A recent Supreme Court case in the UK could have a serious impact on some long-term investors’ plans
Not every legal case is relevant to property investors, but be assured this column is devoted to showcasing only those recent decisions that are significant for the real estate sector. Where better to start, therefore, than the very recent decision of the Supreme Court, our ultimate domestic court of appeal, in Franses v The Cavendish Hotel (London) Ltd UKSC 62 handed down at the end of, what we are still pleased to call, the Michaelmas Term.
The decision matters because it is about recovering possession from a sitting commercial tenant who has statutory protection under Part 2 of the Landlord and Tenant Act 1954. It matters because if, as the present term expires, you want to re-let to another tenant, take back the premises for your own use, or assemble vacant possession for any reason (such as some future development), things just got a great deal more difficult.
To recap, Part 2 of the Landlord and Tenant Act 1954 confers a qualified security of tenure on business tenants (unless the parties contract out). A tenant in occupation of premises under a tenancy for a term of years may stay over at the end of the term, and is entitled to a new tenancy beginning at the date of expiry, unless the landlord can make out one of the statutory grounds of opposition specified in section 30(1). One of those grounds – and perhaps the one most frequently relied upon – is that the landlord intends to demolish or reconstruct the premises (as provided under section 30(1)(f)).