Regaining possession of a commercial property

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Landlords of commercial premises may consider it necessary to bring the lease to an end or to refuse to renew a lease. This course of action might be for a number of reasons: A tenant for example might not have a statutory right to a lease renewal under the Landlord and Tenant Act 1954, the tenant may be in arrears with rent or has made a serious breach of the contract. The landlord may wish to redevelop the premises or occupy it to run its own business.

This article refers to English law. It is not a definitive interpretation of the law. Every case is different, rules change over time and only a court can decide -a lways seek expert advice before taking action or not.

To terminate a lease when it ends the landlord must serve notice – a section 25 notice – and the notice must specify at least one of the seven “grounds” set out in section 25 of the Act. If the tenant beats the landlord to it and serves notice – a section 26 notice – requesting a new tenancy, the landlord may oppose the request on the basis of the several grounds for possession.

There are in fact seven grounds under the Landlord and Tenant Act 1954 used to end a commercial tenancy, or for opposing a new tenancy:

If the landlord chooses a mandatory ground (F or G for instance) and it provides enough evidence to substantiate the claim, then the court must award possession regardless of the situation of the tenant. Furthermore, under a third ground (D), the court has little discretion not to order possession.

For applications on the other four grounds, the court has to decide whether the tenant should be allowed to stay in occupation, even when the landlord proves his ground is reasonable.

Grounds on which a landlord may object to the renewal of a lease listed in section 30(1) of the Landlord and Tenant Act 1954 (part 2).

Ground A: Breach of repairing covenant, a discretionary ground, so the court decides. Generally the breach must be a serious one, but good evidence of the tenant’s failure to keep the premises in good repair does not necessarily in itself enable the landlord to have the tenant’s renewal application dismissed. The tenant may offer to repair on renewal, or the landlord can show given the state of repair the lease ought not to be renewed.

Ground B: Persistent delay in paying the rent, another discretionary ground. The landlord must show that the tenant, “ought not to be granted a new tenancy” given the persistent failure to pay the rent on time. A court will be looking at whether the tenant can convince it of its ability to pay the rent on time in the future. It is important to note that where a landlord has habitually accepted the late payment of rent and not made it clear to the tenant that it must strictly comply with the lease terms, the landlords claim may fail.

Ground C: Breaches of other obligations, another discretionary ground. The onus is on the landlord to show to the court that the breaches the tenant has made are such that the tenant, “ought” not be granted a new tenancy. Again, any evidence that the landlrod 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.

Ground D: Availability of alternative accommodation, here it is mandatory and the Court has little or no discretion. The landlord must show that it can offer suitable alternative premises to the tenant on lease terms that are reasonable and similar. The tenant has limited time to decide to take up a reasonable offer, otherwise it is out.

Ground E: A Sub-tenant – possession is required for letting, or disposing of the whole of the property, another discretionary ground. The landlord must show that the tenancy was formed by sub-letting part of the superior tenancy and that the superior landlord is able to let the whole premises for more than the individual parts. It depends on the superior tenancy ending by the date the applicant’s tenancy ends.

Ground F: Landlord intends to demolish or reconstruct, a mandatory ground. The landlord must show it intends to demolish, reconstruct or otherwise develop the premises which could not reasonably be performed without obtaining possession of the premises. The landlord must have plans and evidence of genuine intention with penalties if it fails to perform. The court is more likely to approve if the premises are in a dilapidated state.

Ground G: Landlord intends to occupy the premises himself, a mandatory ground. The landlord must show that it intends to occupy the premises for the purposes of its own business, or as its residence. The premises must have been owned by the landlord for at least five years prior to the ending of the current tenancy.

Compensation is due to a refused renewal tenant under the Landlord and Tenant Act 1954 set-out in a formulae in the Act for grounds E, F and G.

Landlords should have detailed information available from the start of the possession process including: a schedule of dilapidations, rent payment history, a schedule of any covenants the tenant has breached, full details of alternative accommodation, detailed calculations of the market rent attainable on the whole or parts, a full description of the works that the landlord intends to undertake, details of planning and building regulations consents, a description of any business the landlord intends to undertake, all as appropriate to the grounds selected.

When the tenant is a licensee or if the lease is contracted-out of the Landlord and Tenant Act 1954 (Part 2), serving notice to quit and bringing possession proceedings should be pretty straightforward.

However, complications can arise with protected tenants, i.e., when the lease is under the Act.

Tenants then have a right to renew their tenancy under the Act on similar terms. In these circumstances, in addition to any contractual break notice, the landlord must also serve a statutory section 25 notice. This is effectively a six-month statutory notice period to quit the premises.

