The Supreme Court recently frustrated a landlord’s attempt to circumvent the longstanding protections afforded to business tenants by the Landlord and Tenant Act 1954 in the case of S Franses Ltd v The Cavendish Hotel (London) Ltd.

The Landlord and Tenant Act 1954 is the most important piece of legislation relating to business tenancies. It allows business tenants to remain in premises even once the original fixed term tenancy has expired. Further it provides a mechanism based upon service of statutory notices for terminating such tenancies, and sets out a framework (once the termination procedure has begun) whereby a business tenant is entitled to first refusal of a new lease unless the landlord can satisfy a Court that it has met one or more of a defined range of tests.

The LTA 1954 is therefore inherently tenant-friendly and applies to all business tenancies unless a detailed opting-out procedure is followed. However, subject to a few minor procedural amendments, the legislation has formed the basis of business lease negotiations for over 60 years and it was generally thought that its effect on the property market was well understood and largely unsurprising.

It therefore came as something of an upset to the property market when the High Court in 2017 appeared to approve of a landlord’s scheme to get around the protections of the 1954 Act in order to evict a business tenant.  

A key element to the workings of the 1954 Act is that it seeks to strike a balance between the interests of the landlord and the tenant. Although a tenant can ask its landlord for a new lease, and if there is no agreement ask the Court for the same, a landlord can avoid the need to grant a new lease if it can meet one or more of a number of tests.