Redeveloping a commercial property – Landlord and tenant issues by Moore Blatch Solicitors

As the Brexit effect starts to bite in earnest we have seen a softening of the commercial property market in Richmond and much of Southwest London. While voids periods remain and certainty remain a key issue for landlords others are looking at opportunities to take advantage of the changing market to obtain possession and redevelop.

A landlord’s ability to redevelop and seek possession is becoming one of the key questions when dealing with commercial property and the best way for a landlord to achieve this is under section 30(1)(f) of the Landlord and Tenant Act 1954 (the Act).

Unfortunately, there are several commonly held misconceptions about this section. For example, some landlords typically believe they have an automatic right to end the tenancy at the expiry of the term or that subject to the right financial inducement, tenants will be happy to move on.

Tenants often think they have an automatic right to renew, especially if they have a protected tenancy under the Act.

While a landlord can serve notice under the 1954 Act terminating a lease they must first establish the relevant grounds. If a tenant can challenge these they will be entitled to renew.

In both cases, it’s important to understand the provisions of section 30(1)(f), which can be
broken down into 5 elements:

1. the relevant date to prove the grounds which is “on the termination of the current tenancy” or more practically the date of the hearing
2. the person who must implement the grounds “the landlord” and not an onward purchaser
3. the landlord must have the necessary intention
4. the intention must be either 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
5. the landlord could not reasonably do so without obtaining possession

The landlord must prove in court (and not before) that they are the legal landlord, that they will be undertaking the work on the holding and, their necessary intention, which can be demonstrated by (i) resolutions, (ii) plans drawn up, (iii) contracts to build, (iv) finance and (v) planning permissions.

“Demolition” is self-explanatory, “construction” is the addition of new or additional structures and “reconstruction” generally means rebuilding after demolition. ‘Substantial’ is based on a “before and after” comparison and cannot be merely superficial in nature.

However, while the landlord has to prove ‘intention’ the Court has no regard to motivation, even if the sole motivation is to be rid of the tenant.

To be successful the landlord must also show that the work will be generally commenced within three months and 21 days from the hearing.

Finally, the landlord must prove that they need vacant possession of the holding for the works to be carried out.

This is a complicated area of law which you should take legal advice on, but if you are involved in a case revolving around Ground (f) make sure you have done your homework and have planned well in advance as if the holding is left standing the tenant could still have the right to renew!