Article 4 in our series of articles on the Landlord and Tenant Act 1954
This is part of the series of articles we have published this year regarding the Landlord and Tenant Act 1954, and in particular the grounds a landlord can use to oppose an application for a lease renewal by a tenant. In this particular article, we are going to consider ground (f), which is frequently referred to as the “redevelopment ground”. As we will see, it is in fact a lot more.
Section 30(1)(f) actually states “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 (f) therefore includes the following six categories of work that may be being undertaken to premises:
- demolition of the whole of the premises comprised in the holding;
- demolition of a substantial part of the premises comprised in the holding;
- reconstruction of the whole of the premises comprised in the holding;
- reconstruction of a substantial part of the premises comprised in the holding;
- substantial works of construction to the whole of the premises comprised in the holding; or
- substantial works of construction to part of the premises comprised in the holding.
It is therefore fairly plain at an early stage that a bit of a makeover is not going to get a landlord home, and successfully oppose a tenant’s request for a new lease, using ground (f). Ground (f) uses chunky words such as “demolition”, “reconstruction” and “construction”.
In addition to establishing that the works that the landlord intends to undertake are the correct works to prove ground (f), the landlord must also show that it has the necessary intention to carry out those works, and also that there is a reasonable prospect of the works being carried out.
So what we have is a three-part test for the landlord:
- Are the works sufficient?
- Does the landlord intend to carry out the works?
- Is there a reasonable prospect of the works being carried out?
The relevant works
First, the works must relate to the “holding”. That is the area actually occupied by the tenant as opposed to the area demised to the tenant by the lease.
Secondly, if the lease allows the landlord to enter the holding to undertake certain works, then these works do not count as qualification works under ground (f).
The courts have held that the words “demolition” and “reconstruction” in ground (f) should be given their normal meaning. It is useful to remember for internal only/shell demises, however, that demolition can be proven by demolishing the internal demise, or the demolition of the structure supporting the internal demise.
In relation to reconstruction preliminary and finishing works should be taken into account, such as plastering works to a newly-built wall.
Construction usually involves creating something new, but this does not necessarily have to be of a structural nature for ground (f) to apply. The courts have held that the following are examples of construction:
- installation of a new staircase; and
- installation of bathrooms and drainage.
The courts have also held that the following do not constitute works of construction:
- installation of boilers and toilets; and
- installation of wiring and plumbing.
Obviously every case turns on its own facts.
The landlord must require the premises back in order to be able to do the work. Consequently, if the landlord has a right in the lease to enter the premises to undertake the works, then this will not be a requisite requirement under ground (f). The courts will also consider whether a landlord could carry out the works around the tenant.
The landlord must intend to carry out the works shortly after the expiration of the current tenancy, but reasonably promptly after that date.
The landlord ultimately needs to be able to prove its intention to undertake the works at the date of any trial, and should amass as much evidence as it can of its intention. The landlord will need to have a fixed intention, to have considered all of the issues and to have addressed the various challenges that might arise. The following is a useful but not exhaustive list of evidence that may be available to support a landlord’s intention:
- planning permission;
- plans and drawings for the development;
- appointment of a planning consultant;
- funding – this has never been more so important than in the current economic climate;
- tenders for a building contract;
- vacant possession of any other parts of the development site;
- board minutes; and
- appropriate consents from any third parties.
Prospect of success
The third issue that the landlord must show is that it has a real prospect of carrying out the development it proposes to. If there are too many unresolved issues, then the court will not grant possession and allow the landlord to oppose the lease renewal under ground (f). A real prospect of success has been defined to mean a “real chance”. For example, if there is no prospect of obtaining planning permission for the proposed works then ground (f) will not succeed.
One final point
A tenant can agree to allow a landlord to enter and carry out the development works, or agree to a new lease of only part of the premises and defeat the landlord’s opposition to a new lease under ground (f). The tenant can offer to vacate for a short period of time and then to go back into the premises once the landlord’s works have been done. A court has considered what a reasonable time to vacate the premises for would be, and concluded that three weeks was not substantial interference, and so the landlord failed in its opposition to the lease renewal. The tenant would simply vacate for a period of three weeks to allow the landlord to undertake the works and then go back into the premises. However, in another case a court held that two to four months would be a substantial interference with the tenant’s rights to occupy the premises, even though the tenant was prepared to vacate for this period, and the landlord succeeded in its opposition to the tenant’s lease renewal.
For our final article in this series in December we will be looking at ground (g), the final ground under which a landlord can oppose a lease renewal, colloquially known as owner-occupation.