A Christmas treat

A brief discussion about section 30(1)(d) and (e) Landlord and Tenant Act 1954

In this, my third article on the grounds that a landlord can rely upon to oppose the grant of a new commercial lease and my last article of 2017, we look at grounds (d) and (e). These grounds are, in my experience, rarely relied upon and therefore there is little judicial guidance upon both.

It would be remiss of me in this season of goodwill to all men not to highlight at the outset that this is not the most enthralling of articles. I can only blame the subject matter!

Ground (d) suitable alternative accommodation 

Under Ground (d) of section 30(1) Landlord & Tenant Act 1954, a Landlord can oppose a claim for a new lease on the basis that

"... that the landlord has offered and is willing to provide or secure the provision of alternative accommodation for the tenant, that the terms on which the alternative accommodation is available are reasonable having regard to the terms of the current tenancy and to all other relevant circumstances, and that the accommodation and the time at which it will be available are suitable for the tenant's requirements (including the requirement to preserve goodwill) having regard to the nature and class of his business and to the situation and extent of, and facilities afforded by the holding."

The offer of alternative accommodation must have been made before the time, or at the same time as, the Landlord’s section 25 notice is served/a counter notice to a Tenant’s section 26 notice is issued. The reasonableness of the Landlord’ offer, however, is determined at the final hearing of the Tenant’s application for a new lease, allowing the Landlord to make changes to its proposal following it having first been made. Landlords must be aware, however, that making such changes, especially once proceedings have been issued, could lead to adverse costs consequences for the Landlord. 

When considering the application of Ground (d), the Court will consider:-

  • the terms of the offer of alternative accommodation must be reasonable when compared to the terms of the current tenancy and all relevant circumstances of the current tenancy.
  • the alternative property must be suitable for the Tenant’s needs and not detrimental to its business taking into account the size and nature of the Tenant’s business and existing property. 
  • the new property must preserve any goodwill that the Tenant has acquired from operating from the existing property
  • the Landlord must be able to provide the alternative accommodation at the end of the existing tenancy 

Unlike grounds (a), (b) and (c) which are discretionary grounds, if a Landlord is able to satisfy the Court that it can provide appropriate alternative accommodation, the Court must dismiss the Tenant’s application for a new lease. Given the difficulty in satisfying the conditions, the ground is rarely satisfied.

Ground (e) - possession required where tenancy was created by subletting

Under Ground (e) of section 30(1) Landlord & Tenant Act 1954, a Landlord can oppose a claim for a new lease on the basis that

"where the current tenancy was created by the sub-letting of part only of the property comprised in a superior tenancy and the landlord is the owner of an interest in reversion expectant on the termination of that superior tenancy, that the aggregate of the rents reasonably obtainable on separate lettings of the holding and the remainder of that property would be substantially less than the rent reasonably obtainable on a letting of that property as a whole, that on the termination of the current tenancy the landlord requires possession of the holding for the purpose of letting or otherwise disposing of the said property as a whole, and that in view thereof the tenant ought not to be granted a new tenancy;"

Ground (e) requires all of the following points to be satisfied:

  • The head landlord must require possession of the property.
  • The existing tenancy must be an underletting of part out of a headlease interest.
  • The landlord opposing the new tenancy must be the head landlord, not the tenant's immediate landlord.
  • The rent the head landlord can obtain for the underletting of part and the remainder of the head lease must be considerably less than the rent  that could be recovered for renting the whole of the property.

Ground (e), like Grounds (a) - (c), are discretionary grounds, Therefore, even if the extremely unlikely event that the ground is made out, the Tenant may still succeed in obtaining a new lease.  

An additional point to note: if a Landlord is able to persuade the Court that a new lease should not be granted to the Tenant on the basis of ground (e), the Landlord is required to pay the Tenant statutory compensation. I will discuss statutory compensation, including how it is calculated, in my final article of this series of articles.

In my next article (which will be produced in the new year) I will look at, in my experience, the 2 more commonly used grounds of opposition to a new lease, being grounds (f) - “the redevelopment ground” - and (g) - “the occupation ground”.  There has been a recent judgment in relation to one of these grounds which has been regarded as controversial so make sure you look out for that article which will be much less dry than this one!

If you have any queries arising from this series of articles or wish to discuss a related matter, contact Chris Drinkall, Rollits’ Head of Property Dispute Resolution, on 01482 337367 or by email at christopher.drinkall@rollits.com.

In the meantime, on behalf of all of us at Rollits, I wish you all a very Merry Christmas and a Happy and Prosperous New Year

Posted on: 21/12/2017

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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