Notices to quit by landlord of business premises(Part Two)
This article will be useful reading for all landlords. It explains the process of vacating the tenant while complying with the law. This is part two of a two part article
To possess or not to possess?If the landlord does not seek possession, he may negotiate with the tenant for the terms of a new lease. He must then follow the
appropriate procedure of the order referred to in the previous paragraph.
Link to regulatory reform order
Assuming the landlord requires possession and no order was obtained at the outset, then the procedure is as follows: after the expiry of the fixed term, or at any time during a tenancy with no fixed term, a landlord can ask the court for possession on any of the “grounds” set out in the Landlord and Tenant Act 1954, section 25.
First steps
To start the procedure running, the landlord first has to choose the ground upon which he wishes to rely, then serve the statutory notice.
Because litigation is expensive, most situations are resolved by negotiation between either the parties personally, or their surveyors. But because the procedure is laid down by statute, there is little scope for departing from it. That means either side will lose out very easily if they do the wrong thing or fail to do the right thing within the appropriate timescale.
There are several forms you could use. In the vast majority of cases the form will be PR205 (you offer a new tenancy) or PR206 (you oppose a new tenancy). The words of the forms are laid down by law so do not change them. The tenant must then respond within a set time and in the manner also laid down by law.
The form is in two parts: the notice and the notes for tenant. The notice is invalid unless the notes are served with it.
The procedure is
- landlord serves notice;
- tenant serves counter notice in accordance with the instruction notes on the landlord’s notice, saying the tenant is not willing to give up possession;
- the parties negotiate!;
- landlord applies to court for possession;
- tenant makes counter application for new lease.
Not only must a landlord use the correct form. He must also choose and insert the correct “ground”. These are the grounds on which the landlord may object to the application for a new tenancy. They are listed in section 30(1) of the Landlord and Tenant Act 1954, namely,
Ground A: Breach of repairing covenant
- discretionary ground;
- proof of the tenant’s failure to keep the premises in good repair does not alone entitle the landlord to have the tenant’s application dismissed;
- landlord must show that the tenant ‘ought not to be granted a new tenancy’ in view of the state of repair of the premises;
- the court may take into account an offer by the tenant that the new tenancy should contain a covenant obliging the tenant, immediately to repair the premises as the original lease required.
Ground B: Persistent delay in paying rent
- discretionary ground;
- landlord must show that the tenant, ‘ought not to be granted a new tenancy’ in view of its persistent failure to the rent at the time stated in the lease;
- the court’s main consideration will be whether the landlord will be able to rely on the tenant to pay the rent promptly in the future.
Note: in a case in 2002, the Court of Appeal held that a landlord who habitually accepted the late payment of rent from a tenant and the tenant’s failure to comply with his repairing obligations, was not permitted to insist on strict compliance with the terms of the lease unless and until the tenant was given clear and reasonable notice that the landlord now required strict compliance.
In this case, the current landlord was an assignee of the property. It was the previous landlord who had accepted the lackadaisical approach by the tenant. The new landlord was obliged to tell the tenant that he required compliance before he could complain to the court and apply for possession. The tenant’s application for a new lease was, therefore, granted.
Ground C: Breaches of other obligations
- discretionary ground;
- landlord must show that the breaches are such that the tenant, ‘ought’ to be deprived of a new tenancy;
- any waiver of, or acquiescence in, a breach by the landlord will influence the court against the refusing of a new tenancy on the grounds of the breach;
- the court will consider all the circumstances surrounding the breach and the past conduct of the tenant.
Ground D: Availability of alternative accommodation
- court has little or no discretion;
- landlord must show that he has offered suitable alternative premises to the tenant on lease terms that are reasonable in the round;
Note: the tenant may have to think quickly on this one, because if he fails to accept an offer which the court upholds, then he will be out, with no premises anywhere. He is advised to apply to the court for an undertaking from the landlord to provide specific premises, available for inspection by th tenant, before the court makes any order refusing the grant of a new lease.
Ground E: Sub-tenant - possession required for letting or disposing of whole of property
- discretionary ground;
- landlord must show that the tenancy was formed by sub-letting part of the superior tenancy and the superior landlord is able to let the whole premises for more than the parts;
- conditional on proof by landlord that the superior tenancy will have come to an end by the date on which the applicant’s current tenancy is due to terminate.
Ground F: Landlord intends to demolish or reconstruct
- mandatory ground;
- landlord must show that he intends to either demolish or reconstruct the premises comprised in the holding or a substantial part of those premises, or to carry out a substantial work of reconstruction which he could not reasonably perform without obtaining possession of the premises;
- landlord must be genuine in his intention with firm plans;
- it is more likely that the court will be convinced if the premises are old and becoming dilapidated.
Ground G:Landlord intends to occupy the premises himself
- mandatory ground;
- landlord must show that he intends to occupy the premises for the purposes of his own business, or as his residence;
- landlord must have owned the premises for at least five years before the termination of the current tenancy.
Order for new tenancy
Where the court finds in favour of the tenant, a new tenancy will be ordered. The terms will be decided by the court after hearing the evidence of the parties or their surveyor experts. The maximum length of the new tenancy will be fourteen years. The rent to be ordered is that at which the premises might reasonably be expected to be let on the open market.
Compensation
The Landlord and Tenant Act 1954 provides that the tenant is entitled to compensation if a new tenancy is refused because the landlord:
- requires possession of the property for letting or disposing of the property as a whole, or
- intends to demolish or undertake major reconstruction, or
- intends to occupy the premises for his own business or residence.
Because the landlord’s “choice” of ground is so important, he is advised to get his evidence together before serving the notice. Examples of useful documentary support are:
| Ground A |
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schedule of Dilapidations showing the condition of the premises, the work required to remedy it and the covenant of which the tenant is allegedly in breach; |
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| Ground B |
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schedule of the payment history in respect of rent; |
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| Ground C |
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schedule of the covenants of which the tenant has been in breach and details of the breach or breaches complained of; |
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| Ground D |
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description of the alternative accommodation which the landlord intends to provide; better still, details of the particular property; |
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| Ground E |
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full detailed calculations of the level of the rent which the Landlord maintains is obtainable on a letting of the whole and of the individual parts together with an explanation showing when the landlord will obtain vacant possession of the remainder of the building; |
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| Ground F |
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first - description of the works which the landlord intends to undertake;
second - if planning consent is required, whether it has been obtained and, if not, when it is expected;
third - when the landlord intends to start the work;
fourth - an necessary explanations of the landlords position with regard to adjacent land or consents which might be needed for the scheme;
fifth - evidence that the landlord has the financial ability to complete the scheme.
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| Ground G |
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description of the business which the landlord intends to carry on at the premises. |
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Help for the landlord on how to find the right notice
Just answer all the questions below. If you do so correctly, you should find that your alternatives are reduced.
1) Are there any special circumstances relating to the property and do you oppose the grant of a new tenancy on similar lines to the old one?
If no to both questions, choose PR205, not one of the forms in PR206
2) You oppose a new tenancy. Does the tenant live in all or part of the property?
If no, use one of: 206/2, 206/8. 206/9, 206/10, 206/12.
If yes or maybe, use one of: 206/7, 206/13, 206/14, 206/15.
3) Do you have a section 57 certificate confirming your right to take some action either on a specified date?
If yes, use one of: 206/8, 206/13
4) Do you have a section 57 certificate confirming your right to take some action at a future date?
If yes, use one of: 206/9, 206/10, 206/14
5) Do you have a section 58 certificate stating that the property is required for regeneration?
If yes, use 206/12 or 206/15.
Relevant Net Lawman documents: