In a weekly column, solicitor Juliet Phillips-James casts

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QI am a commercial landlord looking to redevelop the property that I own. The property is currently occupied by a tenant and the tenancy is a business tenancy under the Landlord and Tenant Act 1954. What do I need to be aware of?

ACommercial real estate is in constant shift. Covid-19 has accelerated this shift, where landlords are looking to capitalise spaces more than ever before.

Firstly, before considering relocation of a tenant or a redevelopment, it is important that you check how long is left on the current commercial lease. In checking how long is left, you must also consider the financial health of your tenant-business. If there is a lengthy time remaining on the lease, you may want to propose a surrender of the lease to the tenant. However, before considering such action, you must consider and understand your tenant’s position.

Secondly, if your lease is protected by the Landlord and Tenant Act 1954 and is close to its end, you must serve a notice under the Act to provide the tenant with an end-date for their lease and that you have no intention of renewing it. However, this notice can only be served if you have statutory grounds to do so. ‘Ground f’ of the Act considers redevelopment. You would need to prove that you have the necessary intention to redevelop the property for it to suffice under the Act.

If you are successful on ‘ground f’, it must be noted that your tenants are entitled to compensation.

An example of this is that if your tenant has been in occupation for over 14 years, their entitlement can be 2 x the rateable value of the property.

A final note to consider is that whether your lease is protected by the Act or not, your intentions to redevelop may defeat dilapidations claim at the end of the lease.

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