The time by which a landlord need demonstrate its intention to redevelop premises when opposing renewal to a business tenant on this specified ground (s30 (1)(f) Landlord and Tenant Act 1954 (LTA 1954)) has recently been reconsidered by the Court of Appeal in the case of Hough v Greathall Limited[2015] EWCA Civ 23 (Hough).

Landlords Notice to Terminate (s25 Notice)

A landlord's notice to terminate a protected business tenancy must:

  • state whether the landlord is opposed to the grant of a new tenancy (s25(6) LTA 1954)

  • if it is opposed, specify one or more of the grounds in s30(1) LTA 1954 (s25(7) LTA 1954).

Time by which intention to redevelop need be established

The established view, as set out in the decision in Betty's Cafés Ltd v Phillips Furnishing Stores Ltd [1959] AC 20 (Betty's Cafés), is that the date by which a landlord need demonstrate its intention is the date of the hearing at which the court is deciding whether the tenant is entitled to a new tenancy. This date will, inevitably, be many months after the date the landlord served its opposing notice/counter-notice.

In Hough, the tenant argued that changes to the wording of s25 LTA 1954 brought in by the Regulatory Reform (Business Tenancies) (England and Wales) Order (SI 2003/3096) (the RRO 2003) in 2004 changed the time by which a landlord need demonstrate its intention to redevelop when serving an opposed s25 Notice.

Historical wording of s25 LTA

S25 LTA 1954 originally required a landlord to indicate whether it would oppose a new tenancy and on what grounds it woulddo so. The RRO 2003 changed this wording to the present tense – requiring the notice to state whether the landlord is opposed to a new tenancy.

The tenant in Hough argued that this modification required a landlord to demonstrate intention at the time it serves an opposed s25 Notice.

Decision

The Court of Appeal did not agree with the tenant's interpretation. In dismissing the tenant's appeal, it held that the change in wording related to the abolition of the tenant counter-notice procedure (also brought about by the RRO 2003) where a landlord had to wait to see if its tenant was going to serve a counter-notice setting out its willingness to vacate after it had served a s25 Notice.

The court also held that it was not practical to consider a landlord's intention at the time of serving a s25 Notice because a court must decide whether a tenant is entitled to a new tenancy at the time of the hearing.

In addition, the tenant's interpretation would result in a different test applying, depending on whether a landlord served a counter-notice to a tenant's s26 LTA 1954 request or an opposed s25 LTA 1954 Notice (since the provisions concerning a landlord's counter-notice remain in the conditional tense (see s26(6) LTA 1954). In short, Betty's Cafés remains good law and a landlord need only establish its intention to redevelop at trial.

Comment

The decision in Hough will no doubt be a relief for many landlords who often need the time at the end of a long lease to get their plans in order before they are in a position to demonstrate an intention to redevelop. It also avoids an arguably unfair situation where the time for a landlord to establish their case is dependent on which party instigates the lease renewal process.