The Landlord and Tenant Act 1954 confers security of tenure on business tenants. None the less, a landlord is entitled to oppose a tenant’s application for the renewal of a tenancy on the ground that it intends to occupy the property for its own business purposes. The landlord must prove that: (i) it has owned the property for more than five years; (ii) its intentions are genuine; and (iii) it has a reasonable prospect of being able to act on them: section 30(1)(g).
However, the statute does not specify how long the landlord must carry on business from the premises after obtaining possession. Suppose, therefore, that it intends to conduct business from the property for a short time only before selling it. Is the prospect of a subsequent sale to be disregarded, unless the landlord has a fixed and settled intention to sell? Can the landlord dispossess a tenant in circumstances where a sale is likely so long as its intentions remain within “the zone of contemplation” and do not move into “the valley of decision”?
In Patel v Keles [2009] EWCA Civ 1187; [2009] PLSCS 313, the Court of Appeal ruled that the landlord had failed to satisfy section 30(1)(g), even though he had offered the court an undertaking not to use the premises except as a newsagent for the following two years. The court noted that the undertaking was expressed in negative terms. The landlord had not undertaken to occupy the premises himself, and the trial judge clearly believed that they would be sold as soon as the undertaking expired.
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Consequently, their lordships ruled that the landlord’s occupation must be more than short-term. What constitutes short-term will depend on the facts of each individual case. The evidence here cast doubt on the landlord’s intentions. He had other sources of income and did not need to work from the premises, and he was planning to retire in four years time.
The court ruled that section 30(1)(g) is not available to landlords that have a settled intention to sell within five years. Where a landlord is likely to sell, the court must take this into account when deciding whether the landlord has discharged the burden of proving that it has a genuine intention to carry on business from the premises.
The landlord’s undertaking contradicted his stated intention and the tenant was entitled to renew his lease. The decision indicates that landlords should give careful consideration to the forms of undertaking offered to the court to ensure that they strengthen (as opposed to undermining) their position when seeking to rely on section 30(1)(g).
Allyson Colby is a property law consultant
