Introduced at the end of World War II, at a time when commercial property was at a premium, the Landlord and Tenant Act 1954 (‘the Act’) was designed to address both landlord and commercial tenants’ concerns and find an equilibrium of interests. The Conservative government at the time, led by Winston Churchill, responded by granting commercial tenants ‘security of tenure’, the right to remain in situ after their lease expires, also known as ‘holding over’, through the Act.
Does a Commercial Tenant Have to Leave at the End of the Lease Term?
Unless the terms of the lease explicitly state that the lease is to be contracted out of the Act and the correct ‘contracting out’ procedure is followed, a business tenant generally has the right to ‘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 terminated by either the landlord or the tenant, in accordance with the Act.
Currently, business tenancies of up to six months are excluded from the benefit of security of tenure. 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.
Vested in s30(1), the Act provides seven grounds a landlord can seek to rely upon to oppose a commercial tenant’s lease renewal and serve a ‘hostile’ s25 notice.
What Ground Can I Rely on When a Commercial Tenant Has Committed Serious Breaches of their Lease?
Though seven grounds are made available by the Act, only one ground needs to be satisfied for a landlord to successfully oppose a tenant’s lease renewal.
Ground (c) provides landlords with the ability to oppose a lease renewal where the tenant has committed substantial breaches of their obligations under the lease, or for any reason connected with the tenant’s use or management of the ‘holding’. Under the Act, the ‘holding’ is defined as a part of the premises occupied for business purposes by the tenant.
Ground (c) states that the landlord may oppose renewal on the ground that…
“the tenant ought not to be granted a new tenancy in view of other substantial breaches by him of his obligations under the current tenancy, or for any other reason connected with the tenant’s use or management of the holding“.
When relying on Ground (c), there are two alternative heads of claim that a landlord can choose from;
(i) substantial breaches under the current tenancy; and /or
(ii) any other reason connected with the use or management of the holding.
The former requires the landlord to prove there has been a breach, or breaches, of the lease. The latter requires the landlord to provide reason as to why a new lease should not be granted connected with the tenant’s use or management of the premises. The Court will then look to the tenant to provide a rebuttal as to whether the alleged breaches of the lease are accepted and if they are, why the Court should grant a lease despite the reasons put forward by the landlord.
What type of breach can a landlord rely upon to oppose a lease renewal from its tenant?
The first head of claim under Ground (c), relating to substantial breaches, is applicable to all breaches of the tenancy, other than the tenant being in rent arrears or failing to comply with obligations to repair the property, as per the lease, as these breaches are covered by Grounds (a) and (b) of The Act.
In contrast with other Grounds found within s30(1), such as Ground (a), this first head of claim is not limited to the ‘holding’. This means that if a breach were to occur on any part of the premises demised by the tenancy, the breach would still qualify as reason for a landlord to rely on Ground (c). For example, if a lease is granted for the entirety of a building and the tenant occupies the ground floor for business purposes but underlets the first floor, the first floor is not considered to be part of the ‘holding’. However, if the first floor undertenant allows that part of the property to fall into disrepair and failed to comply with its repairing obligations, the landlord could, depending on the evidence, oppose the grant of a new lease to the tenant under Ground (c).
What Amounts to a ‘Substantial’ Breach for the Purpose of a Claim under Ground (c)?
For the purposes of Ground (c), the breach(es) should not be trivial in nature. Whether or not the breach(es) that form the landlord’s opposition for a lease renewal are ‘substantial’ is a question of fact.
Ground (c) is often used when the user provisions contained in the lease have been breached by the tenant’s use of the premises.
In Youssefi v Mussellwhite [2014] EWCA Civ 885, the Court of Appeal considered, amongst several other issues, whether breaches of an access covenant and a user covenant were substantial for the purposes of Ground (c). The Court found that the tenant had breached the former by being obstructive when the landlord attempted to access the property for an inspection, which undermined the efficient working of the landlord-tenant relationship. The tenant had also breached the user covenant that required the premises to be used for retail trade (within Classes A1 or A3 of the Town & Country Planning (Use Classes) Order 1987). The tenant was not operating any business within the relevant use classes and had no intention to do so, despite being on notice of the breach for three years.
