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Refusing a New Lease of Business Premises

on Tuesday, 28 August 2018.

Landlords sometimes have the right to refuse a new lease even though the tenant is entitled to one under the Landlord and Tenant Act 1954. In this article, we look at when the Act applies and the landlord's most common ground for refusal.

Landlords sometimes have the right to refuse a new lease even though the tenant is entitled to one under the Landlord and Tenant Act 1954

In this article, we look at when the Act applies and the landlord's most common ground for refusal.

When Does the Act Apply?

For a tenancy to fall within the Act, five qualifying criteria have to be met:

  1. It has to be a lease (as opposed to some other arrangement) and not one of the particular categories that is excluded from the Act (eg leases granted for a fixed term of 6 months or less),
  2. It has to relate to premises,
  3. Those premises have to be occupied for business purposes,
  4. The business purposes have to be those of the tenant's business, and
  5. The tenant did not formally contract out of the protections of the Act before the tenancy began.

For as long as the tenancy meets these criteria, then it will be protected by the Act.

What Happens at the End of the Contractual Lease?

A lease which is protected by the Act does not come to an end automatically upon the expiry of its contractual term, but will continue indefinitely until either party does something proactively to bring the tenancy to an end. This will generally be a formal notice by the landlord or the tenant that the tenancy is to come to an end.

The landlord's notice or counter-notice can state either that the landlord is prepared to grant a renewal lease, or that the landlord wishes to terminate the tenancy and to refuse the tenant a new lease. If the landlord wishes to refuse a new lease, it must specify in its notice and later prove (if the matter goes to court) one or more of the grounds for opposition set out in the Act.

Grounds of Opposition

There are seven grounds of opposition set out in the Act.

The ground most often relied on is ground (f), the 'redevelopment ground'. This applies where the landlord intends to:

  • demolish or reconstruct the whole or a substantial part of the premises, or
  • carry out substantial works of construction or reconstruction

and cannot reasonably do so without possession of the premises.

The landlord must be able to show that it intends to carry out the works, and that it has a reasonable prospect of actually being able to carry out those works.

The landlord needs to be able to show that it can satisfy this test at the date of the court hearing, and this is likely to be many months after the notice has been served. The court also has the discretion to consider whether the landlord would have been in a position to satisfy this test within one year of the hearing.

A landlord can help to persuade a court that it has a genuine intention to redevelop the premises and the practical means to do so by showing, for example, that it has arranged finance, prepared plans and obtained tenders from building contractors, or that it has obtained planning permission for the works.

If a new lease is refused on ground (f), the landlord may have to pay the tenant compensation based on the rateable value of the premises.


If you are a landlord or a tenant of business premises and would like advice on your rights to remain in or recover possession, then please contact Michelle Bendall in our Property Litigation team on 0117 314 5326.

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