A tenant who rescued a ruin had no right to a new lease

What is the position if a tenant remains in occupation after the contractual term of his lease ends? The answer will depend on the type of tenancy in question and on whether it is protected by legislation. Smyth-Tyrrell v Bowden [2018] EWHC 106 (Ch); [2018] PLSCS 21 concerned an old miller’s cottage situated in 9.5 acres of land in Cornwall. The building was derelict and overgrown when the tenancy was granted and the land was unfarmable. The tenant came across it while out walking in 1993 and asked the landowner if he could take a 15-year lease. He hoped to restore the building and to recoup his investment by letting the cottage out to holidaymakers. The prospect of giving up possession of unproductive land in return for a modest rent, and of regaining possession of something that could be rented or sold in 15 years time, proved irresistible. However, in the absence of evidence to show that the landowner had actually signed the draft tenancy agreement proffered by the tenant, there was not a valid agreement at law for the grant of the tenancy of 15 years: section 2 Law of Property (Miscellaneous Provisions) Act 1989. The short leases exception in section 52 of the Law of Property Act 1925 did not apply either, because the tenancy was for more than three years. But, given that the tenant took possession of the land and began to pay rent at quarterly intervals, the judge considered that a periodic tenancy would have sprung up “probably from year to year”. The tenant re-built the cottage and sublet it to a holiday rental company that he controlled. The cottage was first occupied by holidaymakers in 1997. Meanwhile, the tenant continued to improve the remainder of the land. The rent increased from £400 per annum to £1000 per annum in 2011, and the landowner served a notice to quit in 2014 – more than 20 years after the arrangement began. With expenditure on the property still to be recouped, the tenant claimed to have a tenancy of an agricultural holding under the Agricultural Holdings Act 1986. But the judge was unimpressed. The land had, historically, formed part of the landowner’s farm but could not have been farmed in the condition it was in, when let. Furthermore, the land had been let for tourism – and not for agricultural activities. This was not a contract for an agricultural tenancy, the land was not an agricultural holding, and the tenancy was not protected by the 1986 Act. The Landlord and Tenant Act 1954 did not help either. Section 23(1A) enables a tenant to be treated as carrying on a business in premises when in fact the business is being carried on there by a company in which he has a controlling interest. But that provision was of no assistance in this case because the company controlled by the tenant held a sublease of the premises in its own right. And, if that were not the case, the landowner’s opposition to the renewal of the business tenancy on ground (g) would have prevailed anyway, because the landowner was able to satisfy the judge that he intended to carry on a holiday lettings business from the property himself and that the premises were required for his own business use. Allyson Colby, property law consultant