Section 30(1)(f) of the Landlord and Tenant Act 1954 permits landlords to oppose applications for new business tenancies if, on the termination of the current tenancy, they intend to demolish or reconstruct the premises and could not reasonably do so without obtaining possession of them.
The test of a landlord’s intention was set out in Cunliffe v Goodman [1950] 2 KB 237. It will not be satisfied if the landlord has too many hurdles to overcome, or too little control of events; it must have “a reasonable prospect” of being able to act on its intention. So the landlord will need to show that it has obtained planning permission for its proposed development, or that there is a “reasonable prospect” – which, according to Cadogan and another v McCarthy and Stone (Developments) Ltd [1996] EGCS 94, means a “real chance”, as opposed to a fanciful prospect – of obtaining such permission.
Key points
- Tenants may be denied business new tenancies if there is a “reasonable prospect” that their landlord will be granted planning permission for development
- A “reasonable prospect” is a low threshold, which should not be equated with probability
- The court must assess a landlord’s prospects of obtaining planning permission on the footing that it is entitled to possession
Another hurdle to overcome relates to timing. The landlord will have to show it will be able to implement its intentions within a reasonable time. And, given that it can take time to determine large or complex planning applications, and that the landlord’s long-term goal was residential development, the tenants hoped to be granted new business tenancies in Warwickshire Aviation Ltd and others v Littler Investments Ltd [2019] EWHC 633 (Ch); [2019] PLSCS 57. But it was not to be.
Intention to demolish
The case concerned Wellesbourne Airfield in Warwickshire, which was home to a number of tenants offering aviation services. Just four of the tenants remained, operating flying schools, a flying club, an aircraft maintenance and leasing business, and a café from buildings on the airfield. The tenants had oral monthly tenancies and the landlord was opposed to their renewal because it wanted to demolish the buildings they occupied so that it could promote the site for residential development.
The businesses were important to the local economy and community and the development plan for the area was supportive of the airfield and its facilities. The local authority had also passed an Article 4 direction under the Town and Country Planning (General Permitted Development) (England) Order 2015, removing permitted development rights, which prevented the landlord from demolishing the buildings on the airfield without planning permission.
So the question for the court in the 1954 Act proceedings that followed was: could the landlord show that there was a reasonable prospect of obtaining the planning permission that it needed to demolish the buildings?
The landlord argued there was a high probability of being granted planning permission (65%), while the tenants rated the landlord’s chances at no higher than 30%. But the judge did not favour using a numerical analysis to establish what “a reasonable prospect” means. Experts may use percentages to help them express their opinion about a likelihood. However, that did not mean that the court should attempt to translate “a reasonable prospect” into a percentage and then measure it.
Notional application
The landlord relied on Westminster City Council v British Waterways Board [1984] 2 EGLR 109. In that case, the House of Lords noted: “In a contest between the planning merits of two competing uses, to justify refusal of permission for use B on the sole ground that use A ought to be preserved, it must… be necessary at least to show a balance of probability that, if permission is refused for use B, the land in dispute will be effectively put to use A.”
However, it was not for the court to decide questions that might be referred to the planning authority for determination. Instead, the court need consider only whether a notional planning application would have a “reasonable prospect” of success.
In Westminster; the principal obstacle to the landlord implementing its intention was the council’s reluctance to grant planning permission for a change of use because it was the occupier and was using the premises for its own purposes. But the House of Lords ruled that the words “on the termination of the current tenancy” in ground (f) mean that the court must assess the prospects of a successful planning application on the footing that the landlord is entitled to possession. Therefore, continued use of the premises for the same purpose is by no means inevitable.
Alternative uses
The landlord argued that no one could compel it to use the land for aviation once it had resumed possession of the airfield. Indeed, there were good economic reasons for not doing so. Operating the airfield was an expensive and onerous obligation – and, if it could not obtain planning permission for residential development immediately, it would consider alternative sources of income, such as vehicle storage, car parking, motorcycle training and off-road/under-17 driver training.
The judge accepted that the landlord’s intentions were not determinative. But they were genuine and relevant. And, although the development plan stated that developers would be expected to contribute to the achievement of the policies set out in the plan, this applied “where it is appropriate and reasonable for them to do so”.
The local authority could not force the landlord to use the land for aviation, and there was no realistic prospect that the landlord would do so, especially as the airfield could be used for other purposes that did not require planning permission. So since there was no real likelihood of reuse for aviation, there was a reasonable prospect that the landlord would secure planning permission to demolish the buildings and the tenants were not entitled to new business tenancies.
Allyson Colby is a property law consultant