Opposing Commercial Lease Renewal - Landlord’s intention to Redevelop under Ground F 

For over seventy years, the Landlord and Tenant Act 1954 (‘the Act’) has formed the cornerstone of commercial property law in England and Wales, attempting to balance the interests of business tenants and the legitimate property rights of landlords. 

Does a Commercial Tenant Have to Leave at the End of the Lease Term? 

Unless a commercial lease is ‘contracted out’ of the Act, and provided that certain qualifications are met, a business tenant generally has the right to remain in occupation of the business premises after the contractual term ends or the right to a new lease on similar terms, also known as ‘security of tenure’. 

At the expiry of the contractual term, business leases with security of tenure do not automatically end. The tenancy will continue on the same terms until either the landlord or the tenant terminate it, in accordance with the Act. 

Currently business tenancies of up to six months are excluded from the benefit of security of tenure. However, in June of 2025, the Law Commission ‘…provisionally concluded that the six-month threshold should be increased, and, in its second consultation paper, expects to consult on increasing the threshold to 2 years.’ Whether and when Parliament will adopt this recommendation remains to be seen. 

How do I Know if a Business Tenant have ‘Security of Tenure’? 

In order to determine whether a lease is contracted out of the security of tenure provisions of the Act, the starting point is to carefully review the existing lease. 

The lease itself should contain a clause explicitly stating that both parties have agreed to contract out of the 1954 Act and that the proper procedure has been followed.  

The landlord must have provided the tenant with a formal ‘warning notice’ explaining that they are giving up their right to a lease renewal under the Landlord and Tenant Act 1954. 

The tenant should have signed a declaration acknowledging that they received the warning notice and understood the consequences. 

This could be a simple declaration if the tenant received the notice at least 14 days before entering into the lease; or 

A statutory declaration, sworn before a solicitor, if the tenant received the notice less than 14 days before entering into the lease. 

Can a Landlord Oppose a Lease Renewal if They Want to Redevelop the Property? 

There are various grounds on which a commercial landlord can oppose the grant of a new lease, including the grounds contained in s.30(1)(f) of the Act. This entitles the landlord to resist the grant of a new lease if it has a genuine firm and settled intention to redevelop the premises or carry out substantial works of construction and requires vacant possession to do so. 

The Act provides that a landlord wishing to oppose the renewal of a business lease which has security of tenure must serve a notice under section 25 of the Act (‘s25 notice’) with a notice period of a minimum of six months and a maximum of twelve months. 

When serving a ‘hostile’ s25 notice to oppose lease renewal, the landlord must rely on one of the seven grounds set out in s30(1) of the Act, though only one need be established. Ground (f) is one of these grounds and allows the landlord to oppose renewal where: 

‘…on termination of the current tenancy the landlord intends… to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof that he could not reasonably do so without obtaining possession of the holding’. 

The application of Ground (f) represents a delicate balancing act between competing interests: the landlord’s right to develop and improve their property asset, and the tenant’s security of tenure. With property development pressures intensifying across the United Kingdom, particularly in urban centres experiencing regeneration, Ground (f) claims have become increasingly common. Sometimes landlords are uncertain about the evidential burden required to successfully oppose renewal. 

Does the Landlord Just Need to Show That Physical Possession of the Property is Required in Order for a s25 Application to Succeed? 

The landlord must demonstrate that they require legal possession, not just physical possession, of the premises. For example, in Heath v Drown the tenant’s lease included a reservation allowing the landlord to enter and carry out works. The court held that if the landlord already had the right (via the lease) to enter and do the relevant works, they did not need full legal possession and thus the Ground (f) application would fail. 

As a Commercial Landlord looking to Redevelop Their Property, What Works are Relevant in Deciding Whether a Lease Renewal can be Successfully Opposed? 

Ground (f) only applies to works to be carried out on the “holding” (the part of the premises the tenant occupies for the purposes of its business), as established in Joel v Swaddle. If work is being conducted on the premises but not to parts of the premises demised by the lease and of which the tenant does not occupy for business purposes, Ground (f) will not be applicable. 

More recently, Sainsbury’s Supermarkets Ltd v Medley Assets Ltd confirmed that “the holding”, for the purposes of a Ground (f) claim, means the premises actually occupied by the tenant at the date of the hearing. In this instance, the landlord had planned to excavate beneath the existing floor level of the basement and create a new underpinning. As the lease was inclusive of the basement floor but not beneath it, the court held that these works were below the holding and not within the holding, and, ultimately, irrelevant to the landlord’s opposition to a new lease. 

A tenant can also reduce the occupied area during proceedings to defeat the landlord’s application if the target works relate only to parts outside the holding.   

