Business tenant refused new lease without compensation

A number of recent cases have made it easier for landlords to oppose the grant of a new tenancy under one of the “fault” grounds, with no compensation payable to the tenant.

In the most recent case, a commercial landlord has succeeded in the Court of Appeal in establishing that a tenant’s refusal to allow the landlord access to the property amounted to a “substantial breach” by the tenant of its obligations under the current tenancy.

The tenant, Zoe Youssefi, claimed she was entitled to a new lease under the security of tenure provisions in the Landlord and Tenant Act 1954 Part II. The landlord opposed on the substantial breach ground contained in section 30(1)(c) of the act.

Lady Justice Gloster in her lead judgment in relation to the issue of access commented that “this lamentable history demonstrates a long standing intransigence on the part of the defendant to afford access by the landlord to the property”.

This case provides Court of Appeal guidance on the correct test to be applied in deciding whether, if serious breaches are established, the tenant “ought not to be granted a new tenancy” under ground (c). The guidance further makes it clear that the landlord does not need to show that there would be an adverse impact on rental or the value of the reversion.

This case follows on another recently reported case Horne and Meredith Properties v Cox and Billingsley (Court of Appeal – March 2014) where the court upheld the landlord’s opposition to a new lease and refused a new lease to a tenant who was described as excessively litigious having over many years wrongly asserted that the landlord was fraudulent and cost the landlord thousands of pounds in litigation costs. The case is also useful in showing that in certain circumstances, a landlord can rely on ground (c) even where there has been no breach of a covenant.

Other examples where the second limb of ground (c) has been successfully argued include where a tenant was illegally residing in a car on the road adjoining the holding and where a tenant persistently breached planning control.