Under procedures introduced in 2004, the landlord is able to issue a possession claim without waiting for the six months’ notice to expire. However, for this to be successful, the court will require detailed evidence as above in a very short time frame. In cases were the landlord is slow to act and unprepared, the tenant can take advantage and obtain a new tenancy.

There is a trap that can catch the landlord out. Where the tenant gets in first and serves a section 26 notice the landlord would need to serve a counter-notice to the tenant’s section 26 notice within two months. Failure to do so would prevent the landlord from bringing a claim for possession.

In practice, the procedure should be straightforward providing the landlord is on top of things with all the information to hand in a timely manner.

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EXCLUSIVE: Letting agency enters liquidation owing landlords and tenants £700,000

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A letting agency in the Midlands has gone into voluntary liquidation today owing landlords and tenants at least £700,000 in unprotected deposits and rent payments.

The circumstance surrounding the collapse of Agent Homepoint Ltd in Walsall, which until recently has been trading as HomePoint, is one of the largest client money protection cases so far this year.

It highlights how it is essential that landlords use agents who are registered with an approved client protection scheme, as agents have been required to by law since 1^st April 2019.

HomePoint had already placed other rental deposits within one of the three government-approved deposit protection schemes, so these deposits are automatically protected.

And its membership of Client Money Protect means landlords and tenants can now make claims to recoup the unprotected rental deposits and rent payments.

“This case illustrates vividly why landlords need to be up to speed on the recently-introduced client money protection rules for agents – using an agent who has not registered with one of the services means not only are they operating illegally but any cash you hand over to them is at risk if they go bust,” says Kate Mutter-Bowen of Client Money Protect (pictured).

If you are one of the landlords affected then visit the Client Money Protect claim online, download the claim form or contact the scheme on 0333 321 9414.

In Scotland it became mandatory from 31st January 2018 and in Wales from 23rd November 2015 for agents to be signed up to a CMP scheme.

Homepoint Creditors have until 11^th of May to lodge their claims with its liquidator, Mustafa Abdulali of Moore UK.

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Inflation erosion on savings accounts intensifies

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The number of inflation-beating accounts on the UK savings market has fallen month-on-month and there has been a rise in inflation. The latest analysis from Moneyfacts.co.uk reveals the options available to savers to beat the current level of inflation today.

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Gap and loophole between content and buildings insurance?

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For leasehold properties, I have recently been advised leaseholders may be exposed to some gap and loophole between home content insurance and building insurance (usually taken by the management company or freeholder).

Can anyone with more experience in the field advise how the best we can cover ourselves

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Landlord sentenced after illegally evicting tenant during Covid

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In August we published an interview with a senior Sunderland landlord who predicted that the financial and regulation challenges posed by Covid would tip many of his fellow landlords into evicting tenants illegally.

His comments were backed up only weeks later by a report that predicted a huge increase in illegal evictions across the UK.

And now a landlord in Barnsley has paid a high price for his part in this growing trend.

Thirty-nine year old landlord Gary Dulson has been sentenced at Barnsley Magistrates Court after it was revealed he had illegally evicted his tenant.

The case relates to March last year when Dulson’s tenant told him he was moving temporarily to his partner’s home to form a bubble.
Dulson then broke down the property’s front door, threw all the tenant’s belongings into a skip.

At the hearing Dulson pleaded guilty and has been ordered to pay compensation to the victim.

Unpaid work

He has also been sentenced to a 24-month community order, 200 hours of unpaid work, and a 15-day rehabilitation programme.

His conviction follows a joint investigation by Barnsley Council and South Yorkshire Police.

PC Paul Davies (pictured), of South Yorkshire Police, told Yorkshire Live that Dulson had “no regard for the victim or his family”, he said.

“Making people homeless by way of illegal evictions is a horrible crime.”

An investigation by The News Statesman magazine in August last year estimated that some 3,000 illegal evictions are taking place every month in England, based on council homeless figures.

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Leading foundation calls for government to solve England’s £375m rent arrears crisis

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An independent think-tank has backed calls for the government to introduce tenant hardship loans for renters impacted by the pandemic, revealing that 450,000 families renting in both private and social housing are behind with their payments.

The Resolution Foundation says that while the Universal Credit uplift of £20 a week and Discretionary Housing Payments (DHP) should be maintained, it also needs to focus on the large numbers of people under housing stress who can’t access financial help.

Its report shows that more than half (56%) of private renter families with arrears aren’t claiming benefits – the passport to the DHP system.

It says: “For this group, a tenant loan scheme, along with requirements on landlords to mediate, would go a long way towards an equitable and efficient resolution of the incipient housing cost crisis.”

Rent arrears

In January, 9% of families in the social rented sector were behind with their housing payments along with 6% of those renting privately, according to the foundation.

