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The less said the better

19 November 2009

In Inclusive Technology v Williamson, the landlord had to compensate the tenant for failing to inform him that he had decided not to go ahead the redevelopment work that had formed the basis of his refusal to grant a new lease.

The Case

  • The background to this is the security of tenure provided to business tenants by the Landlord and Tenant Act. Even when a lease or tenancy runs out, a statutory tenancy continues until it is brought to an end in accordance with the Act. This is done either by a landlord serving a S25 notice or a tenant serving a S26 request.
  • A landlord can only oppose a tenant’s request on the limited grounds set out in the Act. The most common of these is that he plans to demolish or reconstruct the premises and cannot do so without obtaining possession. The vacating tenant may then be entitled to compensation for disturbance.
  • However, the recent appeal decision must now be taken into account by a landlord planning to use redevelopment as the ground on which to end a statutory tenancy. It can be beneficial for a landlord to make clear his firm intention to redevelop as it may persuade a tenant to vacate without argument and not take court action. But the new ruling highlights how this approach may expose the landlord to a potential claim for compensation should he later change his mind without informing the tenant.

Comments

Where a landlord gives notice to a tenant that clearly constitutes a representation of his present intention, he is placed under a duty to inform the tenant of any change of mind. A failure to do so will amount to a misrepresentation or concealment that will result in an award of compensation well in excess of the statutory amount paid for disturbance.

It is settled law that service of a S25 notice does not in itself amount to a representation of an intention. However in this case it was held that an earlier warning from the landlord and the specific terms set out in a covering letter, together with the notice clearly constituted a representation of a present intention. The tenant was awarded £48,000 – the difference in rent between what he had offered to pay when seeking to retain the premises and the rent he had to pay for new premises.

If a landlord is considering redevelopment as the ground on which to rely to end a statutory tenancy, he should not take any additional steps to suggest this intention to the tenant, when serving the S25 notice.

 

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Nigel Whittaker BA (Hons)
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