Another consideration for the court is the amount of disruption to be caused to the tenant’s business whilst works are taking place. Whilst each case is considered on its facts, it is generally expected that the landlord will succeed under Ground (f) if the tenant is to be excluded from the property for 12 or more weeks, as this level of disruption will require the landlord to take legal possession of the premises. 

What Type of Works Can be Relied Upon by a Landlord Under Ground (f)? 

Ground (f) relates to the demolition, reconstruction, or substantial works of construction to the whole or a substantial part of the premises comprised in the holding. Works which the landlord is already permitted to carry out under the lease (or by implied right of access) will not qualify (Romulus Trading Company Ltd v Henry Smith’s Charity Trustees). This includes repairs either party covenanted to carry out. Where the landlord must perform repairs without an express right of entry, entry rights are implied and the works excluded from consideration. 

A lease clause allowing the landlord to enter the property to make improvements may be sufficient to authorise significant works. However, this right is limited if the lease also requires the landlord to restore all damage caused by the works. In such cases, the landlord may be unable to proceed if restoration is impossible—for instance, if the proposed works involve permanently removing walls rather than replacing them, the landlord cannot fulfil their obligation to ‘make good’ the damage.  

What Amounts to ‘Demolition’ Under Ground (f)? 

In Ivorygrove Ltd v Global Grange Ltd, the court held that demolition is to be interpreted according to its ordinary meaning and requires the physical act of destruction of the premises. 

For Ground (f) to apply, the premises must be capable of being demolished and the exclusion of structural or load bearing walls from the demise does not prevent the premises from being capable of demolition. In Pumperninks of Piccadilly Ltd v Land Securities Plc and others, the Court of Appeal held that Ground (f) is applicable where there is demolition of the structure supporting the internal demise or of the internal demise itself. 

In each case, whether ‘works’ constitute demolition and will affect a substantial part of the premises (Atkinson v Bettison), is a question of fact.   

What Amounts to ‘Reconstruction’ Under Ground (f)? 

Reconstruction requires the altering of the structure of the premises, typically by demolishing existing elements and replacing them in a different form (Percy E Cadle and Company Ltd v Jacmarch Properties Ltd). 

When assessing a landlord’s intention to reconstruct, the court should take into account the entirety of the proposed works, including preparatory and finishing works (Romulus Trading). For example, the plastering works to a newly built wall. 

It is important to mention the different decisions reached in Ivorygrove and Global Grange Ltd v Marazzi and another, where the same landlord who proposed to carry out similar reconstructive works to each premises opposed lease renewals under Ground (f) yet succeeded in the former and failed in the latter. 

In Ivorygrove, the Court held the works were demolition and reconstruction of a substantial part of the premises, but in Marazzi the court decided the works did not amount to reconstruction of a substantial part of the premises and so the application to the court failed and the landlord was unable to oppose the tenant’s right to a lease renewal. 

What Constitutes ‘Substantial Works’ Under Ground (f)? 

Often a common question asked by most landlords, in this context, ‘substantial’ is not necessarily measured in a financial aspect, though cost is a relevant consideration, but rather the nature, scope and impact on the physical structure or the character of the premises. For example, major extensions, relocation of load bearing walls or large scale structural alterations will normally qualify. By contrast, routine repairs and cosmetic improvements will generally not qualify. The key distinction lies in whether the works genuinely involve construction, demolition, or reconstruction as those terms are commonly understood in the building industry and whether this involves creating something new, rather than altering what already exists (Botterill v Bedfordshire County Council). 

Additionally, Courts also scrutinise whether reconstruction is genuine or merely a pretext. If a landlord proposes to demolish and rebuild in a virtually identical form, questions arise as to whether the true purpose is redevelopment or simply tenant removal. While courts do not require landlords to prove economic justification for their plans, the absence of any apparent benefit from the proposed works may cast doubt on the genuineness of the landlord’s stated intention. 

It is also important to note that whilst the Court will see works of construction that are of a structural nature as a key consideration, it is not a prerequisite for the purposes of Ground (f) (Ivorygrove). 

Below are a few examples of the Court’s decisions on works of constructions, though this should not be seen as a definitive list: 

• Installation of boilers and toilets generally will not qualify as works of construction (Barth). 
• Installation of drainage and bathrooms where they did not previously exist generally will likely qualify as works of construction (Romulus). 
• Installation of a new staircase generally will likely qualify as a work of construction (Romulus). 
• Removal of partitions will be a question of fact and degree (see the contrasting decisions in Ivorygrove and Marazzi). 
• Laying down a substantial amount of concrete generally will likely qualify as a work of construction (Houseleys v Bloomer-Holt). 
• Installation of wiring and plumbing generally will not qualify as works of construction (Barth). 

