As cranes start to reappear on London’s skyline again, some tenants are surprised to learn they can be forced out of their property.
An occupier of premises for the purposes of a business generally has the right to a new lease when the current lease expires. This right stems from the Landlord and Tenant Act 1954. However there are exceptions to this principle. The uptick in the economy has focussed attention on a landlord’s right to end a lease because he intends to demolish or reconstruct the premises or a substantial part of them, or carry out any substantial works of construction on the premises or part of them, and that he could not reasonably carry out these works without obtaining possession of the premises.
The first thing to say is that if your landlord really is determined to redevelop, you probably won’t be able to use your right to security of tenure to stop him. However, you are entitled to compensation for the termination of your lease, calculated on the rateable value of the premises and how long you have been there. And there shouldn’t be a dilapidations bill if the premises are about to be destroyed by the landlord.
In addition there are a number of tactics which can be employed to test the strength of the landlord’s intention and to make sure any move is timed to suit the tenant. In one case the court determined that a 12 month project to gut the interior of a building, including moving the stairs, was “refurbishment and repair” rather than demolition or reconstruction. In another case the landlord’s plans changed after the tenant had moved out, and the tenant won additional compensation. The timing of the landlord’s proposed redevelopment is also an important factor.
The compromise solution can be a new lease with a right for either landlord or tenant to break it after an agreed period. This balances the tenant’s need for business continuity with the landlord’s right to redevelop.
By Suzanne Gill