Landlord/tenant law in practice: how courts interpret the Landlord and Tenant Act 1954

The Landlord and Tenant Act 1954 (LTA 1954) provides business tenants in England and Wales with what is called ‘Security of Tenure’. Unless the parties to a tenancy/lease contract out of these ‘Security of Tenure’ provisions, tenants have the right to renew their lease on substantially the same terms (except the amount of rent) at the end of the agreed lease term. Landlords can only oppose the renewal on certain limited grounds set out in the LTA 1954.

In this blog, we explore two recent cases that have shed light on how the courts interpret the LTA 1954 in situations where the landlord has exercised their right to forfeit the lease or to oppose a renewal of the lease based on these limited grounds.

Before we start, we will provide a short overview of the LTA 1954 and the grounds on which landlords are permitted to forfeit a commercial lease (i.e., end the lease) or oppose the renewal of a new lease.

The Landlord and Tenant Act 1954

As mentioned above, the LTA 1954 was created to give business tenants more security in their premises by making it more difficult for landlords to refuse lease renewals or evict tenants.

However, to give landlords legal recourse in the event of non-payment of rent or breach of contract, the following remedies are available to a landlord, provided certain conditions are met. These are set out below:

Forfeiture

There are certain situations where a landlord may be able to recover possession of a commercial lease:

• Non-payment of rent
• Breach of covenant (aside from non-payment of rent – e.g., repair and maintenance or subletting covenants)
• Tenant insolvency.

Opposing a renewal

A landlord can only oppose the renewal of a commercial lease under certain limited circumstances. These are set out below:

• Breach of repairing covenant – i.e., the tenant has failed to keep the premises in good repair
• Persistent non-payment of rent
• Breaches of other obligations under the lease
• Availability of alternative accommodation – the landlord must show they have offered suitable alternative premises on reasonable lease terms
• If the property is divided and sublet to several businesses, the landlord can oppose renewal on the grounds that the ‘superior’ tenant can afford to occupy the entire premises for more than the sum of the sublets
• The landlord intends to demolish or reconstruct the property
• The landlord wishes to occupy the premises themselves.

Bijlani v Medical Express

The first case we are going to discuss is that of Dr Bijlani, a dentist whose landlord sought forfeiture of her lease following her suspension from the General Dental Council (GDC). As a doctor operating on the prestigious Harley Street, one of the covenants of her lease was that she must be registered with the GDC in order to carry out her work on the premises. Following her suspension, however, Dr Bijlani continued to carry out Botox injections on the premises – a treatment which, although not legally requiring GDC registration, was nevertheless still considered a breach of her lease.

Dr Bijlani applied for relief from forfeiture on the grounds that she was not continuing to provide dental services at the property during her suspension. Nevertheless, the court agreed that a breach had occurred. However, it offered Dr Bijlani limited relief from forfeiture, stating that she could keep her lease if she discontinued all services until her GDC suspension had been lifted.

This case demonstrates that the court has discretion when it comes to granting relief from forfeiture, giving it the flexibility to balance both the landlord’s and tenant’s rights. In this case, it balanced the landlord’s reputational concerns with the tenant’s application for relief by ensuring that the property could not be used for medical purposes while Dr Bijlani’s suspension was ongoing.

Gill vs Lees News Limited

Lee News Limited, which operated a newsagent and convenience store under two separate leases, applied to renew the leases. The landlord opposed the renewal on the grounds that the tenant had not complied with the repair and maintenance covenants laid out in the leases, in addition to persistent delays in payment of rent. In such circumstances, the landlord must prove that the breaches were substantial enough that “the tenant ought not to be granted a new tenancy.”

Initially, the judge dismissed the landlord’s claim, stating that the rent delays were minor and that the disrepair of the property had been resolved by the time of the hearing; Mr Gill was therefore ordered to grant a new tenancy. However, he appealed, and the case went to the Court of Appeal. At that hearing, the tenant argued that they had repaired the damage ahead of the hearing and, as such, the court could only consider the state of the premises on that date.

However, the Court of Appeal disagreed, instead taking a wider view of the state in which the premises had been kept throughout the tenancy and the severity of the other breaches. Although it eventually dismissed the landlord’s claim and ruled on the side of the tenant, this case should serve as a reminder to commercial tenants that the court will not only consider the state of the property and compliance with covenants on the date of any hearing, but also the tenant’s conduct throughout the tenancy. Where multiple grounds are being relied upon, the court will not look at each in isolation but take a broader view to judge whether the tenant “ought not” to be granted a new lease.

Expert guidance on the Landlord and Tenant Act 1954

Our specialist Landlord and Tenant Dispute Resolution team have spent decades supporting both landlords and tenants in resolving disputes under the Landlord and Tenant Act 1954. Given the court’s discretion in interpreting the LTA 1954 on a case-by-case basis, it is vital to seek legal advice to ensure that your interests are protected in the event of a forfeiture or lease renewal claim.

Please do contact us to discuss your case on 0330 221 8855 or email enquiries@attwaters.co.uk – we’d be delighted to help.