Landlord’s Failure to Extend Its Lease Leaves Subtenant in Place

July 18, 2013

Landlord’s Failure to Extend Its Lease Leaves Subtenant in Place

When a lease on commercial premises comes under the Landlord and Tenant Act 1954 (LTA), the grounds on which the landlord may oppose the tenant’s application for a new lease when the lease expires are limited. One of the grounds that is available to a landlord wishing to take possession at the end of the lease is that the landlord requires the property for the purpose of carrying on its own business.

A recent case heard by the Court of Appeal dealt with such a situation. A landlord opposed the application of its tenant for a new lease. The tenant argued that the landlord could not do this, relying on a provision in the LTA that prevents a landlord from recovering possession from a tenant in order to carry on its own business if the landlord itself has not been a ‘competent landlord’ for the previous five years.

In this case, the landlord was itself a tenant and its lease was shortly coming up for renewal. It had not yet taken action to renew the lease, however. This proved fatal to the landlord’s attempt to oppose the tenant’s lease renewal because the relevant legislation requires the competent landlord to have at least 14 months’ remaining title in the property. The landlord’s own lease did not comply with this requirement and it could not therefore oppose the tenant’s application for a new lease because it could not satisfy the ‘five-year’ rule.

In this case, the landlord should have obtained a new lease before seeking to obtain possession of the property from its tenant. It now faces the prospect of a lengthy wait before it can again seek possession of the premises.