It estimates that the scheme would cost £375 million to operate in England, although it says: “It is fair to expect some quid pro quo from landlords if the state takes on the risk of non-payment of arrears via a tenant loan scheme.”

The report adds: “The time has come for the government to deliver on its promise of a pre-action protocol for private renters and require landlords to take serious steps to negotiate a payment plan with indebted tenants before proceeding to court.”

The National Residential Landlords Association agrees that simply banning repossessions is doing nothing to address underlying problems.

Meera Chindooroy (pictured), deputy policy director, adds: “The chancellor needs to develop an urgent financial package as called for by the Resolution Foundation to pay off arrears built since lockdown measures started last year. Only this will sustain tenancies and prevent renters facing the consequences of damaged credit scores.”

Visit the Resolution Foundation’s website.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Leading foundation calls for government to solve England’s £375m rent arrears crisis | LandlordZONE.

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Landlord in ‘legal first’ crown court appearance over rent arrears harassment

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A landlord has appeared in crown court to confess to harassing his tenant in what is thought to be a legal first.

Matthew Betty admitted conducting behaviour intended to deprive his tenant of her lawful occupation of the property in Kilcooley, Bangor between December 2018 and May 2019.

Following the arraignment at Downpatrick Crown Court in Belfast, Judge Geoffrey Miller QC described it as an unusual case.

He added: “It may well turn out to be the first time in the UK, certainly the first time in this jurisdiction, that a landlord has been brought to the crown court.”

The court heard how Betty, of Ty Pwca Place, Gwent, Wales, turned up unannounced, banged repeatedly on the door, shouted at and intimidated a child who was alone in the house, causing her fear and distress.

Rent arrears

He then encouraged two men to visit the property, where they verbally intimidated and harassed the tenant’s young daughter about alleged rent arrears.

Betty also arranged for NI Water to disconnect her supply, having wrongly advised the firm that the house was unoccupied.

Betty later sent an email to Kilcooley Community Forum headed, ‘Undesirable Tenants/Animal Neglect/Child Welfare Concerns’, and copied it to NI Housing Executive, social services, Landlords Advice NI, North Down Community Network, numerous housing associations and several other government bodies.

Speaking after the hearing, the tenant said she and her teenage daughter were relieved it was finally over so they could start re-building their lives.

Describing Betty’s actions as “two years of hell,” she told The Belfast Telegraph: “I hope this makes a change for private tenants who are going through any kind of trauma with their landlord that they know there is help and without the council, this day would never have happened.”

During the hearing, the prosecution asked to have four other charges lie on file. Betty will be sentenced on 24^th February.

Picture: Belfast Telegraph.

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EICR work required but I have a section 21 problem tenant?

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Where do you stand if EICR work might need doing, but you have a broken relationship with a problem tenant who scared the electrician away and stated no electrical work will be done in the house?

A satisfactory report was given last June with a recommendation to install sockets in bedrooms due to there only being one socket currently in the bedrooms (this has obviously dragged on so long due to covid).

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ISA rates and choice plunge

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Moneyfacts UK Savings Trends Treasury Report data, not yet published, reveals that the expectations of a promising ISA season may well be dashed this year due to continued cuts to ISA rates. The savings market overall contracted month-on-month and product volumes have now reached their lowest recorded levels

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LATEST: Ministers dig deep to fund charging points for renters’ electric cars

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The government is unwilling so far to fund hardship loans for landlords or tenants caught up in the pandemic, but it’s got the cash to extend its electric car charge-point scheme to include rental properties, it has been announced.

Revealed this week, the Electric Vehicle Homecharge Scheme is to now include rented and leasehold accommodation and provide £350 towards a charge-point.

The grant provides a 75% contribution to the cost of one charge-point; the main requirement is that someone owns, leases, or has ordered a qualifying vehicle and has dedicated off-street parking at their property.

At the same time, the Workplace Charging Scheme is being opened up to small accommodation businesses such as B&Bs, which will be able to benefit from new funding.

This aims to boost rural areas and tackle ‘range anxiety’ associated with long journeys, as part of the government’s overall £50 million investment in the green technology.

Transport minister Rachel Maclean (pictured) says: “Whether you’re on the school run or travelling to work, or don’t have access to a private parking space, today’s announcement will bring us one step closer to building and operating a public charge-point network that is affordable, reliable and accessible for all drivers.”

An ongoing consultation suggests simplifying payment at charge-points, meaning that electric vehicle drivers can use contactless payment but don’t have to download an app.

It also seeks to make charge-points more reliable and to force operators to provide a 24/7 call helpline for drivers.

She adds: “This is essential for ensuring costs are fair, for driving competition, and for increasing the confidence of both existing electric vehicle drivers and those considering making the switch.”

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