Calling time is not so easy

In Spirit Pub Company (Managed) Ltd v Pridewell Properties (London) Ltd [2025] Claim No K02ED953, the Mayor’s and City of London Court has confirmed there are multiple aspects to satisfying section 30(1)(f) of the Landlord and Tenant Act 1954. A landlord must establish a subjective and objective intention to carry out works of demolition or reconstruction for which possession of the holding is required, within a reasonable time of determination of the current tenancy. Key points A right of entry can defeat ground (f) if it allows the landlord’s intended works A landlord must establish the necessary intention and an ability to bring it about The “reasonable time” for commencement of the works is highly fact-sensitive Background The case concerned The Railway Bell at 87 George Lane, South Woodford, E18, a public house and ancillary accommodation over four floors, let by the defendant to the claimant. The lease reserved to the defendant the right to enter the premises on notice for the purpose of repairing, altering or rebuilding the premises or any adjoining property. The claimant sought a new lease which the defendant opposed on ground (f). The local planning authority confirmed in response to pre-planning proposals that it objected to the demolition and loss of the public house. By the date of the hearing, the defendant intended to implement a residential conversion of the premises, including constructing three mews houses within the existing beer garden and six self-contained flats on the upper floors. The pub would remain on the ground floor served by the existing cellar and a small garden terrace to the rear. The landlord estimated the works would take 19-20 months and cost around £2.16m. The tenant considered they would take longer and cost more. Meaning of possession Section 30(1)(f) provides that on termination of the current tenancy the landlord intends to demolish or reconstruct the premises or a substantial part of them or to carry out substantial work of construction on all or part of the holding and cannot reasonably do so without obtaining possession. While “possession” here means the legal right to enter on the premises where there is a reservation to enter to do the relevant works, it is assumed such a reservation will be included in any new tenancy and the landlord would not need possession in order to carry out the works (Reynolds & Clark: Renewal of Business Tenancies, sixth edition, 2022). Satisfying ground (f) The tenant argued that ground (f) was not satisfied for three reasons: Failure to separate works The landlord had failed to demonstrate there were works which it could not reasonably carry out without obtaining possession of the premises. The court decided while the right of entry clause was broad enough to include improvements, it was limited by the covenants of quiet enjoyment and non-derogation from grant of the tenancy. The construction of the mews houses and reconfiguration of the pub were works covered by ground (f) since they would involve demolishing or reconstructing a substantial part of the premises. Many elements of the work did not fall within the right of entry clause. The tenant would be excluded from 65% of the beer garden and the upper floors of the premises. This was inconsistent with the irreducible minimum inherent in the grant of the right of entry (S Franses Ltd v Cavendish Hotel (London) Ltd [2018] UKSC 62; [2019] EGLR 4). Consequently, neither construction of the mews houses nor the pub reconfiguration could be achieved without obtaining possession. No firm and settled intention to carry out the scheme The landlord’s intention was dependent on too many contingencies to be firm and settled. It was conditional and driven by the need to remove the tenant. The court was satisfied from oral evidence that the defendant acquired the premises as a development property. The landlord received pre-application advice a year before the tenant’s request for a new tenancy and pared back its plans accordingly. While there were various outstanding matters to be resolved and the tenant’s request for a new tenancy had accelerated the landlord’s plans, the court was satisfied the landlord held a firm and settled intention to build the development, irrespective of whether the tenant left voluntarily. No real prospect of overcoming hurdles The landlord had failed to establish a real prospect of overcoming the relevant hurdles to the development: obtaining planning permission; dealing with an ancient restrictive covenant; and obtaining the necessary funding. The court decided a planning application was likely to have a real prospect of success, albeit less than 50%, and the defendant would overcome any hurdles posed by the restrictive covenant. However, the court was not satisfied the defendant could raise sufficient funding for the works and loan interest. An in-principle proposal was insufficient to cover both. What’s more, the tenant had provided no evidence of the directors’ finances to support personal guarantees which any lender would undoubtedly require. Consequently, the landlord could not establish ground (f). Timing The works must commence within a reasonable time of determination of the tenancy. What is reasonable is highly fact-sensitive. The landlord’s works would likely commence within 10-14 months of termination. The tenant’s refusal to allow access for investigations was causing the delay. While the tenant was not obliged to grant access, the landlord had done all it could reasonably be expected to do to progress the development. Image © iStock Louise Clark is a property law consultant