Developers can rest easy

Developers will welcome a recent Court of Appeal decision on the relevant date for establishing an intention to redevelop business premises in order to oppose the grant of a new lease to an existing tenant.

In Hough v Greathall Ltd the landlord served an opposed section 25 Notice on the tenant relying on the redevelopment ground specified in section 30(1)(f) of the Landlord & Tenant Act 1954 (“the Act”).  The tenant applied for a new lease on the basis that the landlord did not have the requisite intention to redevelop the premises at the date of service of the section 25 Notice.  The tenant argued that the relevant date had been altered by changes to the legislation brought in by the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003.  The wording of section 25(6) of the Act was changed from requiring the landlord to state whether he “would oppose an application for the grant of a new tenancy” to requiring him to state whether he “is opposed to the grant of a new tenancy”.  The effect of that change, the tenant argued, was to make the relevant date for establishing the intention to redevelop the date of service of the section 25 Notice.

The Court rejected the tenant’s arguments and that decision was upheld on appeal.  The Court of Appeal said that the wording of the legislation requires the landlord to state in the section 25 Notice whether he is opposed to the grant of a new tenancy, and if so on which ground he intends to rely.  However, under the Act the landlord is only required to make good his opposition at the date of the hearing.

The Court of Appeal’s decision confirms the long-established position.  Developers can take comfort that they do not need to have their redevelopment plans in place at the date of serving the section 25 Notice, which may be many months before they intend to take possession of the premises.

The full case transcript can be found here http://www.bailii.org/ew/cases/EWCA/Civ/2015/23.html

by Thomas Evans, Associate