A flat occupied not only as a dwelling but also for the purposes of a business carried on by the tenant is capable of being a business tenancy under section 23(1) of the Landlord and Tenant Act 1954, and whether a landlord intends to occupy premises for the purposes of section 30(1)(g) is essentially a question of control.
The High Court has considered these issues, dismissing the council’s appeal, in Royal Borough of Kensington and Chelsea v Mellcraft Ltd [2024] EWHC 539 (Ch); [2024] PLSCS 49.
The appeal concerned an order of the county court on two preliminary issues: i) that Mellcraft occupied the first and second floor flat at 269 Portobello Road, London W11, for the purposes or partly for the purposes of its business at the date of expiry of its lease of the property; and ii) that the council had failed to establish that it intended, on termination of the tenancy, to occupy the holding for the purposes or partly for the purposes of its own business. So, Mellcraft was entitled to a new lease of the property.
The council granted Mellcraft a lease for a single tenancy dwelling of the property in September 2012. The property was occupied by Mellcraft’s sole director and his family. While critical of evidence as to the precise nature of Mellcraft’s business, the judge accepted that it was carrying on business at the property in respect of five leases which it held from the appellant, collecting rents from sub-lessees and paying them to the council. Section 23(1) of the 1954 Act was satisfied.
The council’s case for possession of the property was that it intended to occupy the flat for the purposes of providing temporary accommodation to homeless families. However, the judge concluded that it intended to use the flat for temporary accommodation pursuant to its main housing duty. Consequently, it would not retain any degree of control over the flat which would be occupied exclusively by a tenant. Section 30(1)(g) was not satisfied.
The High Court could find no basis for interfering with the judge’s evaluation of the evidence on either issue. If the sole director was occupying the flat for the purposes of transacting Mellcraft’s business this was capable of qualifying as business occupation of the flat by Mellcraft. The question of whether or not the council would be in occupation for the purposes of section 30(1)(g) was essentially one of control Graysim Holdings Ltd v P&O Property Holdings Ltd [1996] 1 EGLR 109. The judge was entitled to reach his conclusion based on the appellant’s evidence that it intended to grant tenancies.
Louise Clark is a property law consultant and mediator
