Case law: Landlords opposing renewal of business tenancy on grounds of doing substantial works do not have to start work immediately
A landlord proposing to oppose a business tenant’s renewal of the lease on grounds it intends to do substantial works on the premises ‘on the termination of the current tenancy’ must be able to show it intends to carry out the works within a reasonable time - given the circumstances – and not the day after the lease ends, a recent ruling makes clear.
This update was published in Legal Alert - November 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 the legal right to renew its lease if it is terminated, unless the landlord can show why it should not be allowed to. For example, that the landlord can show it intends to do substantial work to the premises – to ‘demolish or reconstruct’ them, or a substantial part of them - ‘on the termination of the current tenancy’, and needs possession of the premises to do so.
A landlord of premises in London applied to renew its lease. The landlord opposed the renewal on grounds it planned to redevelop the site, so that the tenant was not entitled to renew.
The tenant disputed that the landlord intended to do the works ‘on the termination of the current tenancy’. It argued that those words required the works to start the day after the tenancy ended; the landlord did not intend for this to happen – particularly, there was a possibility that other tenants would seek an injunction to stop them on grounds that the resulting noise and disruption would amount to a nuisance, and breach their right to quiet enjoyment.
The court said the landlord did have the necessary intention, saying:
- The landlord had funding, planning permissions and contracts already in place, and had a realistic timescale for getting the work done. The court found this extremely persuasive.
- It was not necessary for works to start the day after the tenancy ended; it was sufficient if they started within a reasonable time. In this case, the fact the landlord was to start within six months and 21 days from trial was reasonable (but this might be different in other cases).
- The possibility of an application for an injunction was real, but one would not automatically be granted and even if it was, the landlord could resolve any issues in those proceedings and start work.
- Landlords claiming business tenants were not entitled to renew their tenancies because they plan to do substantial work to the premises ‘on the termination of the current tenancy’ should ensure they can show they are ready to go, have a realistic timetable and can start work within a reasonable time in the circumstances – and given the likely impact of the work on third parties such as other tenants.
Case ref: London Kendal Street No.3 Limited v Daejan Investments Limited (County Court)
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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