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Under the Landlord & Tenant Act 1954, tenants of premises which are occupied for business purposes (as opposed to residential) are provided with a degree of security of tenure so that when the lease comes to an end they have a right to apply to the court for the grant of a new lease.  The landlord can only object to this request in certain specified circumstances, such as if he wishes to occupy the property for himself or if he requires the property back for development purposes.  

Usually lease renewals are concluded by agreement between the landlord and the tenant but some cases do end up in court.  That was the position in the case of Flanders Community Centre Limited v Newham London Borough Council, a case which was recently heard by the High Court.  

In that case the council did not oppose the tenant’s request for a new lease but the parties could not agree on the amount of the rent.  The original lease provided for a yearly rent of £1, conditional upon the tenant carrying out various repair works to the property.  On renewal the tenant argued that the rent should remain at £1 whereas the council wanted to increase it to £16,000 per annum.  Both sides submitted expert evidence to support their case.  

However, the trial judge found that the expert evidence put forward by both sides was inadequate and she felt unable to rely upon it; in particular, no evidence was given in relation to the terms of the comparable leases relied upon by the council’s expert so it was not known whether they contained any onerous requirements.  In the absence of reliable evidence of market rent, the trial judge relied on the current rent which both sides accepted was a relevant factor and she decided that the new rent should be £1 per annum.  The council appealed.  

The High Court refused to disturb the decision and said that the judge was entitled to have regard to the current rent and it was a matter for her to determine how much weight should be given to it.  Whilst the High Court said that the judge could have carried out her own analysis, she was not obliged to do so in the absence of any assistance from the parties.  The only tangible evidence before the judge was the current rent and in the absence of reliable expert evidence it was a matter for her to determine how relevant that should be.   

This case illustrates the importance of presenting clear, thorough and reliable expert evidence in lease renewal applications as judges do not have an expert knowledge of valuations.  If a party fails to do this then they risk their evidence being disregarded in its entirety, the consequence of which could be very expensive, as Newham Council discovered to its cost.  

At Blacks our specialist Property Litigation Team can assist with lease renewals.  Please contact Luke Patel on 0113 227 9316 or email him at “LPatel@lawblacks.com”.

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