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Mon 22nd February 2010
Landlord loses appeal over repossession of premises

A landlord has lost his appeal to repossess premises that he wanted to use to set up a business.

The court ruled that he had not shown sufficient intention to occupy the building for the purposes of the Landlord and Tenant Act 1954 (the Act).

The premises were occupied by a tenant who had been running a small news agency since 1991. When the tenant applied to renew the lease, the landlord objected on the grounds that he wanted to set up a news agency himself on the premises.

The landlord accepted that to satisfy the requirements of the Act, he would have to show that he genuinely intended to use the premises to run the business and that he was capable of putting that intention into effect. He gave an undertaking that he would not use the premises for any purpose other than running a news agency for two years.

However, the judge ruled against the landlord because he thought his intention was only temporary and it was highly likely that he would sell the premises or grant a lease at the end of the two years.

The Court of Appeal has now upheld that decision. It said that if the landlord succeeded in meeting the requirements of the Act then the tenant would have no right to renew the lease and would have to vacate the premises. The goodwill that had been built up by the business would be lost or acquired by the landlord.

The tenant could suffer a substantial loss and the courts had therefore set a high benchmark for establishing the seriousness of the landlord's intentions and capabilities. There had to be real substance in the intention to set up a new business and the occupation of the premises had to be more than short term.

In this case, the judge was entitled to conclude that the landlord had not provided sufficient proof of his intention to occupy the premises in the way he had described.

 Please contact Lesley Milne lmilne@pwhmllp.com or Michael Wills mwills@pwhmllp.com  if you would like more information about commercial leases and landlord and tenant issues.