Section 30(1)(f) (Ground (f)) of the Landlord and Tenant Act 1954 (LTA 1954) states that the landlord can oppose 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."
At the end of 2018 the Supreme Court considered whether a landlord can succeed under Ground (f) where the proposed scheme of works was devised to comply with that ground in the case of S Franses Ltd v The Cavendish Hotel (London) Ltd [2018] UKSC 62 (5 December 2018).
To rely on Ground (f), the landlord’s intention must have moved "out of the zone of contemplation" to demolish or reconstruct premises and into "the valley of decision" to carry out the works. It must also demonstrate both a firm and settled intention and a reasonable prospect of achieving that intention.
In this case, the landlord had stated that the intention to carry out the works was conditional in the sense that the landlord intended to carry them out only if it was necessary to get the tenant out, and not, for example, if the tenant left voluntarily or if the judge was persuaded that the works could be done by exercising a right of entry. The commercial reality of the situation was wholly that the landlord was proposing to carry out some works to the property in order to obtain vacant possession.
The established position is that the landlord's motive in opposing the lease renewal on Ground (f) is irrelevant provided that the landlord has a genuine intention to carry out the works, it does not matter whether the works are objectively reasonable or whether changes could be made to the scheme of works to make it consistent with the tenant’s continued possession, if the landlord’s intention is genuine.
The Supreme Court accepted that for Ground (f) to succeed there must be a firm and settled intention to carry out the works, however, the appeal turned on the nature or quality of the intention required under that ground. It was concluded that the intention of the nature in this case would not satisfy Ground (f), the landlord’s intention to carry out the works could not be conditional on whether the tenant chose to assert a claim to a new tenancy and to persist in that claim. The acid test was whether the landlord would intend to do the same works if the tenant left voluntarily.
This decision has provided some important guidance about how the meaning of landlord’s intention for the purposes of Ground (f) will be assessed. Whilst this may improve the bargaining position of tenants at lease renewal, it could actually end up resulting in landlords offering more contracted out tenancies, to ensure possession at the end of the term.
If you would like to discuss this article in more detail, please do not hesitate to contact a member of the dispute resolution department.
This article is not a definitive statement of the law. It is designed as a free update on the law at the time of publishing. It is not a substitute for legal advice on specific facts and circumstances. BakerLaw LLP and/or the writer accepts no liability or responsibility for reliance on this article and recommends that you seek independent legal advice on your specific circumstances prior to taking any steps.
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