New acid test demolishes landlord’s ‘pointless’ plan

It can be difficult for a commercial landlord to recover possession of property if their tenant’s lease is protected by the Landlord and Tenant Act 1954. A landlord must rely on one of the grounds set out in section 30 of the 1954 Act in order to avoid giving a new lease to its tenant.

A plan is hatched

The landlord in the case of S Frances Ltd v The Cavendish Hotel (London) Limited thought that they had the perfect plan. The landlord proposed a scheme of works which would meet the requirements for an opposed lease renewal under ground f of s30 – namely demolition or reconstruction works which would be too disruptive for the tenant to remain in occupation.

They devised a scheme of completely pointless redevelopment work, which complied with the ground f requirement and which they fully intended to carry out as a means to recover possession of the property, even though the works would cost over £1million!

Supreme Court weighs in

Their tenant, and ultimately the Supreme Court, had different ideas. In addition to the standard tests; whether the landlord had a genuine intention to carry out the works; whether they could practically carry out the works, the Supreme Court imposed an extra test.

They said that the acid test is whether the landlord would intend to do the same works if the tenant left voluntarily. In the Frances case, they clearly did not, so the tenant got to stay.

The moral of the story? If you intend to rely on ground f ensure that your scheme of works makes sense. Questions are likely to be asked of an apparently pointless scheme of work, so make sure you can show that you will do the works, even if the tenant leaves voluntarily.

For more information, advice or for a free consultation, contact Sarah Barratt on 0191 211 7923.