 (the "Act") allows a landlord to oppose a tenant's request for a lease renewal if:
"…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 that he could not reasonably do so without obtaining possession of the holding." (emphasis added)
Assuming that those works are substantial enough for the provision to apply, the landlord's intention is the next most important criterion to be met. As we mentioned in the previous post on this topic, to rely on Ground (f), the landlord's intention must have "moved out of the zone of contemplation" and "into the valley of decision". In short, the landlord must have both a firm and settled intention to undertake those works and also a reasonable prospect of achieving that intention. Obtaining planning permissions (or at least having a good prospect of obtaining it) and ensuring that the necessary board approvals are in place are common ways of proving this.
Moving on to the crux of this entry, the point to be flagged here is a simple one – in order for the landlord successfully to rely on Ground (f) of the Act, the landlord at the time of the trial must prove that it will undertake the works. It must have the requisite "intention" and the crucial issue is one of control.
Who is the landlord?
This issue becomes relevant in a number of different scenarios:-
1. What happens where a landlord disposes of its interest before trial?
To succeed on Ground (f) the landlord must prove its intention at the time of trial. It is important to ensure that the landlord entity at the time of trial is (i) actually the party with the intention to redevelop and (ii) that it is registered as the proprietor at the Land Registry. The "landlord" will be the entity, at the date of trial, which is named on the Land Registry's records, which can cause problems. The "registration gap" issue is not discussed on this note, but it is worth bearing in mind that there is often a gap between the transfer being completed by solicitors and the new owner being registered at the Land Registry. In any event, if either one of these conditions aren't met, the landlord cannot succeed and the tenant will be entitled to have its tenancy renewed under the Act. Where it is the purchaser who will be the landlord at the time of trial (sometimes only being registered at the Land Registry shortly beforehand), it is critical that the purchaser ensures that it can meet the requirements of Ground (f). Any plans or intentions held by the previous landlord from which it purchased the property will not be of any help.
2. What happens if the landlord will be instructing building contractors to do the works, either under a building contract or by granting them a building lease?
The usual difference between the two is that the contractor under a building contract is paid the sums due under that contract whereas the contractor/developer carrying works out under a building lease is paid by the award of a lease. Either way, control is critical here – the landlord must direct, inspect and approve all the work being carried out.
The above points are worth bearing in mind, especially if the property is to change hands close to the date of the trial or where a landlord will be contracting with a third party to carry out works.
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