When a landlord is considering redeveloping a commercial property, it has to consider whether it will be able to remove its commercial tenants in order to carry out the redevelopment. The Landlord and Tenant Act 1954 (‘the Act’) offers protection to tenants and restricts the circumstances in which a landlord can take back possession of its property.
Unless a commercial lease is ‘contracted out’ of the Act the tenant will have a statutory right to renew their tenancy, subject to meeting certain criteria set out in the Act. In circumstances where the landlord does not wish to renew the tenancy he can oppose the renewal on certain limited grounds which are set out in the Act.
Where the landlord wishes to redevelop the property, he needs to prove his intention to redevelop. The redevelopment works must be substantial and involve either demolition and reconstruction or substantial construction work which could not reasonably be done without obtaining possession of the property occupied by the tenant.
The landlord must serve an opposed Section 25 notice and specify the grounds upon which he relies. The timing of this notice needs to be carefully considered. The landlord must give 6-12 months' notice to the tenant and the termination date cannot be earlier than the contractual expiry date. The landlord will want to balance obtaining vacant possession with protecting its income stream. Where there are multiple tenants, careful consideration must be given as to the timing of all notices.