The Court of Appeal upheld the breach of the access covenant as a substantial breach for the purposes of Ground (c). The Court of Appeal also held that, in the special circumstances of this case, the judge was entitled to find that the breach of the user covenant was substantial and prejudicial to the legitimate interests of the landlord. Notably, the landlord was not required to demonstrate any ongoing or quantifiable loss to succeed on this ground.
Can a commercial landlord oppose a tenant’s lease renewal for poor management?
Unlike the first head of claim, Ground (c)’s second basis for refusal does not require the tenant to be in breach of the lease. Instead, it encompasses circumstances connected with the tenant’s use or management of the holding that fall outside specific lease breaches. The Courts have adopted a broad interpretation of this provision, as illustrated in Turner and Bell v Searles (Stanford-le-Hope) Ltd [1977] 33 P & CR 208. Here, the tenant’s use was not in breach of the user provisions in the lease, but the local authority had served a planning notice requiring discontinuation of use on the tenant. The Court of Appeal refused to grant a new lease for an illegal use, holding that the intended unlawful user constituted “other reason connected with the tenant’s use” of the premises, thereby justifying refusal under the Act.
The provision’s scope was further clarified in Horne & Meredith Properties v Cox and another [2014] EWCA Civ 423, [2014] 2 P & CR 18, which involved sixteen years of litigation between the landlord and tenant over alleged obstructions to the tenant’s rights of way, granted by the lease. The tenant had occupied the retail premises since 1981 under a lease that had been subsequently renewed, which granted two rights of way and the right to park in six designated private car parking spaces. The tenant had initiated all proceedings and made baseless allegations of fraud against the landlord, with both parties incurring substantial legal costs throughout the protracted dispute. The Court of Appeal upheld the High Court’s decision, establishing several important principles:
- That a breach of the lease is not required to enable a landlord to rely on any other reason connected with a tenant’s use or management of the holding;
- That the reasons relied upon need not be directly concerned with the relationship of the parties as landlord and tenant, as the words are sufficiently broad to enable the Court to consider everything it regards as relevant in connection with the tenant’s holding;
- That the litigation between the parties was a reason connected with the use and management of the holding as it related to rights granted by the lease;
- That the tenant’s unreasonable conduct of the litigation meant that the tenant ought not to be granted a renewal tenancy under Ground (c).
The Court clarified that even if litigation has taken place between landlord and tenant, this will not automatically justify refusal of a new tenancy under Ground (c). Rather, the control mechanism is the Court’s value judgement as to whether, in light of the tenant’s past conduct, it would be fair to compel the landlord to re-enter into a legal relationship with the tenant.
Can a court still grant a lease renewal to a tenant even if breaches of the lease by the tenant have been established?
In short- yes.
The phrase ‘ought not’ within section 30(1)(c) demonstrates that the Court retains discretionary powers when determining whether to grant or refuse a lease renewal under Ground (c). This establishes that a tenant’s breach of lease terms does not automatically result in refusal of renewal.
How does the court decide whether to grant the tenant a new lease when the landlord opposes renewal under Ground (c)?
When deciding whether to grant a new lease, the Court exercises broad discretion, considering factors including…
1) The specific circumstances of any breach(es);
2) How both parties have conducted themselves in relation to the breach(es);
3) The cumulative impact of the breaches (if there are multiple breaches involved);
4) Whether the breaches have been remedied by the time of trial;
5) The likely consequences of granting renewal;
6) Whether protective provisions could be incorporated into any new lease to prevent future breaches.
The breadth of the Court’s discretion was examined in Harmohinder Singh Gill (as Trustee of the Gillcrest UK Pension Scheme) v Lees News Limited (Harmohinder Singh Gill v Lees News Limited) [2023] EWCA Civ 1178 where the Court of Appeal confirmed that all relevant circumstances must be taken into account. Importantly, where a landlord relies on multiple grounds of opposition, the Court held that each ground should not be examined separately. Instead, the Court must look at the tenant’s conduct, as a whole, across all grounds. This means that even if individual breaches might not justify refusing renewal when considered alone, the cumulative effect of the tenant’s overall behaviour may be sufficient to warrant refusal.
In Harmohinder Singh Gill v Lees News Limited, the Court of Appeal dismissed the landlord’s appeal and upheld the trial judge’s decision that the tenant was entitled to a new tenancy, on the basis that the tenant had taken steps to remedy its various breaches.
