Supreme Court ruling changes landscape for landlords and tenants

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Supreme Court ruling changes landscape for landlords and tenants

17 Dec 2018

A recent Supreme Court ruling has given tenants increased rights

As most landlords and tenants will know, where a property is occupied by the tenant for the purposes of its business and is not contracted out of the Landlord and Tenant Act 1954 (the “Act”), a tenant will have security of tenure, which means they are entitled to a new tenancy unless the landlord makes out one of seven grounds of opposition. One of the grounds is that the landlord intends to demolish or reconstruct the premises.

The question posed to the Supreme Court in the case of St Franses Ltd v The Cavendish Hotel (London) Ltd was whether it is open to the landlord to oppose the grant of a tenancy if the works they say they intend to carry out under redevelopment grounds are, in the words of the judge HHJ Saggerson, “designed with the material intention of undertaking works that would lead to the eviction of the tenant regardless of the works commercial or practical utility and irrespective of the expense”.

In this case, the landlord, Cavendish Hotel, admitted that the main reason for the work was to evict the tenant, but that it would have carried out the works if that was what was necessary to oppose the tenant’s renewal tenancy. Critically, the witness accepted that it would not have carried out the works if the tenant had left voluntarily.

The Supreme Court unanimously allowed the appeal. Lord Sumption, in the leading judgment, held that the landlord’s motive and purpose is irrelevant for the purposes of ground. The acid test is whether the landlord would intend to do the same works if the tenant left voluntarily.

The Court accepted that the judgment meant that the focus of any hearing may now be the landlord’s motive.

In terms of what the judgment means for landlords and tenants, see set out our advice below:

For Landlords

  • Take advice from your solicitor as soon as possible on when to disclose plans and evidence of intention. Assuming the works is an honest intention, previous good practice was to frontload the claim with documentary evidence to protect your costs position. There will now be concern that early disclosure of documentation and any subsequent change in plans may be used by tenants to suggest works have been designed to facilitate a tenant’s removal. Given the risk on costs, we still anticipate frontloading of claims but in a more structured way. Any change in development plans will need to be recorded and carefully documented as to the motivation for such change.
  • Get your solicitor involved as soon as possible in your development plans, not just for service of a notice under the Act. Kuits’ Property Dispute Resolution team can work with you to put a vacant possession strategy in place and advise you on other options.

For Tenants

  • This is a swing from the Courts in your favour. Take legal advice as soon as you suspect your landlord may be seeking to redevelop.

If you would like to speak to an expert about any of the issues above, please contact us

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