Section 30(1) of the LTA 1954 sets out the grounds on which a landlord can oppose a lease renewal.

Ground (f) states: ”that 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.

Ground (g) states: “that on the termination of the current tenancy the landlord intends to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by him therein, or as his residence.”

The Courts apply the same test of intention under both ground (f) and (g). Firstly, the Court will decide whether the landlord has a firm and settled intention. This is a subjective exercise and the Court will consider the landlord’s state of mind. The Judge will either believe the landlord’s intention to be true or not.

If the landlord is an individual, they will need to provide a witness statement proving the intention and may be required to provide oral evidence in Court. This is usually a straight forward exercise.

If the landlord is a company it will need to comply with its internal governance requirements to demonstrate intention. Someone authorised by the company will need to give a witness statement explaining what is required and to disclose the documents which show that this has been done.

The second part of the test is an objective assessment of the realistic chance of the landlord acting upon that intention and the landlord has to show a reasonable prospect of achieving the intention. The landlord will not be able to show this where there are too many practical hurdles in the way of the development. The more a landlord has done to deal with any potential barriers the easier it will be to demonstrate the necessary intention:

  • Plans and drawings help to show that a landlord has settled on a position and it may be difficult for a landlord to prove his intention to occupy a property himself where a scheme of works will be required and he is unable to produce any plans to the Court.
  • Planning permission demonstrates intention given that it is unlikely a landlord would incur the cost of obtaining planning permission if it didn’t intend to carry out the works.
  • A landlord must show on a balance of probabilities that it has sufficient funds to carry out the works.
  • In respect of ground (f), if the landlord requires vacant possession of other premises in order to carry out the development, the landlord will need to show the Court that it is possible to obtain that vacant possession. The landlord will need to set out how the tenants occupy the premises and how that occupation will be terminated.

Other examples of proving a landlord’s intention include obtaining any necessary consent from third parties and putting in place building contracts with developers and professional advisers, such as architects and surveyors.

It is worth noting that a landlord does not need to prove the relevant intention until the date of the trial and this is important because it enables a landlord to serve a notice before they are ready to carry out the development or occupy the property. It is good practice if a landlord wants a tenant to accept it has the relevant intention under ground (f) or ground (g), the landlord should disclose as much as possible about the proposed works as soon as possible. This may result in an early settlement however, if the tenant suspects that the landlord does not intend to develop but simply wants them out or that they will not obtain planning permission, the tenant may await trial.

Plainly there is a balancing act for both landlord and tenant but if a landlord has a genuine intention to carry out works or to occupy the property, it should in most cases provide the tenant with as much information as possible as early as possible so that the tenant can take an informed view, which may ultimately save significant costs in the proceedings.

For further information relating to this article please contact Senior Solicitor, Kirsty Coggin or a member of the Commercial Property Disputes team.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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