What is the relevant date for assessing the breaches under Ground (c)?
The House of Lords addressed the timing question for establishing grounds of opposition in Betty’s Cafes Ltd v Phillips Furnishing Stores Ltd (No.1) [1959] A.C. 20. While that case primarily concerned Ground (f) and the landlord’s redevelopment intentions, the House of Lords provided guidance applicable to other grounds. The judgment indicated that either a substantial breach or alternative reason must exist when the section 25 notice or counter-notice is served. However, subsequent events following service of the notice also fall within the Court’s consideration.
Further clarification emerged in Harmohinder Singh Gill v Lees News Limited, where the Court of Appeal rejected the notion that facts supporting a landlord’s opposition should be assessed at a single moment. The tenant claimed that the judge should only examine the condition of the premises on the date of the trial.
However, the Court of Appeal adopted a broader approach, assessing how the tenant had maintained the premises throughout the tenancy. They agreed with the landlord that the court should not be tied to a “single snapshot”.
The court acknowledged the fact that the tenant had carried out the relevant repair works between the date of the s.25 notice and the trial was relevant, however made it clear that this would not in itself entitle a tenant to a renewal lease. The court stated:
“If the tenant has a lamentable record of performance and only puts things right at the last minute that is, in my judgment, something that the court can legitimately take into account.” (LJ Lewison, paragraph 39)
This clarified the position that the date for establishing Grounds (a) to (c) is not simply the date on which the landlord’s notice of opposition was served, nor the date of trial. Rather, the court should consider the position at the time the notice was served on the tenant up until the date of the trial.
By way of example, if a tenant remedies the disrepair that formed the basis of a claim under Ground (c), but does so only shortly before the trial date, the Court will consider this conduct when determining whether the tenant ‘ought not’ be granted renewal of their lease. It should be noted, however, that rectifying the breaches does not automatically result in the claim being struck out; rather, the tenant’s actions and timing will be taken into account by the Court in its assessment.
Does the court consider past and future performance when exercising its discretion in deciding whether to grant the tenant a new lease?
Landlords must present evidence demonstrating both the breaches committed and the tenant’s conduct throughout the existing lease term, while tenants should provide evidence challenging these assertions. Crucially, the Court’s role extends beyond evaluating historical conduct to assessing future probabilities should renewal be granted. Evidence that a tenant has rectified breaches before the hearing may favourably influence the Court’s decision. Nevertheless, the Court requires persuasive evidence that similar breaches will not recur during any renewed tenancy.
The court evaluates the totality of circumstances surrounding any breach. Where a tenant demonstrates no attempt to remedy breaches, the landlord’s opposition is likely to succeed.
Conversely, where a tenant exhibits genuine willingness to rectify breaches and honour obligations under a new lease, the Court may reject the landlord’s opposition and grant renewal. Tenants may strengthen their position by proposing additional protective covenants in the new lease specifically addressing the breach, including express forfeiture rights should the breach recur. Additionally, tenants may offer undertakings to the Court to remedy breaches where appropriate.
Should a landlord forfeit a lease, instead of opposing renewal under Ground (c)?
Where a tenant’s breach gives rise to a right of forfeiture, the landlord must carefully consider whether to pursue forfeiture or oppose a lease renewal under Ground (c), as the two remedies interact differently depending on the nature of the breach.
If the breach is a once-and-for-all breach, serving a section 25 notice or counter-notice would treat the lease as continuing and therefore likely waive the landlord’s right to forfeit. Conversely, if the breach is continuous, serving a section 25 notice or counter-notice would waive the right to forfeit in respect of breaches up to that point, but a fresh right to forfeit would arise immediately afterwards in respect of any continuing breach.
The tenant is generally in a stronger position when resisting an application for forfeiture than when opposing a lease renewal application. In forfeiture proceedings, the Court will typically grant relief from forfeiture or decline to order forfeiture if the tenant remedies the breach by the hearing date. However, in an application to oppose a lease renewal under Ground (c), the Court considers the tenant’s potential future conduct when deciding whether to terminate the tenancy and may still refuse to grant a new lease even if the tenant has remedied the breach.
If the landlord succeeds in a forfeiture application, the lease will be terminated and the tenant will no longer have a right to a new lease. However, if the landlord is unsuccessful in the forfeiture application, they may still have a second opportunity to end the tenancy through an application to oppose lease renewal under Ground (c), provided it is within the limitation period prescribed by The Act.
