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LTA54 – redevelopment must be real intention

LTA 54 confers security of tenure on business Ts. L and Ts can contract out of the security of tenure provisions by following a prescribed procedure before the business tenancy is entered into. 

If the lease is not ‘contracted out’ in this way, T has the right to apply for a new lease at the end of the term. L can rely on one of seven grounds to oppose the new tenancy.

One of the most common grounds for refusal is the ‘redevelopment ground’ that states:

‘on 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.’

In a recent case the SC significantly strengthened the protection for business Ts seeking to renew their leases.

L admitted that the work would not be done if T left voluntarily – so the underlying purpose of the work was solely to establish the ground for possession. L would have carried out the expensive and largely useless redevelopment work not because they wanted to redevelop the premises per se, but because they wanted to gain vacant possession of very desirable premises. As L had given an undertaking to the court to do the work, HC held that L had done enough to gain possession but gave leave for a leapfrog appeal to the SC.

The SC held that L’s conditional intention to redevelop the premises where L would not do the work if T left voluntarily was not enough to establish the ground for possession.

This is an important decision for those advising L and T business tenants. Ts are more likely to challenge the rationale for redevelopment works put forward by L and to seek additional disclosure and to consider additional evidence of their own. See S Franses v Cavendish Hotel [2018] UKSC 62 and article [2019] 368 Property Law Journal 2.

 

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