The final G-round
Opposing a lease renewal on the basis of a Landlord's intended occupation
Here we are at last, Ground (g), the last of the 7 grounds set out at Section 30(1) Landlord and Tenant Act 1954 upon which a Landlord of a commercial property can oppose the grant of a new lease to an existing Tenant.
Ground (g) provides that a Landlord can oppose the grant of a new commercial lease on the basis 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".
5 year rule
It is important for Landlords to note that in order to rely upon ground (g), the Landlord's interest in the property must have been purchased or created at least 5 years before the termination of the existing tenancy, that is, the date specified in the Landlord's section 25 notice or the date before the date specified in the tenant's section 26 notice.
There may, due to the circumstances of a given matter, need to be further investigations as to how and when the Landlord's "interest" was acquired to ensure that the 5 year rule is satisfied. That will not be covered in this whistle stop tour of Ground G, however.
The finer points of Ground (g)
The Court has no discretion when it comes to ground (g); if the Court is satisfied that the Landlord intends to occupy the property for the purpose of its own business or its residence, then the Court must dismiss the Tenant's application for a new lease. So what does the Landlord need to do?
The Landlord must intend to occupy the "holding", or at least a substantial part of the holding, at, or within a reasonable time of, the termination of the current tenancy. By way of reminder, the holding is the part of the property that the tenant occupies for the purpose of its business.
The intended occupation must be for purpose of the Landlord's business, which means a trade, profession or employment, or for the purpose of the Landlord's own residence. Whilst the 1954 Act does not define occupation, it is considered to require physical presence and control of the property.
The Landlord must have a fixed and settled intention of occupying the holding which there is a reasonable prospect of being fulfilled. Whilst it is not necessary for the Landlord to prove its intentions until the date of the hearing to consider whether the Landlord can satisfy Ground G, a Landlord would be well advised to take steps at the earliest opportunity to ensure that it can prove that intention.
So there we are, that concludes the summary of the 7 grounds. But we're not finished just yet! In what will be the final article in this series, in my next article I will consider the statutory compensation that a tenant is entitled to receive from the Landlord if the Landlord successfully opposes the grant of a new commercial lease on the basis of one or more of the 3 fault grounds set out at Section 30(1) Landlord & Tenant Act 1954, specifically grounds (e), (f), and (g).
If you have any queries arising from this series of articles or wish to discuss any contentious property related matter, contact Chris Drinkall, Rollits' Head of Property Dispute Resolution, on 01482 337367 or by email at email@example.com.
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.