The Legal Test: What Must I, as a Landlord, Prove to Succeed When Opposing a Lease Renewal under Ground (f)? 

Ground (f) details three distinct elements that must be established before a court will grant possession- with the burden of proof laying firmly with the landlord. 

1. The landlord must demonstrate that they intend to demolish, reconstruct, or carry out substantial works on the premises (or a considerable part of the premises). 
2. They must demonstrate a “firm and settled intention” to proceed with the works, going beyond mere contemplation and supported by credible evidence, and must exist at the date of the hearing. Under the Blackburn principle (Cunliffe v Goodman), even a genuine intention at the time of serving the s25 notice will not suffice if it no longer exists at trial. 
3. Landlords must prove that they cannot reasonably complete the works while the tenant remains in occupation. This protects tenants from eviction where works could be undertaken around their occupation or with temporary access arrangements. 

The Supreme Court decision in S Franses Ltd v The Cavendish Hotel (London) Ltd clarified that landlords must prove their intention to carry out works regardless of whether the tenant vacates, preventing landlords from advancing conditional or uncertain plans. 

The burden of proof placed on landlords wanting to rely on Ground (f) is strict. Landlords considering this route for repossession must plan strategically. It is important that landlords are able to evidence detailed plans that demonstrate genuine intention, and that this intention is sustained throughout proceedings, which can take up to 18 months or longer. 

Additionally, landlords must avoid starting works prematurely before obtaining possession, or face damages claims for unlawful interference with tenant rights. 

Can a Tenant Defend a Landlord’s Ground (f) Opposition to a Lease Renewal? 

Depending on the circumstances of each particular case there are several potential arguments a tenant can make to mount a successful defence against Ground (f), and understanding these options early is crucial for both landlords and tenants to protect their business interests. 

The most common challenge is to question the genuineness of the landlord’s intention. Evidence of inconsistent statements made by the landlord, lack of serious preparation for the works, changes in the proposed development, or no credible funding, can demonstrate that the landlord’s intention is not firm or settled. Additionally, this evidence can also be used to demonstrate the landlord’s intention to remove the tenant for alternative reasons. If this can be proven, the Ground (f) claim will fail. 

If the works amount to no more than routine repairs, cosmetic improvements, or minor modifications, tenants can argue that the proposed works do not meet the statutory definition of ‘substantial’, regardless of how genuine the landlord’s intentions may be. 

Additionally, defences to Ground (f) can be found within s31A(1). These defences protect the tenant where proposed works could be carried out whilst the tenant continues to operate on the premises, or the tenant can occupy a smaller holding within the premises. In Sainsburys Supermarkets Ltd v Medley Assets Limited, the Court found that Sainsbury’s could continue to operate in situ, as works set out to lower the level of the basement floor was in an area that was not necessary to the operation of their business. As a result of this, Sainsbury’s succeeded in their s31A(1) rebuttal. Despite the burden of proof for either rebuttal lying with the tenant, landlords should be cautious of a tenant activating a s31A application by ensuring their work plans can withstand scrutiny. 

What Compensation Will a Commercial Landlord Have to Pay a Tenant if They Successfully Oppose the Lease Renewal under Ground (f)?

If a Landlord successfully establishes a  Ground (f) claim and obtains possession,  the former tenant is entitled to statutory compensation under section 37 of the Act. The compensation is calculated by reference to the rateable value of the holding. For tenants who have occupied the premises for less than 14 years, compensation equals one times the rateable value, increasing to two times the rateable value for tenants with 14 or more years of occupation. 

How Can Ronald Fletcher Baker LLP Help Me Navigate a Ground (f) Application? 

Whether you are a landlord planning development works or a tenant facing Ground (f) opposition, early specialist advice is essential. The decisions made at the outset of these disputes, from the evidence gathered to the strategic approach adopted, often dictate which way the matter will sway. Delay in seeking advice frequently results in lost opportunities, weaker negotiating positions, and avoidable costs. Alternatively, it might be in the interest of both parties to negotiate surrender or settlement discussions, as opposed to going to the court. 

Our litigation team can help assess your circumstances, outline your available options and advise as to what the best way forward is. 

David Burns is the Senior Litigation Partner at the firm Ben Lewis is an associate solicitor in RFB’s litigation department. For inquiries on this topic, please contact David Burns Ben Lewis via email at D.Burns@rfblegal.co.uk or B.Lewis@rfblegal.co.uk or by phone on 0207 467 5751 or  0203 947 8892.