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Case law: Supreme Court says landlords opposing renewal of business tenancy so they can carry out substantial works must actually do those works

A landlord proposing to oppose a business tenant’s lease renewal on grounds it intends to do substantial works on the premises should ensure its motive for doing the work does not contradict its claim that it genuinely intends to carry out the works, or risk the tenant being entitled to renew.

January 2019

This update was published in Legal Alert - January 2019

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A business tenant has a legal right to renew its lease if it is terminated, unless the landlord can show grounds why it cannot. One of those grounds is that the landlord can show it intends to do substantial work to the premises ‘on the termination of the current tenancy’, and needs possession of the premises to do so.

The owner of hotel premises in London let the ground floor to a business tenant. The landlord served notice on the tenant terminating the lease, claiming that it intended to do substantial work on the premises so the tenant could not renew the lease.

The proposed works had no commercial purpose – they were merely to give the landlord the right to oppose renewal of the lease and take back possession of the whole building.

The Supreme Court said that the test was whether the landlord would carry out those works if the tenant left voluntarily. If not, the ground was not made out. In this case the landlord failed the test and the tenant was therefore entitled to renew its tenancy.

Operative date

  • Now

Recommendation

  • A landlord proposing to oppose a business tenant’s renewal of their lease on grounds it intends to do substantial works on the premises should ensure its motive for doing the work does not contradict its claim that it genuinely intends to carry out the works, or risk the tenant being entitled to renew

Case ref: S Franses Ltd v The Cavendish Hotel (London) Limited [2018] UKSC 62

Please note: An article published in the September 2017 edition of Legal Alert covered this case at an earlier stage in the legal process.

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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