Timing is everything for possession on the basis of redevelopment
Pridewell Properties (London) Limited v Spirit Pub Company (Managed) Limited
The High Court handed down a decision which clarifies what a landlord must prove in order to satisfy its intention to redevelop under ground (f) of s.30(1) of the Landlord and Tenant Act (“1954 Act”), especially in relation to the timing of the redevelopment.
Background
In 2025 Spirit Pub Company (Managed) Limited successfully prevented its landlord (Pridewell Properties (London) Limited) from using ground (f) of the 1954 Act (“ground (f)“) to terminate its lease on the basis of redevelopment works.
The High Court (on appeal) has upheld part of the County Court’s decision and maintained that the landlord is prevented from obtaining possession. However, of most interest is how the High Court’s judgment dealt with the timing of the works and whether the landlord was in a position to commence works “on the determination of the current tenancy” in order to satisfy the ground (f) test.
Original decision
The County Court judge was satisfied that the proposed works were substantial enough to use ground (f). However, the landlord failed to evidence that it had a real prospect of obtaining the necessary funding for the development. The landlord’s proposed lender had indicated it would require directors/shareholders to provide guarantees. No evidence was provided to the court of the personal finances of those parties to enable the court to conclude that satisfactory guarantees would be provided.
There were a number of other hurdles the landlord needed to overcome in order to carry out a redevelopment, but the court concluded the landlord had a real prospect of dealing with them.
Unusually, the landlord had not applied for planning permission by the point of trial. The landlord needed to obtain access to the property to carry out certain surveys before submitting a planning application but did not have sufficient rights in the lease to obtain access. The court originally found that the landlord had a real prospect of overcoming the other issues it was facing and, other than the issue of funding, would be in a position to carry out the works “on the determination of the current tenancy” (which is the statutory test set out in ground (f)). That is despite not being in a position to commence works until 10–14 months after obtaining possession because it would take that long to obtain planning permission. The judge concluded that was within a reasonable time of the lease terminating, given circumstances where the landlord could not obtain access for surveys any earlier.
Appeal
Both parties appealed the judge’s decision.
Funding
The landlord’s appeal failed. The High Court concluded that the lender had indicated it would require security, and given that no evidence was provided that a satisfactory guarantee would be provided, the landlord could not show a real prospect of obtaining the necessary funding for the development. The landlord could not therefore show it had the necessary intention required under the 1954 Act to obtain possession on ground (f).
While the landlord’s appeal failed, the appeal judge went on to consider the tenant’s grounds of appeal (essentially challenging the original judge’s findings that the landlord had a real prospect of overcoming the other outstanding issues and that it would commence the works on determination of the lease).
Timing of the development
Of most interest is the judge’s decision regarding the timing of the redevelopment. The judge overturned the County Court’s decision and clarified that the relevant question is whether, given a delay in starting the works, a landlord could be said to intend to carry out the works on the termination of the lease, i.e. by a reasonable time after termination of the lease, not at any long-delayed time. What is a reasonable time/not any long-delayed time is not assessed on whether the delay is reasonable in the circumstances (here, the issue of obtaining access for surveys before applying for planning permission). The court will need to assess on a case-by-case basis what period of time could be added onto the date on which the landlord obtains possession without the works ceasing to be classified as being carried out on the termination date. That will vary depending on the nature of the development, for instance large sites are likely to take longer to mobilise contractors and carry out other preliminary steps.
Key outcomes
- Those acquiring or assembling development sites need to ensure sufficient access rights. The landlord in this case was hampered as it was unable to access the property. This meant it could not obtain surveys or make a planning application and, therefore, could not show it would commence works on the determination of the lease. If a landlord is facing this issue, it may need to consider following an unopposed lease renewal process with a view to obtaining a redevelopment break in the new lease, with sufficient access rights for the landlord in order to pave the way for future redevelopment.
- A lease terminates 3 months and 21 days after the conclusion of a court process. If a landlord needs a relatively short period after that before commencing works, it will still meet the ground (f) test. What is a short period will depend on the specific development, but is likely to include the time needed to secure and clear the property and mobilise contractors and take preliminary steps. Those carrying out large developments in urban areas are likely to be afforded longer than small developments at easily accessed sites.
- For multi-let development sites it is important to plan ahead and ensure that the landlord can obtain possession of the other areas of the development site, at very similar times.
- A landlord needs to take great care to flesh out the evidence behind its intention to redevelop, and ensure that it clearly shows how any unresolved issues will be dealt with.
