Landlords who oppose the grant of a new lease on the basis of an intention to redevelop must not neglect to consider the effect of the redevelopment on third parties, and the potential impact on its ability to commence works within a reasonable period.
Section 30(1)(f) of the Landlord and Tenant Act 1954 allows a landlord to oppose the grant of a new tenancy if, on the termination of the current tenancy, the landlord intends to demolish, reconstruct or carry out works of construction to the premises.
The recent case of S Franses Ltd v The Cavendish Hotel Ltd (previously reported on here) held that a landlord's intention to do the works cannot be conditional on whether its tenant wishes to seek a new lease. London Kendal Street No3 Ltd v Daejan Investments Ltd is the first reported case to consider and apply the Franses test. The tenant occupied part of the ground floor only.
The tenant argued the landlord could not prove the required intention to redevelop. Of particular interest was the tenant's attempt to apply Franses and to also challenge the ability of the landlord to commence works within a reasonable period.
The court held that the landlord had proved intention and although the tenant might seek an injunction and the progress of the works might be hindered by noise nuisance and the reserved rights in neighbouring tenant's leases, such issues could be could be resolved.
The case is a useful reminder of well-established principles, and an early glimpse into how those principles might be applied following Franses:
- A reasonable period to commence works was within six months and 21 days from the order terminating the tenancy
- An undertaking provided to the Court from the landlord that it would commence the works was a "significant factor" in support of proving intention
- The Court considered an injunction to be "far from automatic" and any proceedings to be capable of resolution
- The landlord provided persuasive evidence that it had been considering works over a number of years
- The landlord had no difficulties from a planning or funding perspective
- The landlord had entered into a significant building contract with a contractor who was ready to begin works with a short lead-in time
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.