Opposing a tenant’s 1954 Act lease renewal – Part 2

Author: Alison Mould

This is the second in a series of articles looking at the grounds a landlord can use to oppose a tenant’s lease renewal where the lease is protected by the terms of the Landlord and Tenant Act 1954. In this article we are going to be looking at the grounds of opposition contained in sections 30(1)(b) and 30(1)(c). These are both referred to as “fault” grounds, where the landlord relies on the default of the tenant. If a landlord is successful in opposing a lease renewal relying on either of these grounds then a new lease will not be granted to the tenant and the tenant is not entitled to any statutory compensation.

Section 30(1)(b) (ground (b)) states “that the tenant ought not to be granted a new tenancy in view of his persistent delay in paying rent that has become due”.

The 1954 Act does not define rent. Often leases will define rent to include all sums due under the lease, e.g. service charge and insurance, etc. To err on the side of caution a landlord would be wise to rely on both grounds (b) and (c) (see below) if the arrears are not of simple rent.

The tenant has to be in “persistent” delay in paying that rent. Case law has shown us that the courts interpret persistent to mean either a long history of paying instalments late or a history where a few instalments have remained unpaid over a long period of time.

However, even where there is a persistent delay the court is given a discretion as to whether the tenant should be allowed a new tenancy by the use of the words “ought not to be granted”. In recent years the courts have increasingly taken into account the landlord’s behaviour in relation to arrears. Has the landlord proactively pursued the tenant each quarter when the tenant has failed to pay? Has the landlord issued proceedings/served a statutory demand/instructed enforcement agents? If a landlord has taken a laissez-faire approach to the delay in payment, then courts increasingly find in favour of the tenant and grant the tenant a new lease.

A tenant would always be well advised to ensure that any arrears are paid as quickly as possible, where a landlord relies on ground (b), and in particular ensure that they are paid before any trial using this fact to encourage the judge to use discretion in their favour.

Section 30(1)(c) (ground (c)) states “that the tenant ought not to be granted a new tenancy in view of other substantial breaches by him of his obligations under the current tenancy, or for any other reason connected with the tenant’s use or management of the holding”. Really this ground falls into two sub-grounds, two alternatives, that there are substantial breaches under the current tenancy or another reason connected with the tenant’s use or management of the property.

In connection with the first limb, that there are substantial breaches of covenant under the current tenancy, the obvious question for the court to determine is what is substantial. It is arguable, for example, that, a bit like the Forth Bridge, a tenant will always be in breach of some covenant or regulation, usually disrepair. Substantial is, of course, always going to be a matter of fact and degree.

The other limb that may be used by a landlord under ground (c) is that there are other reasons connected with the tenant’s use and management of the holding. To prove this ground landlords have relied on issues which are not strictly breaches of the terms of the lease, such as non compliance with a planning notice, and protracted litigation (16 years!) between the landlord and tenant in question over rights of way granted by the lease.

The Court of Appeal has given guidance on what a landlord must prove to succeed using the second limb of ground (c) which can be summarised as follows:

  • the tenant does not need to be in breach of the lease; and
  • the reasons relied upon do not need to be directly concerned with the parties in their relationship as landlord and tenant.

A landlord is not, of course, limited in the number of grounds upon which it can rely in section 30(1) when opposing a tenant’s lease renewal. The only real consequence is costs. Thus if a tenant is obliged to defend proceedings where a landlord relies on a multitude of grounds and is unsuccessful on one or more of them, then the landlord may find himself with a substantial legal bill even if he successfully opposes the lease renewal on one of the many grounds upon which he relies.

Alison Mould, Partner, Fladgate LLP (amould@fladgate.com)

View by date:

View by author:

Would you like to hear more?