How does a landlord start its opposition to a renewal under Ground (c)?
The landlord must initiate its opposition to the tenant’s statutory right to a lease renewal by either serving a section 25 notice or a counter-notice opposing the renewal on Ground (c). Where the tenant has served a section 26 request, the landlord’s counter-notice must be served within two months of receipt of that request. The landlord should consider whether it is necessary to oppose renewal on multiple grounds. For example, if the tenant is in rent arrears in addition to committing other breaches, claims should be brought under both Ground (b) and Ground (c). Similarly, if there is disrepair within the holding, claims should be prepared under both Ground (a) and Ground (c).
All grounds of opposition must be set out in the section 25 notice or counter-notice, as the landlord is not permitted to raise additional grounds subsequently. The landlord must specify each ground of opposition in good faith, although it may legitimately abandon a ground at a later stage, albeit with potential costs implications for doing so.
What if landlord and tenant cannot agree whether a new lease should be granted following service of a section 25 notice or section 26 request?
If the landlord and tenant cannot agree whether a new lease should be granted following service of a section 25 notice or section 26 request, either party may make an application to Court requesting that the Court determine whether the tenant should be granted a new lease. The procedure for issuing such a claim is set out in Civil Procedure Rule 56. It is critical to note that if an application to Court is not made by the termination date specified in the section 25 notice or section 26 request (which may be extended by written agreement), the existing lease will end on that date and the tenant will no longer be entitled to a lease renewal. If the tenant intends to challenge the landlord’s opposition, proceedings must be issued before that date.
Who pays the legal costs in Ground (c) lease renewal Cases?
If the matter is settled without proceeding to trial, the landlord and tenant are free to agree who should bear the costs of the dispute and the amount payable. If the matter proceeds to trial, the court has discretion to determine how costs are to be paid. The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party.
When does the lease terminate if the landlord is successful under Ground (c)?
If the landlord successfully opposes renewal under Ground (c), the tenancy will continue for at least three months after the Court’s order. In almost every case, the current tenancy will be continued and will end under section 64 of The Act three months after the application is finally disposed of. The final disposal of the application occurs upon expiration of the period to appeal the Court’s order, which is currently 21 days after the order is made or such other period as the Court may specify. Therefore, if an application has been made to Court, the current tenancy will generally expire three months and 21 days after the order is made. However, if the section 25 notice or section 26 request would have terminated the tenancy more than three months after the date the Court disposes of the application, the current tenancy will terminate on the date specified in the section 25 notice or section 26 request, although this scenario is unlikely to occur in practice. The tenant must vacate the premises on or before the date the tenancy terminates.
Is a tenant entitled to compensation if a landlord is successful under Ground (c)?
The tenant will not be entitled to statutory compensation if the landlord successfully opposes renewal under Ground (c). However, the Court will award compensation if it finds that the landlord misrepresented its opposition and any of the following have occurred:
1) The Court has made an order terminating the tenancy;
2) The tenant has not made a Court application requesting a new lease as a result of the landlord’s misrepresentation or concealment of facts;
3) The tenant has abandoned a claim for a new tenancy as a result of the landlord’s misrepresentation or concealment of facts.
Where the landlord has misrepresented the position, the tenant will be compensated for the loss suffered due to the termination order or the consequences of quitting the premises and not pursuing a lease renewal.
How can Ronald Fletcher Baker LLP help navigate a Ground (c) application for a renewal lease?
Whether you are a landlord seeking to oppose a lease renewal on the basis of substantial breaches or a tenant facing Ground (c) opposition, early specialist advice is essential. The decisions made at the outset of these disputes—from gathering evidence of breaches to adopting the right strategic approach—often determine the outcome. Delay in seeking advice frequently results in lost opportunities, weaker negotiating positions, and avoidable costs. In some cases, it may be in the interests of both parties to negotiate a surrender of the lease or explore settlement discussions, rather than proceeding to court.
Our litigation team can help assess your circumstances, outline your available options, and advise on the best way forward. David Burns is the Senior Litigation Partner at the firm. For inquiries on this topic, please contact David Burns via email at D.Burns@rfblegal.co.uk
Katie El-Gamal
Paralegal
David Burns
Senior procespartner
