Landlord was justified in refusing new business tenancy

A court has ruled that a tenant’s breaches of contract in relation to business premises were serious enough to justify the landlord’s decision not renew the lease.

The case involved a landlord who owned a commercial and residential property. It was leased to a tenant with an agreement that it would be used as a shop and a home.

The tenant occupied the building for more than three years but never made any attempt to open a shop, despite receiving numerous warnings from the landlord.

When the lease agreement expired the tenant applied for a renewal on the same terms. The landlord refused on several counts: the tenant had not always been on time with the rent, the property had not been used for commercial purposes and the maintenance and upkeep had not been sufficient.

The judge ruled in favour of the landlord. Individually, the breaches of rent arrears and failure to keep up with the maintenance of the property did not justify the landlord refusing to renew the agreement.

However, when considered alongside the failure to utilise the property’s commercial potential, it would be unfair to force the landlord to continue a business relationship with the tenant. Therefore, there was no obligation to renew the lease.

That decision was upheld by the Court of Appeal.

Please contact Santokh Singh if you would like more information about the issues raised in this article or any aspect of commercial property law.