Where Part II of the Landlord and Tenant Act 1954 applies to a lease the Tenant will be entitled to the grant of a renewal lease at the end of the term unless the Landlord is able to satisfy one of the statutory grounds. Clarification on the operation of the “redevelopment ground” has been provided by the High Court in the case of Somerfield Stores Limited v Spring (Sutton Coldfield) Ltd.
The redevelopment ground requires the Landlord to show that it has both a firm and settled intention to redevelop and that there is a reasonable prospect of the Landlord being able to carry out the development. It’s now clear, following the Somerfield Stores case, that the intention to redevelop doesn’t have to be formed (and therefore proved to the court) until the date of any trial.
The judgement means that Landlords now have longer to address any obstacles to redeveloping tenanted sites where Tenants seek to renew existing leases and obtaining vacant possession of those sites entails proceedings under the Landlord and Tenant Act 1954.
On the other side of the fence where Tenants are aware of development proposals being formulated by Landlords, they will need to actively pursue renewal proceedings to prevent Landlords from having an extended period in which to formulate and progress their plans.