Redeveloping with a tenant in occupation? Consider Section 31A of the Landlord and Tenant Act

Where a tenant’s lease is protected by the Landlord and Tenant Act 1954 (the “Act”), it can be challenging for a landlord to obtain possession. One statutory ground to oppose the grant of a renewal tenancy and an avenue to achieve this, is for a landlord to prove it has a settled intention to redevelop citing ground f of section 30(1) of the Act.), however, there can still be further hurdles to overcome even if section 30(1)(f) is made out.

What is Section 31A of the Landlord and Tenant Act 1954?

Section 31A of the Act was introduced to give further protection to a tenant where the landlord’s proposed redevelopment could be carried out with the tenant in situ, or where the redeveloped premises could be held by the tenant as a separate holding.

There are two limbs to this legislation:

• Section 31A(1)(a): the redevelopment can proceed whilst the tenant remains in occupation; or
• Section 31A(1)(b): the tenant can occupy the redeveloped premises as a separate holding.

Where a tenant has been served with a section 25 notice opposing the grant of a renewal tenancy citing ground (f), and this is combined with a tenant who is keen to stay, the tenant will often put forward both arguments (Section 31A(1)(a) and(b)) to seek continued protection of the Act.

However, landlords should not be unduly concerned. In the first instance, the tenant must prove that either the works can be carried out or that it can accept a smaller separate holding.

Proving limb 31A(1)(a): the redevelopment can proceed whilst the tenant remains in occupation

Proving limb section 31A(1)(a), that development can take place whilst the tenant is in occupation can be challenging. The wording of the section states  “…the court shall not hold that the landlord could not reasonably carry out the demolition, reconstruction or work of construction intended without obtaining possession of the holding…”

The word “reasonably” sets a high evidentiary bar as the court will look to whether the disturbance due to the works is substantial and for a sustained period of time. This will be case specific.

Further, while the court can order the landlord to change the method of its works if it would allow the tenant to remain in the premises, it is clear the landlord should not incur additional costs as a result nor have to change its approach to the redevelopment.

Proving limb 31A(1)(b): the tenant can occupy the redeveloped premises as a separate holding

With regards to the second limb, that of the tenant taking a smaller holding, it is up to the tenant to show that the premises can be divided into economically separate parts. The court will also consider if the landlord’s redevelopment works can be carried out in the retained part of the premises or whether the access will be required to the tenant’s new part of the holding. If access is required, this ground is unlikely to be established.

Burden of proof on tenant, not landlord

The key takeaway is to be wary of a tenant activating a section 31A application. Ensure any plans are robust and will stand up to scrutiny from the tenant’s advisors.  It is important to remember, it is for the tenant to prove section 31A, not the landlord.

The Hamlins Real Estate Disputes team has expertise in both commercial and residential matters. We seek to obtain the best outcome possible for every client, no matter how big or small the issue may be.

If you have any questions about the Landlord and Tenant Act 1954 or any other property disputes matters, please get in touch.